Q3 2020 Earnings Call
Ladies and gentlemen, please standby your conference call weekend momentarily. Thank you for your patience and.
Standby.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2020 Albumin earnings Conference call. At this time, all participants' lines are in listen only mode.
After the speakers presentation, there will be a question and answer session.
Ask a question during this session you need to press Star then.
In one on your telephone.
Please be advised the today's conference is being recorded if you require any further assistance. Please press Star then zero.
I'd now like to hand, the conference over to your speaker today Mr. Todd trap, Sir you may begin.
Thank you Crystal.
Good morning, and welcome to Abbey image third quarter fiscal 2020.
Earnings Conference call. This is Todd traps, Vice President and Chief Financial Officer.
I'm here with Mike Minogue, Abby image, Chairman, President and Chief Executive Officer.
The format for todays call will be as follows first Mike will discuss third quarter business and operational highlights and then I'll review our financial.
Hello, which were outlined in today's press release and webcast presentation.
These documents can be found on our website under the investors section.
After that we will open the call to your question.
Before we begin I'd like to remind everyone that today's call include forward looking statements.
The comedy cautions and.
Faster is that any forward looking statements that involve risks and uncertainties and are not to guarantee of future performance [laughter] actual results may differ materially due to a variety of factors identified in our earnings press release ended our most recent 10-K in 10-Q filed with the FCC.
We do not undertake any.
Obligation to update forward looking statements.
With that let me turn the call over to Abbey, Meds, Chairman, President and Chief Executive Officer, Mike Minogue.
Thanks Todd.
Good morning, everyone.
In the third quarter I'd be a mid delivered 222 million revenue up 10% year.
Over a year.
With an operating margin of 31.7%.
As previously disclosed we had a strong start to the quarter highlighted by 24% global revenue growth in October.
However, within the quarter the company was negatively impacted.
By two misleading present.
Patients at the American Heart Association.
American heart converts in mid November.
I may remain steadfast on our goal of creating the new feel depart recovery and becoming the standard of care for circulatory support which requires class one clinical.
Guideline recommendations for high risk PCI cardiogenic shock.
Today, we're announcing the start of the next wave of clinical studies designed by the true experts in the field with best practice protocols derived from 15 years of clinical experience and studies.
In the history of the company I feel most confident now about the strength of our innovation.
Clinical outcomes with protocols and feel team.
We also have the infrastructure and expertise to execute multiple clinical trials.
Our customers are energized and.
It it to a chance again to randomize high risk patients as further validate the clinical benefits of Impella support.
Our formula for success has been training data and time, while we continue to innovate and improve patient outcomes.
On today's call.
I will provide updates on physician education.
Current and expanding clinical data and studies.
And I will also highlight our breakthrough innovation.
Before I get into these initiatives I would like to comment on the AJ presentation publish in it.
[noise] journal called circulation.
To be clear Abby med believes that the medical field is enriched and advanced by free debate.
About the merits of technology and its clinical benefits.
We vigorously support their platforms for this important process.
We have been the leader in this space preclinical research and building real world evidence for circulatory support.
The circulation publication is misleading because the authors manipulated a subset of 4% of our patience over a 10 year.
Observations database and did not disclose the analytical methods to other researchers and waived the institutional review board. Because this study was determined to not be human subjects research and quote.
Both the publication and.
The other presentation.
From nearly the same authors.
Contain factual in accuracies that demonstrate a lack of knowledge of the totality of the Impella data.
And ft, a regulatory process.
The circulation paper.
And in CDR presentation, both excluded the sickest Ivy patients who were escalated to other therapies.
And all Ecmo patients, which is the treatment most utilized at the authors hospitals.
Have you had requested that.
That's circulation.
Have you authors validate the data with another third party research organization.
Well the F.D.A. directly to audit insight typically validate what the author state in the abstract and apply consistent standards to other observation on studies.
This request was denied.
Based on the reputation of this journal. This paper is currently impacting impella utilization.
Impella physician referrals.
And ultimately and most frustrating patient care.
In favor of I knew tropes IBP and Ecmo.
With virtually no positive data on effectiveness.
No independent FDIC studies.
We have consistent.
Bonds to all of these positive and negative.
Billing database papers mixing elective high risk PCI patients.
With cardiogenic shock patients with mortalities, ranging up to 95%.
I'd be amid has collected and studied patient data on the vast majority.
I've been tell a U.S. patients since 2000 in six.
It has better visibility to clinical outcomes and adverse events than any third party billing observations database.
Over the last 10 years, Abby image training education.
Brian and technology have shortened the learning curve.
Lowered adverse event rates.
And improved patient outcomes.
And this is published.
The company has taken actions to clarify the misinformation and educate them.
Medical community on F.D.A. audited data and physician initiated clinical studies.
To respond to the safety concerns we have posted safety data for vascular complications major bleeding and stroke.
As well as a summary of our regulatory history.
Okay and real World evidence from 2004 to 2020.
Have you met has initiated a series of conference calls with more than 60 key opinion leaders and embarked on a multi city road show with leading physicians to review the robust set of clinical data and best practices.
Is that support Impella exclusive indications for high risk PCI.
Cardiogenic shock and right heart failure.
I'd be made has produced seven F.D.A. studies.
Five post market studies has tracked over 6000 patients NRC bad.
The study it has more than 115000 patients.
I Q database.
We've invested over $100 million in this endeavor.
Impella is the most studied heart pump in the history of the FDA with exclusive approval, that's safe and effective.
Have you made has supported or attempted seven randomized controlled trials.
And we're currently enrolling our nice Impella RCT.
I'd be a med recognizes that these patients are hard to randomize, because they present ethical and logistical.
Challenges for the physicians.
Now turning back to our key initiatives have you met is pursuing additional RC Tees in high risk PCI and cardiogenic shock to complement our clinical evidence and best practices to optimize patient outcomes.
We have a successful formula for building clinical data illustrated through a series of studies as shown in the posted earnings slides.
First we pilot our data for safety and feasibility like protect one recover one and recover right for.
Hybris, BTI cardiogenic shock and right heart shock respectively.
Next.
We conduct F.D.A. RC teas, like protect II and recover to which helped form the foundation of our ft approvals and indications along with our real World data collection.
And ft, a post approval studies like protect three recover three and recover right RP study.
Based on our clinical data and validation of our best practices, we're conducting another RCT for high risk PCI.
Called protect for.
To support a class one guideline recommendations.
The new trial will compare high risk PCI procedures with Impella support versus high risk PCI procedures with no plan Haemonetics support with the goal of safely achieving complete revascularization.
This trial is designed to address the challenges that exist today in the yearly P.C.I. quality metrics released at TCT, which includes 101000 patients receiving in complete revascularization.
134000 patients.
Undergoing staged revascularization, meaning two to three procedures.
Roughly 67000 patients suffering from acute kidney injury.
And approximately 115000 patients re admitted to the hospital within 30 days.
A piece yeah.
Another older Hybris population exists that includes over 300000 heart failure patients with advanced coronary artery disease that today are not offered surgery or Pcr.
Complete Revascularization protection of the kidneys and.
Improvement any injection fraction preferred really in a single setting should be the goal of every high risk PCI procedure.
Protect for has been under development for eight months.
And the Impella arm is currently being tested and our single arm restore yeah, hi risk.
<unk> study.
The primary endpoint is similar to protect Threed mace at 90 days, and we will attract yep improvements and the patient for up to one year.
The steering committee includes the true experts in the field for both PC <unk> and Humana.
Support.
We will provide more details on our clinical trials that HCC in March and art at our Investor day in May.
We are confident in our clinical data innovation and energized by our physicians to take the next steps that will advance Pcr.
Treatment and help accelerate impella adoption similar to other breakthrough innovation.
My last update on our clinical studies is that we were enrolling patients in the STEMI D to U.F.D.A. RCT with 10 sites RV approved out of the 60 hospitals, we're pleased to announce that we have enrolled.
12 patients to date.
For this study the sites are Randomizing standard of care re perfusion for heart attack patients against Impella unloading therapy combined with re perfusion to measure infarct size reduction.
If successful this trial is.
Design with clinical follow up to allow for a class one guideline recommendations and could open up a new 4 million patient population worldwide.
The successful F.D.A. pilot study of 50 patients was presented at AJ and.
Just in circulation in 2018.
A subset of this STEMI network and principal investigators when ready, we'll initiate recover for a randomized study to test our best practices for cardiogenic shock comparing impella support to other.
Therapies, such as I know tropes IBP and Ecmo.
The STEMI DT you study is currently our priority at these sites, but more details will be provided in the future on recover for.
In coordination with training best practices for PCR side.
Have you med, we'll be investing in education, as we launched the largest educational development effort in the company's history.
This program is called Cam Pcr.
Which stands for coronary artery myocardial protected PCI and will be launched later.
Earlier this month.
The mission of Cam is to enhance physicians skills to optimize P.C. I.
Utilizing innovation that enables safer procedures and complete revascularization for improved patient outcomes.
We're partnering with.
Physician experts in the field to create a dedicated faculty for education and training on T.I. overall that will include human I'm support.
These programs will include password protected community password protected online training.
Onsite an in house educational programs, a national use your meeting and physician Proctoring.
As an example, I would like to share a patient story I'm protected PCI.
Michael Shaw 68 year old from California began experienced in heart issues, we slept im feeling for.
T and unable to perform daily tasks.
Cardiologist discovered that Michael had severe blockages, causing poor heart function within E F at 15%.
It was determined that Michael was too high risk for surgery and was an ideal candidate for protected PCI.
Yeah.
Dr really St Agnes Medical center in Fresno implanted the Impella CP heart pump to provide hemodynamic support as you placed multiple stance and did a thorough job.
Following the procedure Michael felt an immediate improvement and he was just charged home.
He is back working.
On vintage cars and traveling with family.
Michael latest ejection fraction was three times higher and nearly normal and he now feels better than he has in years.
Turning to innovation, we continue to roll out the Impella CP.
He p. with smartest is which is now in 635 of our U.S. sites in the quarter. We also launched the Impella 5.5, with smartest says that leading hard hospitals in the U.S.
The Impella 5.5 is the first.
And only forward flow.
Fully winnable heart pump designed for axle Larry implant, so no sternotomy or cracking opened the just required with the smaller profile, making insertion easier and giving patients to the ability to get up and ambulate, which has been shown to improve outcomes.
Early feedback from the heart surgeons on the first 100 patients has been very positive and a publication is in process.
In conclusion.
We believe that Impella adoption is now a function of time.
Recent Jama publication revealed the growing epidemic of heart failure and reported that is high risk population is increasing as his mortality, especially in the 45 to 65 year old segment.
Like any new breakthrough technology, we have to endure some.
Challenges and adapt to all criticism with clinical data and innovation.
We welcome every customer to analyze and critique or data and appropriately utilize our technology to help improve patient outcomes.
I would like to thank our shareholders for their continued support.
And recognize our employees and our customers who put patients first every day.
We will remember this time.
And recognize the opportunity to propel us forward on our path for class one guidelines for percutaneous.
Getting hard pumps called Impella.
I'll now turn the call over to Todd [noise].
Thanks, Mike and good morning, everyone.
As Mike mentioned, we delivered revenue of 222 million in the quarter, an increase of 10% on a reported basis.
As versus a tough comparison of 30% growth in Q3 of last year.
By region U.S. revenue grew 8% to 186 million driven by a 5% increase inpatient utilization.
For modeling purposes, U.S. product revenue was 100.
It and 77 million in the quarter.
In October we had a record month with 24% global revenue growth and 16% U.S. patient utilization, which we believe was the result of the progress on our key initiatives.
Unfortunately, the presentations in November impacted our.
Growth.
Our elective business saw more of an impact with high risk PCI declining 4% in the quarter, while cardiogenic shock grew 13%.
Outside the U.S. revenue totaled 36 million up 30% on constant currency driven by strength in Europe.
In Japan.
In the U.S. at the end of our fiscal Q3, the Impella two five and C.P. have reached 1425 sites.
The Impella five vote has been placed in 640 sites and the ARPU is currently in 521 sites.
We.
Also launched our new Impella five five with smart assist in 25 sites in the quarter with positive feedback from the heart surgeons.
Q3, reorder performance was solid with a rate slightly above a 100% inline with the reorder rate from Q3 of 19.
Average combined.
Tory at the hospitals for the Impella, two five and CP was approximately 4.6 units per site.
Consistent with the inventory levels, we saw last quarter.
Outside the U.S., we continue to see strong growth in Impella adoption.
In Q3, our European revenue.
These 23% in local currency due to higher patient utilization and cardiogenic shock in Germany, and further impella adoption in other countries like Austria, Italy.
Additionally, Japan performed inline with expectations as we as we generated 8.7 million a salesman quarter.
We opened 10 sites in Q3 and are now in 109 hospitals with 151 hospitals currently approved by the government.
We do expect open less sites in the fourth quarter as a team closes out the post approval study and prioritize is a broader CP launch.
At existing sites.
We are executing our controlled rollout and we're focused on improving patient outcomes with native heart recovery, which we believe will allow us to become the standard of care in Japan for the next 10 plus years.
Moving to key financial metrics gross margin was 82.
2% in the quarter compared to 83% in the prior year.
The year over year variance was driven by the smartest this launch and geographical sales mix.
We introduced Impella CP with smart assist at approximately 300, new sites in the quarter.
We believe this new technology will help improve.
Easy to use.
Patient management and drive productivity, both in the hospital and in the field.
In the quarter R&D expense totaled 26 million, an increase of 7% from the prior year driven by our ongoing investments in clinical research, including STEMI and our post approval.
Studies in the U.S. and in Japan.
We also continued to fund our pipeline of products.
Our new 10, French chief will expand in collapse around the nine French catheter for a small bore closure device.
We have treated 16 patients outside of the U.S., so far and plan to bringing.
This device to the U.S. through a five 10-K clearance at the end of our fiscal 21.
We also have had our first in man pending this March and April for the Impella easy Pete a true nine French Catherine pump, which is ideal for protected PCI.
We believe both these new products will help simplify.
Hi training with ease of use and drive further impella adoption with customers concerned with vascular complications.
[noise] SGN expense for the third quarter totaled 86 million, 7% higher versus prior year.
The lift was driven by investment in our commercial team and.
Mental physician training.
We expect more investment in X gene and the fourth quarter as the commercial team continues to grow and we provide additional training in the field.
In Q3 operating income grew 13% to 71 million translate into an operating margin of 31 point.
<unk>, 7%.
Margins expanded 60 basis points due to higher volume and lower stock based compensation, which more than offset our ongoing growth investments.
GAAP net income for the quarter was 69 million or $1.51 cents per diluted share versus 97 cents.
Since in Q3 of 2019.
The 56% year over year growth was primarily driven by a mark to market adjustment on a shock wave investment, which equated to an after tax non cash benefit of 17.8 million were 39 cents per diluted share.
Excluding the.
Impact from Shockwave.
Earnings per share grew 16% year over year.
Our reported tax rate for Q3 was 28.7% versus 30.5% in the prior year.
We also had another strong quarter on cash as we generated 89 million of operating cash flow.
An increase of 20% versus prior year.
The balance sheet remains debt free and we ended the quarter with 596 million of cash and marketable securities.
In Q3, we bought back roughly 25 million to stock in the open market under our share repurchase program.
Our top priority.
Already for capital deployment continues to be organic growth initiatives, which we believe is the best return for shareholders overtime.
Turning to guidance as previously announced our full year revenue guidance is 10% to 14% growth.
Based on January's performance, which was similar to December.
We expect to be at the low end of this range.
For operating margin there is no change to our guidance.
So in summary, we are confident and our overall strategy and both the technical and clinical advantages of Impella.
With our best in class profitability strong balance sheet and IP.
Portfolio of over 759 pens and 649 pending we believe Abby med is well positioned to become the standard of care through our formula of training data in time.
Operator, please now open the lines for questions.
Thank you.
Ladies and gentlemen, if you have a question at this time. Please press the star followed by the number one key on your Touchtone telephone. If your question has been answered or you wish her move yourself from the kill please press the pound <unk> once again to ask a question. Please press star and then one now.
And our first question comes from Raj standpoint.
From Jefferies. Your line is open.
Hi, Good morning, I'm wondering maybe I could start Todd you updated the guidance there at the very end you know I guess I'm curious you know how things are trending in the field rights. You noted a january continues to be somewhat weak similar to December.
How how has your response the AJ.
He has been received in the marketplace are you still hearing some pushback and really the question is when do you expect that the pressure will start to ease such that growth might start to accelerate again.
Well I'll cover the the response in the field Raj the.
The physicians that are the published experts are the ones that are currently enrolling.
During their frustrated because the paper itself got more media attention and a more press than some of the publications that show improvements in survival with nearly 95% Native heart recovery. So publications on best practices in shock like a nova.
Or the Detroit Cardiogenic shock in.
They should ever the national Cardiogenic shock initiative or the Hanover publication or even the shock working group. So there are frustrated the second component the circulation paper declared that depict the sites. It did the most or had the most experience had the worse outcomes, implying that they have the worse outcomes not that they're treating this sicker population and the.
And with the circulation is that their mixing high risk PCI patients with shock patients and we had sicker patients. We also know that they eliminated patients that are escalate on a balloon pump say bias to date and took out the sake is balloon pump patients. So they are frustrated and their shock that got published a in circulation. There also shocked that.
[music].
That their conclusions were allowed to be so strong on an observation on database a they've asked us to buy the data and get access to it. So that we can evaluate encounter with the specific details, which we're doing for both the N. CDR and this premier database and their galvanized so they're a oh, we the positive.
This is they're totally engaged we know there's been more than five letters written into circulation, none of which had been published that are very strong in favor of the clinical science and again the slides that we've posted a many of them in a couple more are being utilized and shared with our key opinion leaders to show that no.
Other company has the totality of the data and in fact, what some of these centers that are authors or their their standard of care and their usage is really our new trups balloon pump in ecmo. So I think the positive. This is going to allow us to get to that next level to to push forward on the new studies and I'll, let Todd comment on the guidance question.
Yeah. So.
And as you remember back in a JP Morgan, we talked about the lower into the range really to assume that December run rate for was from both a quarter kind of continued and.
The higher and assume that what we saw in October we recovered earlier in the quarter and unfortunately.
January has played out more like December from a U.S. patient utilization perspective, So you know Raj when I look at the patient utilization in January it was up 3% sequentially from December but from a year over year perspective still relatively flat. So again, it's something that you know we watch every day, we did kick.
Off we just launched our multi city.
Tour, where in the southwest this weekend. So we should see how that progresses and then again in the fourth quarter were still launching several new products like CP was smartest is as well as the five five and so and in some of the investments we've made in the U.S. distribution structure around.
Leadership should start yielding some benefit so it's something we're we're watching pretty closely but unfortunately, we haven't seen that rebound yet in January.
Right and I guess, you know we <unk>. The math suggests that then the fourth quarter is going to come in something in the 2% range you know when I guess there. The question is really as you start thinking about fiscal 2021.
Right and what kind of revenue growth one should expect out of the business.
What we're all trying to figure out just kind of the pace of that recovery and when we might start to get back to more positive growth and so I don't know if there's anything you can offer in terms of.
When we that that might start to lift off of at very low single digit growth rate.
So as we can't comment.
Our next year's forecasts, yet, but the we know that our data is better or clinical outcomes are better the new innovation. That's rolling out for smartest is also helps improve outcomes and ease of use.
This is a bump.
And we stand by the data we have and.
We are working with the leaders.
In the space to correct for this misinformation in the end, it's up to a the the clinical community to digest the data, but we feel very confident that we will any and become the standard of care and we will utilize this time to leverage or more studies.
Okay Fair maybe just.
One clarification, you mentioned the expandable sheep, Oh, you're saying the end of next fiscal year, So get yourself.
The better part of 12 or 14 months.
Given that to five 10-K is there is there still some design work or something it has to happen on that product before you you begin to regulatory process United States. It just seems like it's you know, it's 12 or 14 months seems like a long.
Time to get through 510 gig.
Well, we want to be conservative to make sure that Ah you know we're comfortable with the timeline. We've already done 16 patients in April were going to do another eight to 10 or we want to make sure as we enter the space that we don't create any new complications and our process is always to get the best.
And sometimes we go a little slower for that but we think thats most prudent.
Okay. Thank you.
Thank you.
Question comes from.
Matthew O'brien from Piper Sandler.
Good morning, Thanks for taking my questions just I.
I guess tied for first.
For starters on a finer point on guidance for Q4 here I mean, it assumes U.S. impella revenue is down year over year is that right.
I don't think it assumes U.S. impella revenue is down, but it's probably more in the flattish range flat to up low single digits. Okay. So then maybe you.
Slows a little bit more yeah versus okay got it and then you know as you guys I think it fit Raj Senator sounding a little bit, but as you think about the high risk PCI group in the U.S. as.
As you are you know, there's clearly a contraction going on right now with that group not using the product.
That all have you been able to isolate or identify a bigger chunk of that group has decided to start to reduce.
You know the number of impels that they're using and you know how do you reach out to those guys directly and then how do you get them to come around to the totality of the data that you have to get them back using.
More aggressively how long does that take is at six 912 months.
So Matt as we stated we're seeing more of an impact on high risk PCI patients because your elective and they're more dependent on the referring physicians in the community.
Unfortunately, they're referring physicians in the community saw some negative headlines a severe headlines on safety that were unjustified and are they sometimes only read the abstract so we're working with them. The other impact we've had is for high risk PCI with the dabbling is that people who are starting to use it.
They.
They decide to.
Put off treatment or get in and out or stage. The patients. So we're working through that we also saw.
You know some of these are some of these headlines have impacted a little bit of what the hospitals are doing from a.
D. A perspective, so we're going to try to transition that phase from people that are being aggressively marketing against us to the sites that are now going to start marketing. These these examples where they can do high risk PCI patients and they can see improvements any F and or to remind all the investors PC I in general historically does not show an improvement in.
Injection fraction or heart function, usually relieve symptoms chest pain.
Cabbage are open heart surgery has increased your F. Because you can do you have complete revascularization with a with a vein and every publication on PC I shows that complete revascularization reduces major adverse events and that's the ultimate.
The goal, so getting in and out and not getting complete revascularization limits the performance of <unk> and that's the bigger goal and that's what people are focused on and that's what protect for will highlight.
Okay, and then last one for me, Mike you kind of touched on it there with protect for but I think would protect to it took you you know that study was about to about four years to.
To be completed how do we think about how long. This one will take and then protect you I'm pretty sure was randomized versus balloon pumps and in this case is not is that going to be an issue with the clinical community.
Given that you're not randomizing versus some other type of human dynamic support.
Oh, that's a great question so the.
In fact, you does give us a date against the balloon pump what we see now as far as are the critics or the skeptics is there not necessarily promoting the balloon pump is a balloon pump has complications. It does have an increase of of stroke. It does have asked her complications and has major bleeding as published in the literature. However.
The folks that the talking about getting in and out so they'll do a radio that get in and out they won't inflate the balloon for the mandated time by the manufacturer for this then they don't necessarily do atherectomy they limit how much contracts they have for visualization and that's really the broader bigger market. That's also gives us the ability to look at.
Reducing readmissions are improving complete revascularization testing acute kidney injury or even reducing readmissions. So that's the bigger broader market. That's when you're in how to hundreds of thousands of patients every year with <unk> and that's a focus I think from a speed perspective, we'll give that data out as we get closer but we're also doing.
In a more patients you know a factor of 10 times more patients per week or from when we were starting with protect two and when we started with protect too. We didnt have five 10-K, and then we had 510 k. So we have the infrastructure. The bandwidth we have the field team, but we're going to do it right because we want to have a class one recommendation so patients that.
Have they are termed high risk PCI or turned down for surgery can it get the benefit of Impella support so the physician can do complete revascularization.
Very helpful. Thank you.
Thank you. Our next question comes from Danielle Antalffy from SVB Leerink. Your line is open.
Hey, good morning, everyone. Thanks, so much for taking the question just wanted to ask about Japan here first second and I know you said in your prepared remarks. It was inline with expectations was down sequentially, though and this is the first time it was down a synch sequentially since you've launched so just wanted to get more color on why.
You know what the drivers there were and then I have I have I have one follow up.
Thanks for the questions I Danielle so as we mentioned in the last quarter, we opened up a far fewer sites in the second half of the year as we did in the first half. So just to just to remind you we opened up about 49.
Sites in Japan in the first half of this year and then the second half we opened up 10 in this quarter and when open up a little bit less next quarter and it's really as we close out the post approval study and really the team is focused on rolling out CP in Japan, and so really that's the difference.
Between you know the 9.5 million that we had in Q2 to the 8.6, which was literally lower site openings in consul shipments. Okay. So nothing about tha data, that's not having an impact actually last Japan or Germany.
No I would say so we haven't seen.
In Japan.
In Germany, I would say, we did see a little that AJ noise started to spill over.
In the month of of January So, we're seeing a little bit of softness in Germany. As a result of AJ got it and then my one follow up is maybe this is for for you. Mike You know my other question forgetting is how.
We should think about the government agencies looking at these ha data presentations in circulation publication I mean, obviously this dataset is flawed, but CMS over the last two years has proposed rate cuts and.
Every year, they've they've reverse those but how does this you know.
This was a I caught the one AJ data presentation was a cost effective analysis I mean does this give them leverage to potentially caught reimbursement I don't know what you can say about that but would love your views.
Sure to thing so one as I said in my comments, we want the update involved a the FDA has we provided the data that the.
In the publication, we are getting access to that data and we also are getting access to the NCR data, but memory from 2015 to 2017, we have those all those patients in the Ike you database and we have some of those patients in multiple databases. So we can break it out to high risk PCI shocked right heart failure.
Your five though by name by hospital by indication we have more data then exist in those databases. The NCD. Our database did not actually have the ability to track some of the human Amick information until the ended 2017, and so will we have access to the data and we'll continue to push that for CMS.
It's a great question and were in with CMS on a routine basis showing them, our new data talking about heart recovery talking about our ability to enable improvement in F and reduce readmissions and acute kidney injury and we want CMS to look at all this information we want them to look at these other alternative therapies I know tropes.
Sure it balloon pumps Ecmo, we want the FDA now to look at all those adverse events that they have for vascular complications and bleeding and stroke, but again the reason that both public presentations are are interesting and somewhat flawed is they eliminated all the patients that didn't do well on the balloon pump.
I don't think any paper.
For that we would submit or any study we would try would would would ever get completed if we said we're going to publish a paper on patients. They got impella only in the Cath lab, the intend to treat if its balloon pump than the intend to treat is the balloon pump and if they have to go on to other technology, then they that should be counted, especially from a cost effectiveness.
Perspective, if a patient gets ecmo and as a result has to go onto an l. that down to a transplant that's a million dollar patient.
That's a million dollar patient to CMS and hospital charges, that's millions allocation to an insurance company and all those things should be looked at so in the yen CMS looks at the data it's a hospital charge.
Brian I remember, we have hybris piece I end shock patients and what's your expected to do is try to find ways to improve productivity, which is what we do it have you made it we expect that to come down every year, but what CMS has institute is a network of ways to get paid for Impella, whether its hub and spoke where you put it in and.
Her orbitz biventricular or if it's just left side or Rightside. So we'll work with both agencies, we stand by our data and our data is more comprehensive an extensive and we have more cost effectiveness data than any data base out there and we have the largest database with high risk PCI and shock patients that exists in the world and we'll continue to utilize.
Thank you so much.
Thank you. Our next question comes from Chris Pasquale from Guggenheim. Your line is open.
Thanks, Mike I'd say first kudos to you in the team for being willing to do the kind of clinical studies necessary to generate some of this level one evidence I wanted to touch on.
And one point with each of the study so on recover for just wanted to make sure I understand your comments there do you plan to hold off on initiating that study until STEMI D to use enrolled.
Oh, so the answer is not till its enrolled we want to get the RV sites up and running feel comfortable that we can now at it because we have the.
Infrastructure, we've made the investment these are some of the top users and remember they are putting the device in that all hours. The device can be in for six plus hours. The patients will be in the ice you in some cases in most cases and they're already doing something that has some ethical logistical issues by waiting 30.
It's before they open up the blocked artery the flip side of that is since Rescreening now for all STEMI non STEMI patients. We're gonna get a 10% of that population is going to be in shock and therefore at at many of these centers. We can just go to the next protocol, which would be shock and there were going to utilize the protocol of NCS I or no of a for best practices.
Compared to the other arm, which is going to be honest tropes balloon pump ecmo, what all the things that they do today at sites that don't have impella and to point out and I. Appreciate the comments to continue to do studies. We've continued to do study since 2006. It tells you something about the technology that it's such an.
Ethical challenge and logistical challenge to withhold hemodynamic support elevate ads for acute shock have never been randomized in the history. The FDA Impella. This is the first time, we've done it for a de T. and bridged transplant, the only randomization to optimum optical medical management.
That was in Heartmate, one and it wasn't necessarily ethical challenge because you were actually giving a pump to a patient that was dying of heart failure. So these are very difficult and challenging studies to do for ethical reasons, but we're going to push through that and have certain ways to crossover, but they're going to be really hard endpoints to cross over so there's no.
No.
Theres no confusion over how sick these patients are.
Thanks, and then on protect for I appreciate the come to the importance of comparing supported PCIA to unsupported BPCI and the idea that perhaps is that unsupported group, that's the bigger opportunity, but the recent papers do muddy the water in terms of the incremental.
Of Impella versus balloon pumps, so why not have a third arm of this study where patients get balloon pumps, and where you just count escalation of therapy, perhaps as as a failure on a composite endpoint to show the difference between a that sort of supporting to support the Impella provides.
That's a good points and as I said it we've spent eight months working on this study with the experts the balloon pump itself has a adverse events and so going against nothing is actually a tougher compared or most people that do high risk PCI again the people on these publications are not publish that.
No not high risk PCI.
Practitioners, they don't use a balloon pump because the human I'm support proven and measured is about 0.2 to 0.4 liters per minute. If it's time perfectly which it's not in most cases, so it's a harder bar and if they're going to do and get in and out that's really.
What they want to compare to that's the bulk of the patients that are out there we don't necessarily see high risk PCI, we don't see the balloon pump as a competitor anymore and even from protect you and protect three we're now going to have 1500 patients to compare to protect too and in protect to remember if you had atherectomy.
With the balloon pump you had a 30% repeat revamps rate in 90 days. So one out of three of all those patients had to come back because a balloon pump didn't provide human I'm support. So we're gonna go for the larger opportunity. That's what our advisors are believed and most of these patients in the future, it's really going to be almost similar to on.
Pump surgery versus off on surgery, which about 85% of the patients in the U.S. have surgery on pump and so to some extent, we're looking at on pump Pcr versus off pump and that will clarify and speed up the study.
Thanks.
Thank you. Our next question comes from Jason Bedford from Raymond James Your.
Your line is open.
Good morning, and thanks for taking the questions. Just a couple Todd you mentioned trends in January earlier, and I think you said, 3% up 3% month over month flat year over year.
In the month of January just curious was that in reference to worldwide are U.S.
That was U.S. patient utilization, okay, perfect, Mike you've mentioned a couple of times that a class one guideline recommendations for percutaneous unloading.
As a goal just in terms of timing when do you expect to to get a class one recommendation.
So the protect for is our priority study right now.
And it's already in the works.
We have a we already have a committee and we are now going through the process of starting to screen. A this centers that will accept and we hope to be enrolling.
Since within the next year.
Okay, and I apologize if I Miss is maybe talk about the size and the follow up on the trial.
What we said is we're going to give details more details at HCC and we'll give a lot of details at the Investor day in May just for the record currently today for our guideline high.
PCIA is class to be.
The insured balloon pump for shock in Europe, and Japan is class three which means it's harmful for cardiogenic shock, which is why the paper. That's currently out is so questionable because.
Some of the physicians have questioned we know what is the purposes.
Is that papers it to try to encourage it class three recommended device or is it two softly encourage ecmo for shock patients.
Okay. Thanks, that's it for me.
HM Okay.
Thank you.
Our next question comes from Marine I bought from BTI G. Your line is open.
Hi, Good morning, Thanks for taking my question I wanted to ask one on the debate here and then went away from it.
With the early efforts you've been making to make calls for Calwell, if you're starting the road show to get that data centers [noise], Yeah, just stop early feedback basis and kind of a one.
On one basis are you seeing a positive impact person by person at this point.
Yes.
Great. That's what I wanted to hear a one asking this on away from all the confusion here [noise].
I'd love to hear more about how the Impella five five launch is going is on track with direct.
Vacations, and what can we look for the coming quarters.
[noise] summary, the Impella five five is what I believe heart surgeons have wanted for the last 15 years when I started it abbey a med we were a surgical company and people are always talking about a minimally invasive longer.
Term winnable pump, where you didn't have to core out the ventricle, where you didn't have to crack open the chest and so the Impella 5.5 is our first step into that equation. The impella BTR pump will follow with that will be a longer term vad implanted similar way, but it will that run for more than a year and allow for patient.
Discharge on both the Impella five five and the BTR pump they will have smart assist so we're able to actually monitor and see how the patient is doing we're able to look for signs and predict recovery and of course with Impella connect we track that patient in the cloud and so we a it's a it's an.
So that breakthrough Unfortunately, the surgeons are not as susceptible to the noise from AJ, we have huge demand. The feedback has been incredibly positive, especially since we've been able to duplicate that cardio opposite cardium apathy shock patients.
And actually returned to baseline.
I'm off there on a true ups and have their kidneys, either recover are protected which allows them to be ex planted and go home without any further technology, such a big win especially for a large population out there. That's 72, that's acutely to compensating and when they come in you don't have a lot of options to get them back to baseline unless.
More invasive or an escalation on a triple therapy, which has been proven to increased mortality. So we're super excited the top centers the top heart surgeons in the country I have embraced it we've done over 100 patients in the publication is pending.
We also believe it's the most blood compatible pump.
And that.
Ever created and will be will be measuring and publishing that data as well and there's just a huge opportunity here as a forward flow pump because it does rest and recover the device with the heart, but as you when it down we can measure via the pressure volume lips, we can look at pressures in the Lv and really get a good.
Have good timing on winning somebody back almost the way you'd Wanna hamstring.
Great. Thank you for much.
Right.
Thank you. Our next question comes from Chris Cooley from Stephens. Your line is open.
Good morning, Thanks for taking questions just two quick ones for me at this point.
Todd maybe this is something we have to wait for the upcoming Siskel your dog or could you maybe help us think a little bit about related clinical trial expenses would still fall in the fiscal Fourq you.
Just want to make sure we time trying to like the wall correctly, there I think it's great effort.
Taking but just from a modeling perspective policies, how we should maybe contemplate a and then maybe just as my follow up like.
Because of the answer here too, but I've got a housekeeping one of the prior questions. You mentioned that you were in contact with U.S.J. only tell you.
Hi, just such.
And can you give us color regarding the characterization of those discussions and what we should interpret from the or is this just to be acknowledged to figure agency is aware of.
The discrepancies circulation paper thanks, so much.
Chris Let me answer the second question first I don't think we heard the first question.
There was little bit of static so we work all the time with the F. day were collaborate with 'em. We have an ongoing F.D.A. study now we're doing a review of some of the future studies, we have the five post market approvals. So we're always talking with them. We're always communicating our database and the reason that we want to communicating with them.
As we have an obligation as a company for patient safety.
We track nearly all our patients in the U.S. I don't believe there's another medtech company that does that and certainly no one in the space does that and so if if if things progress and we were not able to get access to the data we asked circulation to have the authors validated.
And provided at least to the FDA if they want so we can fulfill our obligate our regulatory obligations.
They that request was denied and so we the F.D.A. is its own separate agency. They have seen the publication, but they also have seen all our data and if they were concerned or you know I think you'd know that because we.
Only have a STEMI DTR study going on for patients that aren't in shock, where where we're moving now for patients that just for heart attack. So they see the real time data. There frustrating part is this I mean paper it basically omitted every single ft, a study and even omitted the STEMI D to you publication that.
It was in circulation and presented at ha as well as the protect to study that was published in circulation. So the data for Vassar complications major bleeding in stroke or the information for high risk PCI comes from an FDA randomized study protect to.
The STEMI numbers, we have come from our pilot randomized.
And now in process and for shock it comes from our registry data and other studies as well. So we stand by our data we continue to work with the FDA to improve outcomes and innovate.
Now what was the first question.
Just a appreciates the so called or just wanted to clarify from Todd.
The protect for any additional clinical trial.
Ramp up here should how should we think about experience <unk> realize it's probably more physical 21, but just helping us kind of dollars.
This fiscal year, just in terms of the Fourq <unk>.
Materials for Fourq you yeah.
I would say the protect four is more of a fiscal probably towards the end of the fiscal 21 cost element.
As you think about this year in Q4, obviously from a margin standpoint.
It's going to where you know I am I imagine will be down year over year, mostly driven by just the investments we're making in the business.
Yes. So if you think about from a investment standpoint, we have the higher heads that are hitting us in Q4 for for what we hired this year, we have the Japan post approval study Thats more back end loaded Dole impact Q4, STEMI is ramping up.
Over the course of year again more back end loaded this year.
And then and then also that we have the start of the next calendar year, we typically see higher payroll taxes and fringe benefits in Q4, so from a from a year over year perspective margins in Q4, I do expect him to be down.
Versus what we saw in Q3 as well as.
Year over.
A year.
Thanks for clarifying.
Hi.
Thank you. Our next question comes from Margaret Taser from William Blair. Your line is open.
Hi, Good morning, guys. Thanks for taking my question.
So.
What I wanted to follow up on what the referral channel and businesses maybe.
Something you guys don't have quite as much control over is going out and talking to your top accounts administrators. So.
Know, whether it's a 60 site road show have you been able to reach out to that referral channel how the top users a top accounts for you guys thought about how to yell effectively address that kinda decrease and.
Referral network and just kind of general thoughts on that over the next 12 to 18.
Thanks, Mark for the question. So it's a the road shows is kind of a a three pronged approach to clarify this data number one is we've already done calls with the key opinion leaders were.
During the slides you see on the Internet and more in detail to make sure that they have the information summarized on what what are the what's the safety data available for balloon pump Impella and Ecmo and how does that stack up for vascular may mastering complications made or cleaning and stroke and then pellet does very well there.
The second with that information is asking them now either with or without us to work with their referring physician. So one physician told me. His strategy is when he's gotten these calls from referring physician, saying, they're concerned about the safety of Impella and their don't want to have a protected PCI.
His.
His his standard line is have you read the paper in whole unusually the answer is no and he comments to will why don't you read the paper look at the limitations of it and then call me back if you really are still concerned.
And so those local meetings are important but what we're also doing is we're going out with some of them and.
And having them present to their community and then as part of that road show, we're talking about the clinical data, but we're also talking about the innovation some of the new things coming whether its expandable sheath or single access or smartest says and then last is we're creating this camp user base network so that.
At our users.
Can communicate with each other can share information can post slides can post case studies and we can share the videos with them both internally and externally as appropriate. So we are very fortunate to have such a dedicated group of physicians. They are the experts in this space.
Yes, they are the published leaders and they're the ones treating these patients. So I would say in summary, that's the most important thing and investors should should take notice of is that the people in this space that are leading the field are using impella, our publishing their actual data not taking a billing database and pulling it to take other people's data. So.
Okay, well continue to lead on that front and we feel like our physicians have never been so supportive and energized as they are today.
Okay. That's great and then just a follow up you kind of reference it's a little bit but am I think earlier you said you've been out you did it maybe purchased some of the data from premier or.
The other networks.
So are you going to take that data review it potentially publisher response or leave it in the country Pam.
Just wait for kind of single site RCT it'd be published.
I'm going to do all the above so the first thing is we have data that's already like that so we have the eni.
Database that was published in Jack in 2015, Arthur with stretch that article showed that the when the advent of P. that hit the market and that's 99% Impella in 2008, it lowered mortality. The paper also showed that when you utilize the balloon pump cost went up 25%.
Absolute costs, because many of these patients get escalated and when patients were escalated are used before the pea that it was a statistical predictor of death. This is why this paper by eliminating those escalate on a balloon pump took out the sick. It's the most costly patients and also eliminated all ecmo patients, which many of those.
Survivors, because the heart has been loaded require more invasive and more expensive procedures like Oh Vas and then transplant. So that's a that's a very important component, but then with the Premier database itself. We will go through it we will put everything back into it with the end CDR data, we're going to run the numbers from 2000.
18, and 2019 some of those patients will be an eye Q some of them will be an eye Q and in our post approval studies. We also are pulling the data from these six centers that have very limited use of impella. So in 2018. The authors the hospitals. They did 1400 ecmo patients they did one.
Thousand plus balloon pump patients and they did 221 impella patients in those patients at those centers about half the time, they do not follow the protocol. So impella patients that that get impella come usually within it balloon pump before or many of our patients transferred in on Impella to their.
Those impellers immediately removed and switch to Ecmo. So we'll be continuing to published data from our real world evidence and will complement it with the other publications that are out there.
Great. Thank you again.
It's smart.
Thank you and that does conclude our question and answer session for today's conference and I Love to turn the conference back over.
Mike Minogue for any closing remarks.
Well I want to end with Ah. Thank at our investors for their support this is part of our journey to become the standard of care and it's probably the best opportunity. We've had in a long time to push through to get the guidelines required so that impella can be worldwide to class one guideline.
You have any follow up questions. Please reach out to us and we thank you for your time today.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the programming you may all disconnect everyone have a wonderful day.
[music].
Okay.
[music].