Q1 2020 Earnings Call
[music].
The only mode, we will be facilitating 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 done God Shaw, President and Chief Executive Officer, Shockwave, Michael and Dan Puckett, Chief Financial Officer Chocolate Naco.
Earlier today Shockwave released financial results for the quarter ended March 31st 2020, 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 this 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.
1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including without limitation statements relating to our sales and operating trends business in iron prospects financial in revenue expectations and future product development and approvals are based upon our current estimates and various assumption.
These statements involve material risks and uncertainties, including the impact of covered 19 pandemic.
Could cause actual results or events material differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements for list and description of the risks and uncertainties associated with our business. Please refer to the risk factor section of our annual report on form 10-K on file with the FCC and available on Edgar and in our other reports fired filed periodically with us he see.
Shockwaves disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information is accurate only as of the live broadcast today May 12 2020.
With that I'll turn the call over to Doug.
Thanks Debbie.
Good afternoon, everyone and thank you for joining us today.
I hope that all of you and those around you are healthy and our successfully navigating this challenging time.
We greatly appreciate your interest in Shockwave.
Before we begin the discussion of our results I would like to over a few comments on the cobot 19 pandemic.
We've been closely monitoring the situation not only for the potential impact to our business, but for how it may affect our employees physician customers patients and the global community around us.
And I went to acknowledge and thank the healthcare workers. So many of whom we consider our friends who had been on the frontline fighting for us all.
The past couple of months have been far from though.
But the Shockwave team has demonstrated the creativity flexibility and dedication to continue moving us forward safely with minimal disruption.
Which will enable us to serve our customers and their patients well into the future.
Following me up my update I will turn the call over to Dan to discuss our financial results in more detail I will then close and we will open the call for your questions.
To start I will review our recent highlights.
We reported 15.2 million in revenue for the first quarter.
Which was up 109% over the $7.3 million, we reported in the end revenue in the first quarter 2019.
And we ended the quarter with $170 million in cash.
We completed enrollment and Cadthree, our U.S. pivotal trial for the coronary indication in March.
In early April we completed enrollment and CAD for our coronary pivotal study in Japan.
We made good progress expanding our U.S. field team and ended the quarter was 78 individuals in the field.
Up from 61 on December 31st.
We launched see two in India that the India alive meeting in February.
And received a very positive response, which is encouraging given that there are over half a million coronary interventions in India annually.
Now we would like to provide some perspectives on market dynamics.
We started the first quarter at a very encouraging pace.
It would have landed us above previous pre Covance Street consensus on both revenue and gross margin.
Tobin was beginning to impact procedure volumes in early March and they slowed precipitously in almost every geography after March 13th.
Well some of our cases did continue.
The majority were delayed or canceled.
The ABL cases that were still being formed and performed albeit at a reduced rate, we're TAVR access and critical limb ischemia in the U.S. and urgent coronary cases internationally.
The peak procedure volume for shock wave in the U.S. appears to have been in late February.
And by the second week of April the volume bottomed out at roughly 60% below the February peak.
In the second half of April and into early May we have witnessed a modest volume return of pad cases.
But it has been extremely localized with some geographies becoming quite busy.
And other seeming to have no intention of restarting until late may at the earliest.
Fortunately.
The conversation about ramping up elective procedures has universally gone from if to win and we now are seeing case is scheduled for the second half of May which is a noticeable improvement.
Ultimately our customers believe the vast majority of the patients they had planned to treat pre cove. It will still receive the treatment they needed.
But we anticipate it will be a few months before they can methodically work through the backlog rebuild the pipeline of new patients and ultimately return to what one would call normal.
The early evidence incentives that are beginning to restart suggested large for access and critical limb ischemia or see alike cases return most quickly in the U.S. followed by more standard Colocation cases.
The fact that CLL I will be top of mind for our customers is good news for as far below the knee device, which is still early in its rollout.
In addition to below the knee and larger poor cases.
We also believe that common femoral cases are likely to pick up a bit faster since common femoral diseases, often more severe and the standard of care is surgical endarterectomy, which requires hospitalization and suffers from a reasonably high complication rate.
Generally.
The ability of I'd be able to reduce complications mitigate runaway costs reduce the need for inpatient treatment and shorten length of stay is likely to be highly valued as physicians prioritize what procedures to do and decide what devices to use for those procedures.
Internationally the impact on procedures was very similar to what we saw in the us with some significant disparities as we look country to country not unlike what we are seeing between states in the U.S.
As in the U.S. the lowest procedure week appears to have been the second week of April with a modest increase week over week thereafter.
We believe the return of procedures will also resembled the U.S.
And be slow for the first couple of months as mechanisms for managing patients are sorted out, but then it will become busier leading into and through what does ordinarily the slow summer months.
Like our U.S. pad business, our coronary application often enables cardiologist to treat complex calcified patients via a percutaneous outpatient approach instead of undergoing surgery and remaining the hospital to recover.
So stepping back a bit we grew 109% in the first quarter. Despite the considerable covert headwinds in March and while the wins grew even stronger in April.
We are starting to see see them some side somewhat globally, and we feel that the myriad benefits of Ivy Hill that positioned us. So well just eight weeks ago are still present, and we'll auger to our advantage as the patients return.
Safe simple and effective is a great combination in any era.
Operationally.
We have continued to higher but very selectively since mid March.
And we put many new hires on hold until we had a better sense of how long and deep the procedure reductions would be.
And by extension, how meaningfully Cove, it would impact our business.
As mentioned previously at the end of March we had 78 professionals in the field in the U.S. versus 61 at the end of 2019, which is a bit ahead of where we expected to be.
We continue hiring additional field personnel when we identify candidates who meet our very high standards and we are still planning to end the year with more than 110 people in the field than us.
Our team has continued to see port our customers, albeit from a plate distance.
And it is great to see the strength of the relationships our team has with the clinicians.
This will be critical to facilitate access to hospitals as new policies are implemented.
The downtime also enabled us to conduct extensive training programs across our various applications.
And to train more thoroughly on our growing library of publications.
Trapping dozens of type a sales professionals in their homes for two months and having them train and plan every day has not been pretty.
But our team is rested better prepared and eager to get back to serving our customers.
One of the most impressive things I've witnessed recently is the dedication and commitment shown by our operations quality and R&D teams.
They can't do their work from home and while most of the country was hunker down on zoom. These groups Didnt Skip a beat.
Our R&D team advanced our pipeline projects at the pre covert rate.
And on the manufacturing side, we were able to cut overtime and yet output actually increased in April.
The extra inventory, we have built gives us a helpful cushion if demand returns rapidly or should our new clean room take longer to permit and build them we are expecting.
Turning now to clinical and regulatory.
We were very fortunate to be able to make considerable progress with our key trials this year.
Starting with Cadthree.
Our U.S. coronary I'd.
As of the ended the quarter, we had enrolled 384 patients and we only needed 370 to be valuable patients to satisfy the pre specified statistical plan in our protocol.
The FDA agreed that we could submit with at least 372 patients and we're now working with sites to follow up on the last handful of patients monitor the data.
And prepare the final module of the PMAG.
Based on our current work plan, we continue to anticipate a third quarter submission and a six month review by the FDA, which would lead to U.S. approval in the first quarter of 2021.
Cadfour our trial in Japan also completed enrollment.
Entered the credit of our investigators they were able to enroll through the covert escalation.
We will be working with our sites and PMTA to stay on track with our submission and approval timelines, which continues to suggest a mid 2022 approval in Japan.
On the peripheral study side the pad three trial, both registry and randomized arms.
Were initiated in order to help demonstrate the utility of Ivy Hill and to develop the market for the device.
The registry arm of pad three has enrolled over 1200 patients.
We now have a considerable cohort of patients in this study treated above the knee with our M device.
So we have elected to narrow the focus and will now and we will now only be including patients treated with the S. Four going forward.
The randomized arm of pad three was just starting to come back online following the DCB debacle, but.
But then cove it arrived in the trial was disrupted again.
We have taken advantage of this opportunity to reassess how to approach the study.
In determining whether different strategy is warranted given the considerable resources that requires and the challenges of managing studies during coated.
The goal of pad three was it was two statistically validate what we see in the clinic every day at Ivy Hill delivers excellent lumen gain with minimal to sections and reduces the need for stance.
We believe the outcomes from this study will be helpful to our commercial team. So we discussed the idea of stopping the trial with our principal investigators.
And collectively decided to do so after the final pre scheduled cases are completed this week.
We will begin the process of data luck and then map out when this results of the trial will be presented likely early next year.
We're pleased to have enrolled over 300 patients in a rigorous randomized controlled study and appreciate the effort of the investigators.
As we look to move through the next phase in our customers returned to treat their patients. It is important to note that through these challenging months, we've held steadfast and we'll Maine and we'll continue to maintain our focus on our organizational priorities.
To provide a safe productive environment for our employees to optimally serve our customers and their patients.
To continue to generate clinical data to demonstrate the unique benefits of Ivy Hill.
To prepare for our near and long term growth by thoughtfully investing an expanded capacity and enhanced capabilities.
And to advance the next wave of innovations to further expand the addressable markets for Ivy Hill.
With that I will turn the call to Dan.
Thank you Doug good afternoon, everyone sharply medical's revenue for the three months ended March 31st 2020 was $15.2 million, having 9% increase in the $7.3 billion missing agreed with the prior year.
You must revenue was $7.8 billion into first quarter, 2020, representing 114% increasing seeing positive last year.
This increase was driven by continued sales force expansion into new new territories increased adoption of early in the price.
International revenue was $7.4 million thing, 104%, it's the same period of last year.
Our international growth was driven by continued penetration in are established markets combined with geographic expansion.
Looking at or product lines, our peripheral products M. S. Four accounted for nine point when new doors. The total revenue in the first quarter this year.
Compared to $4.4 million missing period of 2000, 1900, 5% increase or coronary product see two accounted for $5.8 million at the total revenue in the first quarter of this year compared to $2.7 billion in the same period of last year.
Presenting a 117% increase oversee to revenue is currently international in addition sales generators in stairs sleeves contributed $300000 in revenue in the first quarter 2020.
For the $200000 same quarter last year.
Gross profit for the first quarter 2020 was $9.5 billion compared to $4.2 million into first quarter 2019.
Gross margin for the first quarter 2020 was 63% as compared to 58% in the same period last year.
Contributors to gross margin improvement included continued improvements in production processes to drive efficiencies.
In greater absorption of fixed costs to increase production.
Total operating expenses for the period were $25 million, 74% increased $16.4 million in the same quarter last year.
R&D expenses were $11.9 billion compared to $7.5 million in the same period of last year.
The increase is primarily driven by clinical study cars for Cadthree, Heidi and cared for in Japan and increases for R&D headcount programs.
Sales and marketing expenses were $10.4 million in the first quarter this year compared to $5.9 billion in the same for you to prior year.
The increase was driven by sales force expansion in the US in your name machine General and administrative expenses for the first quarter. Two does 20 were $6.2 million compared to $3 million, but the same period last year.
The increase is primarily due to expenses associated with being a public company and legal costs related to the IP yours.
There are obviously many expenses that we will not realize as travel trade shows in some trials were delayed or canceled in these reductions in spending in some areas have given us the ability to continue investing in others such as inventory build in product development, while most importantly, maintaining are valuable workforce financial security.
We were not able to precise precisely predict the impact included 19 in our business in the near term you.
We do know demand is being affected in the second quarter, and therefore anticipate margins will come down in the quarter due to continued fixed costs allocated over decrease product revenue.
We then expect a gradual recovery through the third.
And into the fourth quarter 2020.
Net loss for the first quarter 2020 was $18.8 million compared to net loss of $12.8 million in same period of last year.
Loss per share for the period was 59 cents.
During the quarter, we spent $4.7 million and capital expenditures, including $4 million for the Buildout for new facility next door to our existing facilities and a clearer which released in the fourth quarter 2019 to facilitates expansion in production lab space in Houston building and we ended the quarter with 170.4 million.
Cash cash equivalents in short term investments.
As we announced last month, given the uncertainty around the global environment in economy, we have withdrawn our revenue guidance for 2020 fiscal year, and we'll revisit the topic when appropriate.
We are confident in the proactive measures we've taken as a company to address the pandemic and its impact on our health business into our overall wellbeing, including restricting travel reporting all but exempt employees work from home.
We will continue to monitor the external environment to ensure we managed business in a fiscally prudent manner and we have identified multiple levers that we can pull to slow down or spending should the procedure and be slower than we expect.
Our employees in technology or two most important assets and their strong cash position is an asset we are extremely fortunate to have one that we do not take for granted.
We are running our business during this unprecedented time with a keen high on all three of these essential pillars. As we continued builds for the future at this point I'd like to turn the call back to Doug for closing comments.
Thanks, Dan.
We know these are uncertain times for us.
And I want to assure you that we are dedicated to doing our part to support the health and wellness of our team our customers and their patients as we continue our effort to transform the treatment of complex calcified cardiovascular disease.
Like everyone else. We've spent the past three months geographically separated and spending way too much time looking at one of those spaces on a computer screen.
And yet our team has come together and has demonstrated that they can execute in service of our customers. Despite considerable adversity.
Unfortunate and proud to be associated with such an impressive group and such a remarkable technology.
Thank you all again for your support and for taking the time to join us today.
Take care of results can be well.
With that I'd like to open the lines for questions.
Thank you as a reminder to ask a question you want me to press Star. One then your telephone we ask that you. Please limit yourself to one question and one follow up question. You May then return to the Kim to withdraw your question press the pound team. Please standby, while we compile the culinary roster.
My first question comes from David Lewis with Morgan Stanley. Please go ahead.
Good afternoon, and congrats on a kind of a solid quarter given the environment.
Just stay.
For me, Doug and Dan just starting off thank you talked about sort of which procedure successor, which vessel beds are more durable than others I Wonder if you think about.
[noise] access and asset say more broadly do you think both those vessel vads can get back to some sense of normalcy by the fourth quarter.
Yes, Thanks, David.
I think the access will go well come faster.
'cause, it's being driven by E.
Eve our teams are.
And TAVR all of which.
We'll we'll break fairly high as.
Positions are trying to figure out which appropriate patients are prioritizing, which patients are choosing to get treated.
SFS a standard Colocation, we think will be sort of as you think about all the vessel vessels, we treat that'll probably be the one that takes a little bit longer because it's like paying its not like salvage.
Interestingly.
One vessel I didn't really talk about much in a well all in our script was not just iliac for.
For access, but iliac symptomatic, we it that was that remain surprisingly durable.
It has remained suppressing the durable as a percentage of our cases so.
Probably because were.
It's the it's the inflow for for the legs and if you've got to treat you got to treat it.
So we think in order of sort of sequencing it'll be access cases critical limb ischemia.
Then common femoral and iliac and then the laggard will be yes hefei.
It will feel more and more normal in the sort of late third quarter into the fourth quarter, we think unless there's a severe double dip or something like that that we're not anticipating.
But.
But its but we'll we'll SF baby all the way back to where it was at its peak in terms of total procedures.
Not likely until the fourth quarter, and but hopefully in the fourth quarter. It is.
Okay, very clear and just two quick ones for me as well. So one you mentioned some pricing commentary Doug it's interesting a lot of medtech companies aren't talking about the impact of coven on pricing. So any specific reason why we should be thinking about pricing for your business or was that just abundance of caution you just had three.
Still gets you those.
Given that is being started still gets you. What you intended added pad three and then just not related question on coronary you kind of indicator you still higher to same number ratify the ended the year at 110. So should we think about the coronary launch not talking about the quantification, but just qualitatively whatever the coronary launch was supposed to do in 20 and 2021.
Do you still think you can sort of deliver that type of number or is it impacted at all by the pacing of rep hiring this year. Thanks, so much.
Yeah, I think up and we're not seeing any.
Any effect on pricing.
But.
There are lot of things that have changed in the in the world on a daily weekly basis that we had an anticipated. So just had an abundance of caution.
There are things that could change in the feature that we're not anticipating and certainly.
Our pricing has been remarkably stable since our launch our price in the U.S. has not budgeted inch and we don't anticipate it will.
And internationally pricing is just a little more varied because you've got the distributor margins as like so we're we're not expecting any impact on price as a result of covered we we treat patients generally for whom other.
Options are not great. We can do it safer more effectively and more simply than other other options predict in cases, like large where access and corners in like so.
No no expectation for pricing change in terms of rep hiring.
We were looking at sort of a normal distribution this year centered around the middle of the year in terms of hiring ramping up in the first quarter with.
Bolus of hires in the second third and then tailing off in the fourth.
I would say, it's going to skew now it will skew third fourth we did.
Other than expected in the first quarter. So we we got a head start we are sort of every week or so we.
Look at where we believe cases are coming back online and where we are stretched a little thin and we we agree okay. Let's go target a clinical specialist in that area or a territory manager that area.
So our our we're filling our roster just a little bit more selectively versus having a big training class of 10 15 people at a time.
We have not altered our expectations for next year. We we are we're fortunate we've we've.
Attracted some incredibly talented folks and.
Bill will get them a little bit later, so they'll have to catch up faster, but we we fully expect will have full capability in time for the coronary launch.
And we we.
We're we're already hearing that coronaries are starting to come back a bit.
Talking to my friends, who are currently selling.
Coronary devices, there, they're seeing a rebirth after the sort of strange pause from.
STEMI, we're expecting to come back online here in coming months in Europe for Coronaries, and we expected we fully back online.
And then more like it has been traditionally well one so once we get approved next year.
Thank you. Our next question will come from Robert Hopkins with Bank of America. Please go ahead.
And Doug and Dan This is a Kyle Betsy on for Bob, but just two quick questions I just wanted to get a sense.
Yes, this earlier, but as the rollout of BTK been impacted all at all by coded just wanted to get some broader viewpoints on how we should think about.
How you're conducting your market development efforts more broadly in light of co that and how much you think the current environmental set you back as you grow into 2021 and beyond then just had one quick follow up after that.
Sure Yeah, the well certainly.
We all as an industry have been impacted by the challenge of challenges.
Faced by our customers first and foremost and their ability to manage their their facilities and.
And do they do cases, when they can et cetera, So 10, and our ability to therefore access the accounts has been challenge just like everybody else has been.
Which doesn't help when you're when you're in the middle of launching a product like we are with with us for.
So we have supported a tactfully carefully when invited we we have still covered cases through covert, but obviously at a.
At a greatly reduced rate so so it certainly has not.
It's not been an accelerant to our launch.
By any stretch.
What it did has done it is it's given us an opportunity to share best practices for the.
Territory managers, who had been particularly successful at launching Esfour.
And we've we've had the opportunity for the sales and marketing leadership to.
Conduct even.
Deeper level dies on critical limb ischemia and thus for in the opportunities to and.
Ways to share the benefits of that technology with our with our customers. So as we.
Reemerge from the shutdown collectively as a society I think we are better position now frankly for the US for continued rollout than we were before because we've taken advantage of the downtime.
In terms of market development.
John does for its it's hard to get new customers opened and get through Vac committees when vac committees aren't meeting.
So that it has slowed some of our new customer acquisition expectations as I'm sure. It has with everybody.
But we are hearing that vac committees are starting to reemerge and we're starting to get onto agendas for Vac committees and we are hearing that.
There's a at least at this juncture that Theres a.
Change of approach from the committees and.
And we think that our lead with a with large for access will continue to augur well to our benefit and frankly, probably.
Well, the even more appealing because if you now have an option of doing an alternative access and keeping a patient in the hospital for a couple of days.
Or you Shockwave pre TAVR, it's even more obvious now that.
For hospital patient physician getting the patient in and out.
The sapiens or what have you.
As a whole lot more attractive than hanging around the hospital for a couple of days so.
That applies to the frankly, our application in almost every every anatomy.
Got it and that's helpful and just one quick follow but obviously kind of a lots change in the last few months and on the Q4 call you had talked a little bit about reimbursement just wanted to get the latest update there I know thats a couple of years away, but just want to make sure. We've got your latest views on that and if anything's changed as a result.
Slide three or anything like that I know, it's obviously.
A couple of years away, but just want to get your views.
Yes, so we are as best we can maintaining.
Contact with the with the societies that.
That our.
Have been tasked with coming up with the new basket of the lower extremity codes.
And.
They like everybody else have been an a bit of a pause. It is our continues to be our expectation that there will be a new set of codes CPT codes proposed.
For later this year.
They were asked last year to come up with the codes and they've been.
Debating amongst the four societies as to what that basket should look like.
It seems likely that they'll they'll do that in the June timeframe although.
I don't have certainty that they would do that but that would put them in line for.
The fall CPT meetings.
As best I can tell listening to the societies. They don't think it will lead to a new approved set of codes.
The next October of 2021, which is why we have suggested we think whatever the new basket of codes are it's most likely to go into effect at the end of 2022, which would be for the fiscal year 2023.
Again, I I can't give any assurance that we will be in that basket, it's encouraging that the.
A growing number of members of all of the societies seem.
Quite favorably predispose towards Shockwave, and and want to be able to use more and think that if.
Payment or a little bit better they could.
It would benefit them and their patients in there and they're center. So we seem to have a lot of support.
Which again no guarantees but.
But thus far the society seem to be.
Be engaged and then trying as best they can remotely to come up with that consensus proposal to give to.
To give today may for the for the CPT process.
Thanks, Doug.
Thanks, John.
Thank you. Our next question will come from Larry Biegelsen with Wells Fargo. Please go ahead.
Good afternoon, and this is Kevin on for Larry. Thanks, So much for taking the question first just have one on the clinical front and then I had a follow up on the PM now so Doug on coronary you mentioned you're on track to submit in Q3, you, obviously completed enrollment and announce that my question is on.
That will you will release.
The data of that trial, and then I'll hold for the follow up thanks.
Yes, so assuming there is something that resembles TCT this year, whether that's a.
Live meeting we go to and.
And sitting in halls, and listen to presentations or it's a remote meeting like so many are becoming our target is.
To have the data presented at TCT This fall.
Okay, perfect and then on the PNM upfront you know obviously in light of the reduce revenues any thought significantly on gross margin and operating expenses in Q2 in the second half of 2020 on the Opex run it looks like those levels came up sequentially in the quarter largely due to the higher.
And then secondly, as you think about your cash position in the coming quarters do you feel like you have enough to weather the storm and reach profitability with what do you have today. Thanks.
And I'll, maybe I'll take team with down on this is especially Ken so so on.
On gross margin near term.
Given given the meaningful slowdown in procedures, which will translate into obviously a slowdown in revenues.
The.
The current current timeframe as we've described.
That that won't that that will not have a positive impact on our gross margin. So so they'll come down.
And in terms of our.
And then I'll, let you walk through Opex, but in terms of our our expectation on the cash cash position.
Fortunately, we have tremendous support last year, both in the IPO and our follow on financing and we.
We didn't appreciate it appreciate how timely that follow on offering was but but obviously in hindsight, we were really lucky to be at a position to raise the extra money last year.
And find ourselves with a at the end of March unearned $70 million in cash and a lot of future spend on things like a new clinical trials that were thinking about doing next year and.
And trade shows and other other items that are desirable to spend money on we think they're the right thing to spend money on.
But if for some reason we are in a position where hey, we should we should slow down our spend to preserve cash a little bit.
We've got a.
Over a dozen different sort of discretionary spend items that we've identified that if we had to hey, we could slow down push I'll spend a little bit slowdown some hires and.
In areas outside of like the sales team, where we could.
We could be a little bit more conservative on cash and further extend our runway so were.
We feel fortunate to be in such a strong cash position at this juncture, then and ticket less well into the future.
And Dan on.
Sure.
Add on and Doug's point on Q2 on the gross margin, we've got some costs and other cost of goods sold that don't get put on the balance sheet flow through and that will impact the margin as alluded to earlier.
Somewhat in Q2, then we expect things to improve and drive more favorably as year goes on on FX.
I alluded to on on the script.
We've got some some concept of naturally fallen out given the slowdown travel trade shows and conferences and so those are those are going to not be recurring for the most near term you got some natural hedges on Opex I wouldn't expect a lot of growth on the opex.
For the rest of the year, we're still going to be adding sales people as appropriate building up the commercial funding our critical programs.
I mean, we're still maintaining our critical functions and initiatives.
And so we're not backing off there, but we've got some natural hedges, but I would not expect the opex to.
Step up considerably as year goes on.
Given some of the natural hedges we thought.
Hopefully that helps very clear thanks for taking the questions guys.
Thank you.
Thank you. Your next question will come from Cecilia far along with Canaccord Genuity. Please go ahead.
Hi, Doug and Dan.
I wanted to ask I guess first just on what you're seeing in centers through commented on using ideal.
Lets say 10.
Hi back then.
And just what this is done to drive awareness of generally.
How you view that position coming out of it.
Yeah the.
So certainly for for the sort of immediate timeframe that we've been living through for the past eight weeks or so.
However, access in the U.S. has been.
A.
Very large percentage of our cases relative to the norm, it's it's not half of our cases.
By any stretch, but it's a it's it's an important core procedure base, because you're you're still doing TAVR on the.
Sort of.
Emergent elective kind of a patient where you really need to get the TAVR done you really don't want to keep the patient in the hospital overnight. So you you Shockwave to open up the iliac.
Yeah, it's that same logic that has.
Enabled that large bore TAVR access to be our our lead sales pitch or or strategy forgetting.
Hospitals interested in Shockwave, if they're doing TAVR almost everybody wants they think about it realizes there's no downside using shockwave and there's a lot of upside using shockwave pre TAVR.
We would expect and certainly we've been working with our sales team to think about.
How do we further accelerate.
And that that TAVR access strategy, so that everyone who is doing TAVR.
Is using shockwave when appropriate for those cases.
Recently and brought on.
A couple of a really strong sales leaders from one of the larger companies that.
Sales whatever device and they're thinking hard about okay, how would I.
How can we take advantage of of our very recent experience in.
In that TAVR space to to help further accelerate the shockwave nationally in the entire accounts.
So we anticipate there will still be.
One of the main first line.
Appeals to the to the Vac committees and hospitals, so that we can reduce complications reduced length of stay improve outcomes for four patients getting towers or eve ours are tiv ours and.
So it's up its critical in the us.
Is still early stage internationally, but.
Internationally, there's an obviousness that this would be advantageous the patient just like it's obvious to us customers.
Okay. Thanks, Doug and then if I can also ask.
Just on the 2.5 million there or what you saw pretty close there just in terms the on making people more comfortable and driving volume and then coming out on the other side as well.
Are you build off of the with the Allied and then just ramp back again. Thank you.
Yeah and by the way.
Life posted Jason I see nice to hear you directly seal.
Yes so.
The I mean, it would've been possible, but challenging to continue picking up new accounts with us for without the two five.
So obviously a.
Provides comfort to the physician to have the smaller device.
They.
It's probably just a safe to use the three millimeter.
But in their minds, it's not a safe because that's how they've been trained so if we if we only launched the three the three five in the four Oh it would have a ultimately been successful, but but arguably maybe less successful than than having the two five just.
It's a little bit of pushing water uphill if you're treating.
Two to two and half millimeter vessel, it's hard to convince yourself you should use a bigger balloon when you've had bad experiences using bigger balloons on those vessels with with higher pressure balloons. So.
It it it enabled us to.
To sort of continue the rollout and.
It's not like there was a step function change because it it got approved.
Or we approved its launch once we had finished the the limited launch.
That all happened in the fall. So it was only staggered off by by maybe six weeks from the from the rest of the launch for four to six weeks.
So there wasn't a long runway pre two and half millimeter.
I think having a full four sizes will be a will enable us as critical limb ischemia cases come back online probably a little sooner.
And then yes, if as I said earlier, it's we're going to be glad to have the two and half, let's just say them.
Thank you.
Thank you.
Thank you in today's final question will come from Adam meter with Piper Sandler. Please go ahead.
Hi, guys. Congrats on the solid start to the Aaron Thanks for taking the questions.
Maybe to start just a bigger picture question on BTK now that you're about I think six months and launch here in the U.S.
Yeah, how do you think about that the longer term opportunity and the commercial apple below the knee versus coronary and above the knee and just curious if you could.
Maybe horse those three applications in terms of potential uptake.
Sure so.
Coronary we don't have any U.S., but it will be we certainly believe it will be the most rapid uptake.
Certainly has been internationally, there's a there's just an obviousness when you.
Once you have our C. Two device in your hands you find all sorts of patients who you were previously either sending to surgery.
Or treating suboptimally.
With a with a under deployed stance or trying to.
To manage the manage these complex patients.
With with tools that aren't really designed to treat the different vessels, we can treating the corners. So.
So so that'll be the fastest we believe that's why we're.
Looking to staff up so substantially to to prepare for that that launch early next year.
Second would be a large for access again, it's just obvious.
A third surprisingly to me at least because I hadn't predicted it is symptomatic LTX, there's just nothing really good to treat those vessels other than.
Covered stent in a high pressure balloon inside of a covered stent try to avoid.
Rupture major to section potential disaster.
Or patient and physician and then the the sort of elegant safety of Shockwave really resonates in the X.
And then I'd say, it's sort of common femoral and below the knee again.
Two vessels were not great options for a lot of these patients with a lot of calcium and both of those.
Below the knee the cases are a little bit longer and there are fewer cases than say in the early acts. So that's.
Maybe one of the reasons why only X has been has been so encouraging for us but.
The safety below the knee the ability to avoid to section to the ability to treat bifurcated lesions avoid.
Embolic debris.
Our all so so clearly the spot on for that below the knee target that we.
We certainly expect that that is going be a.
A real.
Vital part of our business going forward.
And and again in this in this era as patients coming back or coming back because they really need a procedure done because that are.
Their risk of having their foot amputated, we're eager to get back out and and sort of get the launch.
Backup enrolling because we were as you pointed out we were we are well and we were getting well into it and then we.
Sort of got stunted by coven as everybody did.
So were.
The diversity of vessels.
Even though its M in us for its two products, but it's so many different applications.
And that sort of the richness of those different applications. We expect will will play off of each other very nicely as we continue to roll out and and we're not.
But we're not going to do as we're not going to say, okay, you must sell.
50% your business has to be S. Four and 50% of your business has to be M. In part because a lot it's going to vary a bit by territory do you have a good a lot of below the knee business going in your territory, then you'll be able to take advantage of it if.
If you're maybe a big TAVR territory, you're probably going to buy a little bit more towards tavern until you have that fully penetrated et cetera.
So it's nice to have a have a bit of a portfolio of products and portfolio of applications for those products.
Okay appreciate that color, Doug and then for just a follow up.
On Cadthree it sounds like TCT is.
The likely venue there.
But just on the data itself.
How should investors think about any potential clinical data rest with that study.
I know we've seen other coronary datasets that that looks strong and they'll U.S. coronary business is obviously done very well shell is it fair to assume that you view that data risks to be very low and and then just what do you think the data needs to show to drive strong adoption with U.S. clinicians. Thanks for taking the questions.
Sure. So the our expectation is that given the consistency of what we see both commercially as well as our CAD, one and CAD two studies and.
And dozens of publications that others have done when using our device I think we will demonstrate that our devices.
Is very safe and the corners.
What weve a remarkably in CAD, one and CAD two we only had nonqm eyes, as our as our Mason and Nonqm eyes or.
You get those sometimes just by.
Temporarily shutting off aside branch and on the side branch comes back on after you deploy stent. So they are transient by definition and and.
And not something that if a clinician would ordinarily pick up on outside of a trial, so very minor complications.
With.
More patients in our study obviously.
Pushing 400, it it seems likely that you'll have some other phenomenon just.
Because your anytime you wire somebody's coronary arteries, you're you're going to have risk of some some events, but we would expect.
If we are if we are.
Comfortably below at 10% base rate as we have been in.
CAD, one and CAD to a that that would be.
The kind of results that that our physician would be helping physicians would be hoping to see.
If we have any any events outside of non QM.
If there.
Very small number than I think thats, what physicians would expect and.
Given the widespread awareness of of Ivy Hill in the Coronaries and.
At least what I perceived to be.
Fairly high pent up demand I think as long as we cross those that sort of very safe threshold as we as we have in the past.
It's already sort of well understood for the as its potential benefit for for a wide array of patients who are either.
They're not getting atherectomy can't get atherectomy.
Have left main disease, where you don't know what to do as a physician et cetera I think.
We'll be in will be very good shape with those kind of results. The the sort of residual sonos. This result, which sort of an afterthought in our in our trial.
Sort of less than 50% residual is.
That that's not a factor that he was going to look at it because.
Once you put a stanton, you're you're you're going to cross that threshold.
So.
Where.
We're going to be measured by safety and we certainly expect that we will demonstrate that safety.
Very helpful. Thank you.
Ladies and gentlemen, thank you for participating in today's question and answer session I would now like to turn the call back over to management for any further remarks.
Thank you operator, and thanks, Thanks, everybody for taking the time I know these are trying times and had a lot of distractions over the past couple of months.
I can't tell you how much I appreciate the support of our investors, but most importantly.
The support of our customers in our employees. We're in a we're in a really fortunate place as a as a team.
With a lot of work yet to do and a lot of patients that we need to take care of so thanks, again, and we'll speak to everybody soon.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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