Q4 2019 Earnings Call
Good afternoon, and welcome to Shockwaves fourth quarter and year end 2019 earnings conference call. At this time all participants are in listen only mode, we'll be system.
Taking a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes I would now like to turn the call over to Debbie Kaster from the Gilmartin group for a few introductory comments.
Thank you all for participating in today's call.
Joining me are Doug Jones, President and Chief Executive Officer of Shockwave Medical Dan Pocket, Chief Financial Officer, Shockwave Medical earlier today Shockwave released financial results for the quarter in year ended December 31st 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.
That include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events or results or performance a forward looking statements.
All forward looking statements, including without limitation examination of operating trends and our future financial expectations, which includes expectations for hiring growth in our organization and regulatory affairs and guidance for revenue in 2020 are based upon our current estimates in various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to material differ from those anticipating anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.
Our list and description of the risks and uncertainties associated with our business. Please refer to the risk factor section of our 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 and is accurate only as of the live broadcast today February 13 2020.
With that I'll turn the call over to 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 fourth quarter in full year two doesn't like to you.
We reported 14.3 million in revenue for the fourth quarter and 42.99 for the full year 2019, which were up nine point threemillion $30.7 million, respectively over the same period in 2018.
We continued to be encouraged by the growing adoption of Intervest or lithotripsy, we're obviously as unique solution for patients suffering from complex.
Vascular calcification and by the strength and success of our field team and educating our customers.
And helping improve outcomes for patients with complex calcified disease.
Dan will provide details on our financials a bit later in the call.
But I'm going to start by highlighting some of our accomplishments over the past few months and I will also share an update on how we are seeing I've, you'll use which has transformed a bit since we went public less than a year ago.
We will also discuss some of our plans as we get ready to launch coronary and the bus.
First a quick overview over operational progress this last quarter.
We transition from a limited market release, two we full commercial launch of our S. Four below the new product in U.S., including the release of EUR 2.5 millimeter version in December to complement the three three and a half and four millimeter sizes. The relaunch in November.
We continued to make good progress on our cat through U.S. I'd eat trial and expect to complete enrollment this march.
We initiated the CAD four study in Japan in November.
We signed a lease for a second facility more than doubling or space in Santa Clara.
We expanded geographically and solar product and 42 countries over the course of the year on.
We completed the successful phone financing, which with gross proceeds of roughly $103 million.
As you can tell our dedicated team continues to execute effectively on multiple fronts as we expand our efforts to treat a broader spectrum of patients globally.
With the expanded from limited launch of S. Four this past quarter, you're seeing broad use up and down a little or lake with a very high level satisfaction with virtually every case.
We've been really pleased with the early traction and diverse use of best poor below the knee.
There are a limited number of safe and effective options for treating disease below the knee and area, where there is a base of 300000 procedures annually.
Roughly 65% read calcification.
So we believe this is going to be a vessel bed, where lithotripsy is going to make a significant impact for patients.
It's still early in the lunch and as physicians increase their experience, we continue to engage with them to best understand how they are incorporating us for into their treatment algorithm.
Theres a pattern of sweet spots emerging.
They are first doubting ankle were small heavily calcified arteries often require almost immediately after standard angioplasty.
Second areas, where the vessels branch such as the tip, you apparel needle trunk or keep BT.
And the proximal interior tibial tibial arteries tea.
Both of which carry high risk of complication when using other technologies.
And third when there is only a single best where many to provide blood flow to the foot referred to as single vessel run off.
In which case safely restored and flows what determines whether a patient gets to keep their foot or not.
The addition of export to our portfolio is providing even more diversification of vessels to our commercial procedures.
We spent a lot of time discussing below the knee over the past six months and for good reason.
But it feels like this has led to an under appreciation of how meaningful the above the knee special opportunities are for us. So I'd like to remind everyone about the spectrum of vessels, we can treat and in many cases uniquely treat.
The femoral popiel arteries run the length of the side and then beyond the D.
Well these vessels are somewhat less calcified than most of the other vessels treat with about 50% allegiance being calcified.
There are still close to 700000 procedures in this group each year the largest of the peripheral sub segments.
Given the procedure volume, yes, a phase the bread and butter her most peripheral technologies.
And we're seeing a great deal have you'll use in USA. Despite the large number of alternatives for this segment.
I feel tends to be used in the toughest most calcified subset of lesions, where our technology helps customers achieve a great lumen game and almost no risk of complications.
The public fuel artery, which is the segment behind that need is unique because of all the movement of the vessel wouldn't like bins, and it's an area where physicians want to avoid stance at all costs.
So the safe low pressure minimum this minimal to section aspect of five yield is proving to be a very attractive option.
The common femoral artery or CFA, the short bifurcated segment just above the essay.
Approximately 75% of lesions in the common femoral or calcified.
And our internal estimate is that there were over 100000 procedures annually between surgical and eventual approaches.
The common femoral has traditionally been overlook as a separate market opportunity because this vessel has long been the purview of the vascular surgeon since surgical endarterectomy still considered the gold standard.
And accounts for nearly half the common several procedures.
Surgery has remained the preferred approach for many physicians because they want to avoid compromise or blocking the branch artery the profundity.
Which is a risk when using interventional options such as denser atherectomy.
Ideals ability to safely expanded lumen without embolic debris or high pressure dilatation resonate strongly with our customers.
The vessels that have been the most unanticipated surprise for us or the iliac artery.
Our data indicates that there are actually more symptomatic iliac than below the knee cases.
With roughly 400000 iliac procedures annually in the diseases Similarly, as calcified about 70%.
They're not a great number of safe options for treating calcifediol the ex since a preparation can be catastrophic and even managing to sections can be tricky.
Covered stents are the most common go to option and heavily calcifediol, yes, since the covering usually prevents catastrophic outcomes and <unk>.
In the event of at the section or rupture.
However, covered stance are expensive and can compromise the vessels that should ideally remain peyton since the iliac side branches, Pete blood to the pelvic area.
So using shockwave at very low pressures and letting me I'd be able crack the calcium our customers are having have learned what they can safely open up the iliac and with minimal risk of major complication.
And can then follow with the stuff I've covered or Noncovered, if they so choose.
Lastly, but still need hylenex is the large gore axis opportunity.
This is the smallest segment in terms of procedure numbers with up to 15% of nearly 300000 large for catheter cases potentially benefiting from Ivy Hill.
Well the procedure number is not as large as the other opportunities. The beauty of large for is that it is obvious to everyone would have profound benefit Chuck we buffers patients physicians and most importantly, vac committees recognized immediately but delivering it to ever transfemoral.
Christians, having to resort to alternative access strategies is just better safer and more economical.
If you aggregate all these calcified vessels you end up with almost 1 million patients in developed Endovascular markets, where shockwave can make a difference that's an enormous opportunity and we had barely scratched the surface.
Shifting gears to our field team.
We continue to get a lot of questions around the pace of expansion and planned future structural reorganization.
With the overlap and physician customers and device techniques for both peripheral and coronary use of Ivy Hill.
We're very confident in our decision to continue forward with a single Salesforce, where all territory managers and clinical specialist will be responsible peripheral and coronary procedures.
Our U.S. organization continues to execute and performed very balanced way across the country.
The field teams comprise a very managers clinical specialists and territory movies.
We envision ending 2020 with 110 to 120 professionals in the field nearly doubling to 61, we ended 2019.
We are planning to bring the majority of these hires onboard but ended the third quarter.
To ensure that most territory managers and clinical specialists will have at least a quarter to sell peripheral before the corner launch.
Internationally, we have a team of 10 direct field professionals, along with 18 distributor partners, who will be adding modestly to a direct presence over the course of 2020.
Turning now to clinical.
We spent a significant time.
And effort during the quarter building clinical evidence through both our company sponsored and investigator sponsored research.
CAD, three or 442 patient U.S. coronary I'd. He was the start of the quarter.
And the year really.
As of December 31st we had 346 patients enrolled and we continue to anticipate enrolled at the moment completing in March.
Assuming a third quarter submission and a six month review by the FDA that would lead to U.S. approval in the first quarter of 2021.
Also on the topic of Cadthree.
Earlier this week the FDA approved it continued access protocol for C.
We're pleased that the FDA was willing to grant us this additional corridor patients since a little bit it will keep the device in the hands over investigators leading up to the commercial launch.
And will enable us to collect additional data. The further supports the safety and efficacy the C. Two system.
[noise] CAD four or study in Japan started out very briskly, because our investigators said patients waiting for the travel to start.
And there were 27 patients enrolled as of December 31st.
Based on the current rate, we expect to complete enrollment of the 64 patient cohort in the second quarter.
We continue to model the timing of approval in Japan to be mid 2022.
On the peripheral side.
We restarted the randomized arm of pad three also in November and are working with sites to get through the logistics of getting the revised documents group.
Got a few new patients enrolled through the end of the year and expect the pace will pick up as some of the bigger enrollers come on line this quarter.
Since no new paper work required for the registry on pad three it pick trip back up and it was enrolling briskly as soon as we told sites that we are adding another 500 patients.
We ended the year with over 1100 registry patients.
Finishing up with a few details around our facilities and operations.
Our employer employee count at the end of 2019 was at 286 compared to 162 at the beginning of the year.
We completed a move to or 35000 square foot facility in Santa Clara last summer.
Our hiring plans indicated that we're going to be out of space by the middle of this year and you see two does as well as we expected to we were at risk of not having enough capacity and the three premiums we are running today.
Fortunately.
The 50000 square foot building next door to us had been vacant for sometime and had the same owner as our current building.
We were able to extend our current lease and entered into a lease for the newbuilding both of which now last through 2028.
We're going to convert the current building almost entirely to the manufacturing facility, taking our cleanroom space from 3500 square feet today to more than 8000 square.
And the Newbuilding will house and expanded R&D lab as well as all of a ministry of in support of function.
We anticipate that this larger footprint.
Well give us enough space for this perceivable future.
You are quite fortunate that this opportunities available to us since joining buildings as much more efficient and great comfort.
League Needless to say it was more than helpful that I've had the investor support in the follow on offering last fall since that gave us the ability to make this important long term commitment.
2020 looks to be another year, where we will be growing at a rapid pace on multiple fronts and we believe it or pieces. We put in place in 2019 will serve as a strong foundation to support the script.
With that I'd like to turn the call to them.
Thank you Doug good afternoon, everyone Shockwave Medicals revenue for the fourth quarter ended December 31st 2019 was $14.3 million, 183% increase from $5.1 billion and the same period of the prior year.
You ESS revenue was $7.6 million into fourth quarter, 2019, growing 200% from $2.5 million in the same period of last year, all of which was derived from our peripheral products.
This increase was driven by continued salesforce expansion into new territories and increased adoption of our products and.
International revenue also saw nice increase in a quarter growing 164% to $6.7 million into fourth quarter. This year from $2.5 million in the same period last year.
The main driver International revenue growth was continued penetration in or establish international markets combined with contribution from some new countries.
Looking at a peripheral products M and asked for accounted for $8.7 million of the total revenue compared to $3.1 billion in the same period of 2000 1800, 79% increase.
As a reminder, we just launched the S. Four product in U.S. in the middle of Q4 2019.
Our current every product see two accounted for $5.3 million of the total revenue in the fourth quarter of 2019 compared to $1.9 million in the same period last year, representing 181% increase.
Oliver see two revenue is currently international.
In addition, the sales of generators, most of which were international contributed $317000 and revenue into fourth quarter. This year compared to 58000, a same period last year.
Gross profit for the fourth quarter, 2019 was $8.8 million compared to $1.8 million for the fourth quarter of 2018.
Gross margin for the fourth quarter, 2019 was 61% as compared to 35% in the same period last year.
Contributors to gross margin improvement included continued improvements in production processes to drive efficiencies and greater absorption of fixed cost from increased production.
Gross margin in Q4 was impacted by set our startup costs, including equipment supplies and training.
Of our new C.E.R. three production lab that we brought online in the quarter.
Total operating expenses for the fourth quarter of 2019 were $24.1 million and 87% increase from $12.9 billion into fourth quarter of 2018.
R&D expenses for the fourth quarter, 2019 were $10.1 billion compared to $6.1 million into fourth quarter 2018.
The increase was primarily primarily attributable to clinical study costs for Cadthree I'd, he and CAD for Japan.
Sales and marketing expenses for the fourth quarter, 2019 were $9.6 million compared to $4.9 million into fourth 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 fourth quarter of 2019 were $4.4 million compared to $1.8 billion into fourth quarter 2018.
This increase is primarily due to expenses associated with being a public company and legal costs related to the IP ours.
Net loss for the period was $14.7 million as compared to net loss of $11.2 million and as same period of last year.
Net loss per share in the fourth quarter 2019 was 49 cents.
We ended the fourth quarter of 2018 with $195.3 million in cash cash equivalents in short term investments.
This number includes net proceeds of $96.7 million from the follow on offering completed in November.
On the topic of cash this week, we refinanced our existing $17 million debt facility with Silicon Valley Bank from 2018.
The new debt agreement in the amount of $16.5 million has a term a 48 month with an interest only period of 18 months.
Net proceeds after paying our current Silicon Valley Bad Bank debt principal and interest from the refinance will be $3.2 million.
Before turning to our outlook for 2020 I'd like to briefly recap for full year 2018 result.
Total Shockwave revenue for the year was $42.9 million, an increase of 250% compared to full year 2018 revenue of $12.3 million.
Revenue from us for the full year, 2019 was $22.7 million, which increased more than three fold over 2018 revenue of $7 million.
International revenue was $20.2 million for the full year 2019 compared to $5.3 million in 2018.
Representing a 285% increase.
Now turning to our outlook for 2020, we expect full year 2020 revenue to be in a range of $74 million to $77 million.
Which would represent a growth of 72% to 79% over the full year 2018.
At this point I'd like to turn the call back to Doug for closing comments.
Thanks, Dan.
I mean look back at the past year I'm really encouraged by the progress we have made.
Have you all has surprised us by being used effectively in ways, we had not thought possible and ways that make a huge difference in treating patients.
The team performed extremely well in 2019, but we know the opportunity in front of US is substantial and we're nowhere near reaching our potential.
Thank you all again for taking the time to join US today and with that I would like to open the line for questions.
Thank you.
To ask a question you'll need to press star one on your telephone to withdraw your question press the pound key again to ask a question press Star one.
Our first question comes from David Lewis with Morgan Stanley. Your line is open.
Hey, good afternoon, just a few for me.
It does just update on pad three timing when you think you can finish enrollment and I guess the more specific questions are is this going to be enough for expanded reimbursement should investors be thinking more 21 or 22 for that reimbursement I had a couple of quick follow ups.
Yeah. Thanks, David So pad three the randomize arm, we are Oh, we continue to believe that it will there will enroll a complete enrollment end of this year so fourth quarter.
At that we do not believe that that data from that trial is required for a reimbursement. So if you look at.
For example, a CPT code you need level to a evidence you don't need level three level one evidence.
Like a randomized trial.
We already have publication of have met analysis that just came out recently, which would qualify that level two way. So we we currently have based on our understanding and feedback we've received that we have sufficient publications for a four.
Occasion for a code.
Okay, and just a couple just quick follow ups, Doug on not be Teekay.
Two and a half should we expect two and a half to have a significant impact on BJ trajectory relative to three and then I'll just ask the third one right now just on DCB, it's pretty clear throughout earnings the DCB recovery, probably up 10% sequentially with most of the major DCB providers any impact you've seen in the channel relative to a DCB. So those two and I'll jump back in queue. Thanks.
Yeah, No we're not seeing yes, we are seeing a.
Dcbs are doing what kind of what we had predicted they do they would rebound not all the way to where they were 18 months ago, but certainly north of where they were.
Nine months ago, when they were really in the in the.
The their low watermark.
That does not where just as it when it was.
The high end 2018 that didn't really affect us lower in 2019, it didnt affect us is not.
The the slight incremental growth does not seem to that I had any impact on our business one way or the other.
In terms of below the knee.
We we decided to launch the two five first of all because it performed very well in the limited launch.
And it was quite evident that our customers really felt more comfortable in some of those smaller more distill lead the vessels, where the two five even though even if the threeo would have been adequate and.
And sure enough our sales mix is going to be pretty heavily biased towards the two five trio.
Versus a versus the 354 out.
It's too early for me to say Oh, well, if we didnt have to five we would have lost whatever 20% of the opportunity I do think it's always easier to use the device of your physician if you feel more comfortable and if you feel like if the right size.
So it does eliminate a potential sort of anxiety and reluctance to use the device by having the two five it's not it we're not we'd always hoped it would launch it. So it's it's not materially changing our expectations for the device where we remain.
We remain bullish and on us for.
Thank you. Our next question comes from Bob Hopkins with Bank of America. Your line is open.
Oh, Thanks and just.
Just wanted to follow up on that a little bit.
I appreciate the opening commentary on all the different opportunities, but this is the.
This news when a blow the needs of just a couple of more you're just.
As Doug.
Help us understand a launch.
What percentage are counts as you get into in the quarter and.
And I know you gave us a nice commentary and where it's being used today, but from your early experience. What do you think of the prospects for this to become.
Kind of more of a workforce across multiple multiple different disease type of any.
Yeah. It does it.
Where does seem to be.
In in the U.S, we've had to date it works very effectively throughout the.
Lower leg.
Well, what we what we have sought to understand is.
In part because we want to we do understand our there are there certain locations that were does work better and it and the answer is it seems to work well.
Never use it.
Well, it's always easier just as with common femoral, we discovered from a both the clinical application as well as the sales strategy targeting that location. It it was easy or to get physicians to think about hey, I really don't have a good solution there.
Similarly.
Sort of distal lesions down around the ankles or some of those bifurcated areas up at the at the sort of further up the leg.
Resonates pretty well with physicians because as they think about it they realize those are areas, where they are anxious or really didnt when using other technologies.
Yeah, we've we've not talk about and we're not.
We were sort of not ready to talk about how many of ours sites as a percentage we're in yet with us for although.
Certainly the the we're encouraged by the adoption and it's a lot easier to get into sites that already have them five because they already understand.
The value and utility of Shockwave and we've already got contracts in place in the likes of so thats. Our our our initial pushes is almost six with them almost entirely going into sites, where they are you shockwave because they're they're they're receptive and and we're certainly encouraged by the early the early.
The early adoption.
And then.
A quick follow up can you just.
On a different topic actually on reimbursement just give us your latest thoughts on.
Timelines for when you think you there could be incremental reimbursement available on the peripheral side and how long it'll take on the coronary side and also just how much of a priority is that process for you right now.
[noise] organizationally its.
There are there are few of us who spend a significant amount of time working through the the.
The effort that it takes two to.
Fairly long term effort that it takes to to get reimbursement, but it but it's it's not like we have.
We turn the whole sales team around on reimbursement, there's nothing they can do on that so so we have a small core team that.
Has worked on things like lets make.
Let's make sure we've got the although publications that are required so check that's been done.
A slightly larger team working to make sure that we have good relations with the various societies.
And and we think we're we're in good standing now with a with the sort of four key societies that that the.
I have to have to coalesce around whatever they're going to do on it in the lower extremities, So hccs Guy SBS that's IR.
And and that that was a that was a big improvement over where we were say.
December of 2018, where we really had.
So we're very very fledgling relations with those societies I'd say, we're in we're in good shape right now switch, which at least ensures that we haven't seen a table.
And then once you have those two pieces in place the perhaps the most important thing is to make sure you have have significant.
Energy and enthusiasm coming from the members of the society. So if physicians really like your device.
ER and make it down to the.
The leadership of the society that it would be very helpful for them to have incremental reimbursement or that sort of necessary because it doesn't matter. If you have good publications of the docs don't want to use the device.
The societies aren't going to.
Really work on your behalf.
So we we certainly believe we're in very good shape on that front.
So the sort of building blocks are in place now.
It is a.
It takes time, we wanted to have all others in place for the moment when the societies. We're told it was it was time to reassess the codes.
No.
It's now being talked about by others in the field that those codes are going to be going under a reassessment, we became aware of that last year.
But there was never sort of a formal announcement that goes out it's more word of mouth and Unfortunately, we were we were in the loop on it. So at least we are in a position where we have the pieces that you need.
The timing for that.
A reassessment of the lower extremity basket, though however is.
Is likely to be fairly drawn out the because you have for societies that have to agree and they have to agree.
And then rock committee gets involved it's a it's more likely than not that it is going to be measured in years not quarters before theres a final new basket as they would describe it.
They have multiple.
Things that have to worry about they have the existing technologies that they have to a that that they obviously want to protect and they hope don't change dramatically, but they also have new technologies like Shockwave, then dcbs that are not currently incorporated.
And the societies are very very careful not to.
Tell companies like ours, what their plans are because they have to be very careful a they don't know what the consensus is gonna be and b. They recognize that that it's a it's fairly.
Yeah could be very meaningful if they tell you one thing than they do a different thing so.
They collect input and then go off on their own into tough decided what they're going to do our expectation is.
There will be a proposal to come forth later this year from the societies, but it will likely be sort of end of 2022 potentially before they before there's a final basket.
Okay.
Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Your line is open.
Hey, guys, it's Larry Yeah, Thanks for taking the question.
Doug just wanted to start with the 2020 guidance and looking for a little bit of color. You know you up the midpoint of the guidance assumes about 75% growth year over year any color on U.S. versus though U.S.
And peripheral versus coronary and maybe Dan any comments on the cadence the growth in 2020 is there anything we should be thinking about and I had a couple of follow ups.
Yes, who will go we'll tag team on that certainly U.S. per well U.S. growth will be all peripheral obviously since we're not anticipating coronary approval till the end of next year.
We believe S. Four will be nicely stimulative to that growth and and as for we didnt.
We are there will be a little bit of elsewhere in internationally, but because of the new MDR. The the improved us for with the thicker bloomed material won't likely get approved until later this year, which is more than a year. After it was approved in the U.S.
Fortunately all the other devices are approved and and commercial internationally. So we have the our process isn't affecting us there.
Will pick up some international peripheral, but it'll be selective by by country and less meaningful than the than the coronary a driver internationally.
So it's not yeah, we seek to have to can you continue to have a fairly balanced business between us and international with peripheral driving U.S. and international being driven by coronary and geographic expansion of coronary.
As far as cadence there I think you're going to see a nice continued progression as we continue to penetrate.
Internationally and in the U.S. and we're bringing on additional sales resources, which will add add to that so you'll see a nice progression.
As the year over year goes on.
Thank you and then two two quick ones for me what Doug.
The CAD Ah I thought it was CAD three or was it surface CAD two or three but the continued access protocol you mentioned in your prepared remarks, how meaningful could that be in 2020, and just lastly, you know the large bore access opportunity you talked about that being you know dice for account openings. How are you measure either.
You know for example, you another six 700 TAVR centers in the United States How're, you doing penetrating those accounts relative to maybe non caliber accounts help us understand now that large that opportunities is helping you. Thanks for taking the questions guys.
Yes. Thanks.
Yes, so it at that a large for access.
Which is which has traditionally been very TAVR centric, although we're now.
Using a lot for access as a as a key strategy for our vascular surgery.
Vascular surgeon efforts, because they'll use large bar for their evolving tiv AR devices.
So we've had a few symposia recently on that that have been.
Really positive so.
Large bar isn't just PEVAR however.
It it but pretty tower was certainly a key driver and continues to be a key driver.
You know where.
We are.
We know where all the tower sites are we certainly target TAVR sites as a as a an entry point to get into the into the accounts since most of them pretty much all of them also do.
And vascular work.
And and so we're in we're in more than half, but but still have meaningful.
Opportunity to expand to two additional power sites as well as now using that same sort of large bore access type strategy for the for the Vantiv are which is a and obvious benefit for the vascular surgeon just as the pre TAVR isn't obvious benefit for the a further.
Cardiologist.
In terms of the continued access protocol.
Asked how significant it would be for this year.
And I don't know if I fully understand the question, but I'd say it how many doesn't start Oh, yeah. Yeah. Yeah. Yeah. It's it's a we can we can treat up to 500 patients.
That but it's still constrained by the same inclusion and exclusion criteria. So we got a lot of screen failures because it as with every trial you you you have a.
You have to screen out certain patient population. So so this will be subject to those same inclusion extra inclusion criteria. So if it would.
It would not.
So I do it's hard to fathom, how we would possibly exhaust this 500 patients I don't think will come anywhere close between now and the time that we get approved but it's so it's almost like an unlimited.
Incremental pool of data that will have a at the time or soon after the time that we get approved.
Our what what's what we think is most important about it is I mean, having more data is great.
It will it will strengthen our dataset, but but a it became clear listening to some of our sites that that they felt it important that we keep the device in their hands between now and launch so that.
We would launch with familiarity and momentum versus sort of out of sight out of mine for a year.
Great. Thanks for taking the questions.
Hello.
[music].
Thank you. Our next question comes from Jason Mills with Canaccord Genuity. Your line is open.
Great. Thanks, Thanks for taking my question, Doug can you hear me okay.
Yes, and congrats on the Chiefs again, Jason.
Thank you. Thank you very much strong proud I Oh.
I want to say [laughter] I wanted to start Oh, U.S. corner, so sequentially, it's double what doubled from the first quarter fourth quarter sequentially been tracking just under 3 million a quarter.
Could you give them talk about how that progress is got law of large your numbers, but great momentum. There. So how should we think about Youre 2020, cadence and Oh U.S. coronary and then who does that does that trajectory get impacted at all of you should be the data for cash.
Battery the U.S. study once it's once its published trucks, just help us out a little bit with respect to I know the opportunities big <unk> as the numbers get larger.
How should we think about the cadence Oh U.S.
Yes so.
The.
I first I'll answer the data question first.
The.
The data from CAD, one CAD, two and dozens of single center type publications.
I think as dispelled any.
Doubt about weather.
Beyond the Coronaries is safe and effective that's that's it's.
Sort of accepted and given particularly internationally, where they are the so many of the K wells now have the device and have access device and have had a chance to use it in.
Inflating something to four atmospheres, having of having the lesion just just sort of pop open and never any embolic debris issues.
Don't think.
That CAD three data will do anything other than validate what that which they already know.
And that of course presupposes that CAD, one in CAD to our AR.
Our good predictors of what we'll see in CAD three and the inclusion exclusion criteria are roughly similar so I don't know why they wouldn't be.
We'll see continued expansion of of C internationally.
Both.
Penetrating within existing countries within existing centers.
Some of this very small countries like I think of these Denmark as an example, before we're in.
We're in all the centers as well, but but all the centers, meaning like five or so so in some of those smaller countries, where where we're well distributed the question that is how well penetrated our way.
And in those centers, that's where we and.
Working with our distributors look to turn our attention too.
A two peripheral large more access and the like sort of the next sort of the next bridge to.
Growth the.
We continue to add geographies. So we'll expand within a geography is where we aren't fully penetrated which is the vast majority of the countries where we are.
As well as adding new geography is like we just added India earlier this year.
Which which we are.
Optimistic about thus far at least based on the feedback we've gotten large population obviously great positions.
But also the device seems too.
Seems to resonate well, which makes sense, it's a heavily calcified population due to the significant.
Diabetic issue in that country. So, we'll we'll we'll we envisioned international growth being consistent and and meaningful for not just 2019 2020, but but.
Into coming years, as well because we have yet to.
From from from all accounts, we've yet to reach all the geography as you need to reach and even within the geographies. We we don't envision that flattening out for some some time, but but less stimulated by specific event like like Cadthree data.
Got it that's helpful. I guess I guess another way to ask it is this your it was just over a third of total revenue that being due to an all that obviously outside the United States 2020, it'll be all outside of United Since again should we thinking about it as a mix of say the midpoint of your guidance to be.
Something similar.
The 220 19.
What what internationally I mean international will continue growing coronary what international Doesnt have because of that the well first of all the.
MDR delay on on on S. Four but also just a procedure volume for peripheral is.
Not as high internationally is that is as it is in the U.S. So international will be largely a coronary growth still whereas U.S. will get sort of the additional boost of of S. Four.
So the while we're well we anticipate having a nicely balanced business if it.
It's reasonable to assume that will be biased a little bit more towards the U.S. because of the incremental S. Four.
Revenues that the U.S. picks up that international doesn't doesn't get to benefit from.
Okay, Great got it and then.
Seems like you're trying to avoid giving specific numbers for S. Four versus them five but could you talk about.
Sort of as a mix of the of the revenue in 2020.
What what S four might contribute as a percentage of let's say the U.S. business.
Or perhaps you know contextualize its best you can so that we can understand maybe the mix between your above any business in bordering below the knee business. Thank you.
Yes.
So you had the I think you'd understand what we don't want to do as we don't want to put ourselves in a position, where we're saying our our business will be X percent below the knee and y percent above the knee and then suddenly.
Started trying to drive our sales team to hit a specific number when maybe the best thing to help the most patients is wow, everybody wants us using us in the common femoral well yeah, but the problem is now if I overshoot on M and I don't quite hit what the street thinks I'm going to do on US for then then people get nervous that esports not doing well.
So I can say as far as doing very nicely, we're very encouraged by the adoption thus far.
But it is early and.
And folks are sorting out how they'll how they'll use the device we were.
We I think what early experience so far over the past few months is that it is validating our perception that our our.
In our peripheral business is healthy or with the combination of S. Four and M. We do have more ability to address the specific needs of our existing customers as well as.
To provide a.
New option for physicians, who are frustrated with their below the knee.
Therapeutic options and were able to now treat multi level disease.
More often because there you're you will often see people treating inflow disease in the best Epay or public Appeals and then they'll dropdown and be doing work in the two bills.
And until a few months ago, they might use us for inflow, but then they would have to go knew somebody else in below the knee and now now we're getting them something that.
As an opportunity to treat both that and potentially sort of and up sell for us because now they can potentially use to two shockwave catheters, one M and in one of us for.
So given the procedure volume and given the procedure volume of all of those above the knee vessel that we talked about.
It will we don't know we don't see a time when when asked for ever sort of surpasses M. So it's going to be a percentage of the M. Just because they're just fewer below the knee procedures.
But as you pointed out to me there are also fewer good options below the knee so.
We are where we are.
We're quite we're quite Inc., we were quite pleased with the clinical response the device. So far we surveyed all the anecdotal reports that come back is ours are while this is a fantastic device for this case.
But with hundreds of thousands and sort of a bump.
Several times more above any cases between iliac, some common terminals and as a phase it's going to be hard for us for to quite catch up with that even even though we were hopeful that we haven't even higher penetration below the knee than we have have been above the knee as a percentage of the cases.
I.
Thank you very much I'll get back.
Thank you and we have a question from Adam made her with Piper Sandler Your line is open.
Hi, guys. Congrats on another nice quarter here and thanks for taking the questions.
One on BTK from me I know, it's early but just curious of adoptions being driven by.
Share taking or if it's just more patients that are being treated due to the use of S. Four in the clinical profile I use it market expansive.
And then we've also heard that there are some cases being done in tandem with atherectomy. So just wondering if you could put a finer point.
Or percentage on those cases that are getting both products not a follow up.
Sure.
It's a it's a.
That's a low percentage of the cases I don't know I don't know sort of how far below 20%, but but but below that of of combo cases.
But what sometimes hard to differentiate is when when we get used with atherectomy, whether it's below the knee or above any.
How often does that done done because there's clear clinical benefit to combine the devices and housing is it done because.
You got the incremental reimbursement with atherectomy that that brings more cash into the procedure. So you can clinically rationalize using atherectomy use it really small bird create a whole and then you shockwave to sort of get you get you lumen game. So is it feels ethical clinically, but it also feel.
It was.
Helpful financially to to combine the two devices into into the procedure.
Although the the incremental margin from out from that atherectomy predict if you're going to do something like use a filter also in the case is is negligible.
But I do think there are certainly times when.
We're not we're a great device win win win.
Once you get to get to get across but there are some pretty tight narrow lesions, where atherectomy is helpful. At opening it up to then to then had shockwave.
In terms of.
The.
Reasons already or instances when when.
Physicians are electing to use the device.
You know balloons are still the majority of cases below the knee atherectomy is less.
Adopted less below the knee than it is above the knee in in large part because well first there are fewer atherectomy cat devices. These below the knee or companies itself to visibility, but but when you are really worried about.
Embolism or the section or perforation in some of these patients you're going to bias towards.
The the safest alternative in the safest alternative has been traditionally.
Balloon angioplasty and now we we can provide them something in.
And equal or safer embodiment with the invest your lithotripsy.
But we we obviously have the the cut the added benefit of being able to risk allocation. So.
My my.
My understanding and it's sort of anecdotal feedback because it's not like sites tell us.
Mike I cancel the atherectomy case and decided to you Shockwave, it's more like.
This case looks like a great Shockwave case, I'm going to I'm going to use it so but.
My our impression is that most of the case most of the ins used cases were getting our sort of would've been a balloon.
And they're going to use shockwave instead, so in that.
Definition, it I would I think you'd probably call that sort of market expanding versus share taking at least.
As I think you would look at it.
Okay really appreciate that color.
Doug and then maybe just want for Dan I think you guys talked about bringing most of the new.
U.S. sales reps I'm at the end of Q3, just hoping to get a better sense for level of Opex spend this year and then ended 2021. Thanks, so much for taking the questions.
Sure we're going to continue to as you noted expand pretty significantly on the sales front.
So you're going to see definitely ramp as we expand.
To Doug's point, we're looking to close the doubling the but the team so you'll see a continued ramp leading up to coronary.
R&D, we've still got to clinical activities we've got.
Cadthree, we've got CAD four we've got pad three.
So we're still going to see some spending in 20 related to support those clinical activities. We've added a couple on R&D teams to work on the pipeline stuff. So we'll continue to see some R&D spend increases as well in 20 DNA will be fairly modest.
Well add some accounting and legal support as we grow the business.
And as needed.
Yes, and we've got a sales training class across the hall, they really wanted us to do the call from that room. So they could introduce some second engine.
We said not this time, maybe next time.
Thanks, guys.
You're welcome.
Thank you and I'm showing no further questions at this time I'd like to turn call back to Mr., Doug Shaw for any closing remarks.
Thanks, very much and thanks, everybody for for joining us for the call. Today. Obviously, we're we're encouraged by the foundation, we were able to build in 2019 and and quite optimistic about the prior prospects for 2020 and beyond and.
And I appreciate all the support and interest that the you all have shown thanks very much for your time.
Okay.
Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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