Q1 2020 Earnings Call
[music].
Greetings and welcome to the Endologixs first quarter 2020 earnings conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If you haven't question at that time, you May Press Star One as a reminder, this conference call is being recorded.
The conference call is also being broadcast live over the Internet at the Investor section of the company's website at Www Dot Endologixs Dot com and the webcast replay the call will be available at the same site approximately one hour after the end of today's call.
Before we begin I'd like to caution listeners that comments made by management. During this conference call will include forward looking statements within the meaning of federal Securities laws. These forward looking statements reflect management's expectations about future events milestones and results of operations, including the impact of Copel 19 pandemic on the company's operations anticipate.
Anticipated regulatory approvals clinical trial status product portfolio updates and financial and operating projections and plans.
There are known and unknown risks uncertainties and other factors that may cause the company's actual results performance or achievements to be materially different from any future results performance or achievements expressed or implied by the forward looking statements.
For a discussion of risks factors. The company encourages you to review it smells annual report on form 10-K quarterly reports on form 10-Q, and subsequent reports as filed by the company with Securities and Exchange Commission.
Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast May 11 2020.
The largest undertakes no obligation to revise or update any statement to reflect events or circumstances. After the date of this call. In addition, today's discussion will include references to adjusted EBITDA, which is non-GAAP financial measure.
Adjusted EBITDA as a key measure used by the company to evaluate operating performance generate future operating plans and make strategic decisions for the allocation of capital.
Please refer to the company's press release issued earlier today for further information.
With that said I'd like to turn things over to Mr., John or pachinko into logics Chief Executive Officer. Please go ahead Sir.
Thank you operator, and good afternoon, everyone and welcome to our first quarter conference call.
Thank you all joining us today and I hope you have for families are in good health.
Surprisingly large though is ongoing companies 19, pandemic, and resulting economic disruption and had a material impact on I know lodgers sounds like you take a moment in time, each and every one of our employees here and I know objects and our partners.
Termination flexibility they have shown.
Courses the pass through costs.
Several of us or different locations for today's call. So she is barely logistical challenge.
Hey, accompany this change from the prior earnings calls.
On today's call provides an update on the impact coolers 19 on our results and product portfolio for detailing our response to this unprecedented prices.
I will then turn the call over to our Chief Financial Officer, Messina, who will review, our first quarter results cost actions and liquidity profile in more detail.
After that we'll have another call for questions.
As a reminder, we have posted an updated investor deck on our Investor Relations website directly below the webcast link.
My window business off during January and February Saudi continuation of the operational momentum we have developed through 2019 sales of AFX, two and novation, we're trending in line with our guidance early in the quarter before being significantly impacted by the.
Hi, this procedure volumes in the second half March uses was deferral of elective procedures in the United stage Europe and cost.
Necessitated by the Cobot 19 pandemic.
AAA procedures total nine between like they've been none elected larger diameter, aneurisms and symptomatic patients patients receiving treatment for national guidelines and the representing approximately 20% of cases that would be treated under normal circumstances.
Recent recommendations from the Royal College of Surgeons in the UK suggest that suggest the patients with AAA may consider deferral treatment.
For the three months.
We'll eventually require treatment.
For this reason I am confident that the bulk of the decline we have experienced in procedure volumes is driven by deferrals and cancellations and that many of these procedures will take place once hospitals begin to reopen for non cobiz are rated treatment.
These unprecedented times has necessitated unprecedented action.
The safety of our employees and customers is and always has been our top priority and logistics in response to this crisis years taken actions to create the safest possible working environment. While also ensuring that there is inadequate supply ever products available to treat patients.
He need.
He has continued to manufacture products at our production facilities in both those items Santa Rosa I was going to be exemption. Other critical service in the state of California, while a lot of essential employees have been working from home since the issuance of the shelter in place orders.
With very few exceptions, only employees, who produce or distribute the product the vendor nervous cylinders.
We have separate and workstations in accordance with social distancing recommendations and improved our cleanliness practices, including two new disinfecting all services within the facility.
We now have registered nurses station to both of our facilities that are responsible for screening each employee prior to entering the small restricting entry Lexus at each facility to facilitate optimal screening.
I'm a supply standpoint early on in the pandemic, we increased product availability in the field by shifting inventory the forward stocking locations from our warehouse in order to have it closer to what customers in case logistical or transportation difficulties rose.
We have also taken a number of cost actions to manage operating expenses and liquidity, which would seem overview shortly.
We continue to make progress against our operational clinical goals, but these mitigation in cost actions combined with the ongoing uncertainty around procedure volumes may result in changes to our anticipated timelines over the coming quarters.
The timelines of the semen items discussed today are based on the factors. We currently standard which as we all have seen are subject to change quickly and those predictably.
Turning now to quarterly highlights, including the status and timelines related the best to she Bash Altos innovation Himax.
Total revenues for the first quarter was $28.5 million compared to 35.6 million for the same period in 2018 and was meaningfully impacted by Cosan 19 in the latter half of the quarter.
We were extremely pleased to announce this afternoon, they've been completed enrollment in our events to I'd be for Nellix 3.5 on March four twentytwenty.
In response to the Cobot 19, and the related to enroll the delays seen across multiple clinical trials. We submitted a 90 supplement to the FDA. We've revised statistical analysis plan, which are aligned with the recently published an FDA guidance document.
Conducting clinical trials of medical products during cobot 19 pandemic.
Our submission propelling us a minimum sample size of 95 patients with no alteration to define endpoints. The power of the two year effectiveness endpoint has been reduced from 93.8% to 87.4% lets the power of this.
We remain endpoint remains.
The power of the safety endpoints remains 99.9%.
The power of both endpoints remains well above 80% typically seen in this therapeutic area.
We are now working on the PM, a submission, which we plan to submit shortly after the first 95 patients in the trial reach one year or follow currently anticipated in March 2021.
Turning to Alto on March 16th we were excited to announce that we had received FDA approval on the basis of being panel track PM. A supplement that included data from elevated trial.
Outsold, who is a critical milestone for into Rogers as we seek to introducing portfolio devices designed to address the current unmet needs to evolve.
Also as a differentiating the barge price that offers significant design features that we believe will enhance ease of use improve acute outcomes and preserve the long term durability associated with patient specific anatomically adaptive ceiling.
We believe altos ultra low profile and its seven millimeter aortic neck linked indication gives us the broadest applicability of any undergrad in the us.
As a conditional approval for alto and the logics has committed to performing to post market clinical follow ups studies.
Once the protocol received FDA approval. The first 100 commercial Alto implants, we will be included in a sizing study to describe aortic measurements and device sizing assessed on diagnostic CTG scans by further implanting positions and Endologixs in.
The June services.
The second post market study will be designed to address device performance in the real world. We have designed a global prospective randomized trial to compare the performance of alto to contemporary compared or tend to address.
The aim will be to prune superiority of the auto product platform across multiple parameters of performance, including an assessment of aortic necks dilatation alongside traditional clinical imports.
In the EU, we are finalized with working to finalize the last set of test results.
And confirmation of the final ISU with NFC IR notified body.
Based upon what we know today, we are expecting vinyl CE mark approval for al. So by the end of June although as I stated earlier, our timelines are subject to change as the environment remains fluid.
We are also completing final production readiness for alto across our supply chain, ensuring that our component suppliers and those who produce certain sub assemblies achieve on target performance.
Inline with our previous comments regarding us introduction of out so our first phase will convert existing ovation IX customers to alto by effectively trading sites on the differences in the advantages of Alto.
We are targeting 40 high ended volume ovation IX sites, we are using proficiency and our 100 patients sizing study can be executed appropriately.
Given the current situation our Alstom training program, it's been designed to be delivered remotely using virtual classrooms and virtual reality simulation.
By Q4, we would train and introduce Alto two remaining I extra counts and further develop site specific strategies to grow out those relative competitive position compared with <unk> ex baseline.
Turning now to ovation High X in Q3, 2018, we issued a field the safety notice regarding polymer leagues with the ovation hyatt's platform.
Since that notice we have continued our investigation and have recently to find the root cause for the majority of Parliament leaks, which is a material weakness adjacent to the polymer filled channel, which may become compromised during the depression pressurization with liquid.
Our.
This investigation has been time consuming and technically complex due to the infrequency of the complication and we regard the completion of this analysis as a significant achievement.
The manufacturing and device design changes required to rectify the material weakness has been delineated and have already been incorporated on the alto platform.
As a result, we believe that alto will meaningfully decreased polymer leak rates compared to litigation I pass.
And it's our intention to transitioning customers to alto in geographies, where Allison is approved.
Given our determination of root cause we held the medical Advisory Board, whose members suggested that a further safety update was warranted on utilization I edge platform.
This recommendation was made as the current polymer leak rate incidence of clinical harms and defined root cause is relevant for positions when considering treatment options and that reaffirmation of treatment recommendations. The pound the rigs is a responsible action.
We have been working collaboratively with our regulatory partners on the content and implications of the update to the 2018 field safety notification, which was issued globally last week.
The update contains information on the reduction in clinical harms associated with polymer leagues since the 2018 notice we remain confident of the risk benefit profile of the ovation highest platform based on encore data from a real world basket.
On the registry and our internal analysis of complaints.
We continue to work through the site activation process for key best in the expectation that clinical research will become increasingly buyable as the year progresses.
We have identified our first 15 sites for the key best I'd and expect two to three sites to be ready to enroll patients around the midpoint of the year.
We anticipate starting enrollment in the second half of the year as recovery from the coated 19 pandemic allow us.
She that's remains a priority for our clinical teams due to the considerable unmet need for patients with complex AAA in the us alongside developing aneurism ceiling as a paradigm altering therapy in the treatment of patients with AAA.
Lastly, we recently also announce key additions to the Endologixs team on March 12, we announced Jane Karen and appointments a server or the Endologixs border. We are thrilled to add an executive of genes caliper to our board I am confident that James extensive industry experience.
Both operationally and financially will be a key asset as we continue to pursue our long term growth strategy.
On April 14, Tim a better was appointed the company's Chief commercial officer, Tim brings to Endologixs over a decade of experience in the medical device industry.
Most recently served as general manager in Division Vice President of the West region for Abbott's structural heart business with responsibilities were sales marketing and the PNM across the Mitraclip and placer surgical valves and TAVR franchises.
Prior to that he spent nine years and Edwards life Sciences and was a member of the senior leadership team.
We're excited to have came on board and his broad commercial and strategic experience will be invaluable in taking our commercial team to the next level as we launch also and build out the nellix platform.
Inline with the broader medical device industry. The first quarter of 2020 was challenging.
While we are continuing to see many of these same headwinds here in the second quarter. We are seeing signs of improvement in procedure volumes, which has seen will touch on in more detail.
Despite limited visibility, we will continue to bet, our assumptions and scenario plan in order to manage through these challenges and come out the other side of this pandemic.
And now I'd like to turn the call over to the seem to discuss the first quarter 2020 financial results as well as our costs than liquidity actions in response to code that may team.
The team.
Thank you John and good afternoon, everyone. Our total revenue for the first quarter of 2020 was $28.5 million compared to $35.6 million into first quarter 2019.
As John mentioned in his prepared remarks sales of AFX and ovation, we're trending in line with our guidance for January and February before being impacted in March by the global shutdowns and the deferred look elective procedures related to the covert 19 pandemic.
USA revenue for the quarter was $18.6 million compared to $22.8 million a year ago.
National revenue was $9.9 million compared to $12.8 million for the first quarter of 2019.
On the product line basis global sales of both AFX and ovation were impacted by the slowdown related to Covidien team.
First quarter gross profit was $15.1 million, representing a 53.1% gross margin compared to 65.2% in the prior year period.
Some of this gross margin decline can be attributed to lower volume associated with the corporate banking crisis.
100 basis points of the decline is related to an inventory reserve for FX two product that is expected to expire before usage in the first half of the year.
This is driven by the lower case volumes expected due to the corporate 19 and bag in the first half of the year.
Excluding the impact of these onetime items gross margin operation you would have been higher than reported.
Total operating expenses for the quarter were $31.3 million compared to $35.2 million in the previous years quarter.
In the past we have discussed our plans to implement further cost control measures in 2020 to improve the overall operational profile of our business.
In response to be abrupt onset of go over 19, we have accelerated the implementation of these actions already scheduled for 2020.
In addition to some temporary cost control measures.
Our key focus to improve liquidity has been supporting the manufacturing ramp of both also and all compliance related programs.
We do expect these cost management actions and back deliverables and and commitments, we have made and as visibility into revenue improves we will communicate those changes.
Net loss for the first quarter of 2020 was $18.1 billion or 90 cents per share compared to a net loss of $22 million or $2.12 per share a year ago.
These results were primarily impacted by the slowdown with revenue related to the cobot 19 shutdowns in March.
Adjusted net loss for the quarter totaling $16.2 million compared to an adjusted net loss of $11.7 million for the first quarter of 2019.
Adjusted EBITDA talking the loss of $13.2 million for the first quarter of Twentytwenty compared to an adjusted EBITDA loss of roughly $7.6 million for the first quarter 2019.
Moving to the balance sheet towards a cash cash equivalents and restricted cash with $42.2 million as of March 31st 2020, compared to $42.8 million as of December 31st 2019.
The bites 31, Twentytwenty balance included $10.5 billion outstanding under the company's revolving credit facility with certain affiliates of the Deerfield management company.
Our operating cash burn for the quarter was approximately $9.3 million, we continued to closely monitor and manage our cash burn and have taken the necessary steps to focus our cash expenses only on the most critical activities.
As announced in the 8-K filed today, we've received $9.8 million from the small business administration as part of the cares Act under the battled protection plan multiple PPP.
Turning now to guidance on April six we grew our guidance due to the uncertainty surrounding the magnitude and duration of the impacts and the cold 19 pandemic.
Our visibility to the magnitude of these impacts remains limited and therefore, we will not be issuing guidance at this time.
Since we have not providing guidance I want to offer some additional color on our performance through the month of April in order to give you a better idea as to what we're seeing in the business.
Since the beginning of March we saw six weeks of continuous declines in our case creation numbers.
Our able to U.S. average daily sales was down 58% versus April last year, and approximately 52% lower than February before the pandemic.
The good news is that we saw an inflection in the mid April and have now seen three weeks of sequential improvement, although still well below where we were prior to the impacts of the pandemic.
It also seeing the heterogeneity in case creation based on the extent of global banking and bad geographically.
We attribute some of the improvements to certain hospital system, starting to treat patients beyond the prescribed emergent and symptomatic screening.
As a result of go over 19 related decline in revenues and limited ability to accurately predict our recovery.
The recovery over the next several quarters, our auditors have raised a going concern doubt related to our ability to satisfy our financial obligations for the next 12 months.
We are taking actions to preserve liquidity. So that he can continue to serve our customers without disruption.
Additionally, as a result of the impacts of go over 19, we think it's highly unlikely we will achieve the conditions precedent in the required timeframe that were established as part of the February 2020 that restructuring.
We are actively engaged in discussions with our lenders to ensure we remain adequately funded through this period of temporary uncertainty. So that we can continue to deliver the most innovative products for the treatment of AAA.
Lastly, I want to provide some color on the delayed funding of our 10-Q.
Yeah, working closely with that auditor to finalize the medical related to the complex debt restructuring transactions that occurred in February 2020.
Most of the remaining work is related to documentation surrounding the debt transaction and we do not expect any financial impact on our results posted in today's press release and the inscape.
We expect to have the 10-Q on file no later than the week of May 25th.
And now let me turn the call back to John John.
Thank you are seeing once again I would like to sincerely. Thank our entire team here at into logics for all of their hard work and ongoing commitment during this unprecedented crisis.
This level of resiliency is what will allow the company to emerge from this crisis in a position of strength as we continue our mission to transform the order care for life.
Again, given the logistical challenges as being a part for one another please allow me to direct the questions. We've received from each of you today to members of my team who would best address each.
With that we will now open the call for questions operator.
Thank you at this time, if you do have a question that will be star one I can start one for questions. We'll hear first today from Matthew block with Stifel.
Good afternoon, everyone. Thanks for taking the question to start I wanted to the flush out a little bit how we should be thinking that TQ appreciate thing yeah.
Commentary on March and what you're seeing in April instead of on the most basic level, if I heard you correctly.
Really should start about thinking about the base being down.
50% to 60% in March and that's where the starting point and then obviously figure out what we think that that sort of recovery trajectory that is with the imaging. Obviously some improvement in April that the right way to reach the right starting point to pick about on had QQ shape up.
The seed.
Sure Hey, Matt I think as I mentioned on another marks here you did see some improvement in April but again I have a qualified for the fact that within its way below where we want to be and via live below where we were expecting to be before the pandemic.
But we do see.
April to your point to being the 50% to 60% range. The crime and then start to see some sequential improvement in Maine, and then try and depending on how the hospital system start to do the procedure volumes and thanks for that and how they prioritize deepwater in there or capacity.
Continue to see some sequential improvement in June so that's that's at least a very in perfect wait to kinda give you a sense on what we're hearing.
And as John mentioned all of this is subject to change and it will continue into for themselves. So 50% to 60% reduction in April sequential improvement in Maine, and then obviously a better numbers in June.
Okay I appreciate that.
A list of a couple of other quick questions. John you can direct them. Just just observation really if you just look at sort of the U.S. I know you EPS growth performance or decline in the quarter that both fairly similar down 20%.
So again, if we take it out say the recovery trajectory is there anything about U.S. versus the L.U.S. business. It would make one more likely to accelerate or re accelerate faster any thoughts on how to think about sort of a geographic recovery from a U.S.U.S. standpoint.
[noise], Matt I'll take that and then.
Maybe have deceived billion.
I think it's important to recognize that the return to kind of pre pandemic procedure volume. We believe will be affected by five factors first is ultimately relaxing the size and severity eligibility criteria for scheduling AAA too is.
Our ability to support cases without PPP were other site specific restrictions like the testing of our reps.
So far we've been able to support our teams thus far.
Third is the availability of the overall, our given the bolus backlog the collective cases and that again.
I believe we'll see the significant amount of heterogeneity.
Sure is I think a consistent high level of patient competence in returning to our hospital to receive the necessary care. This has been a.
Daunting observation.
With many health care providers and institutions.
And then the fed related Lee is that ultimately the relaxation in the shelter in places is lifted, thereby allowing family members to support patients into and out of their hospital stay.
I don't believe there's been a significant difference in the effect of the pandemic regionally, but I'll, let machine highlight further if warranted.
Yes, I think on a number of basis Mad what I'd say is you're right I think Europe, and U.S. will kind of tracking.
In a similar flashing really some of the negative you know month or monthly it'll get declines.
I think when you look at deal U.S. market I still think that.
Some of the indirect markets are going to be under a lot of stress for the remainder of the your I think the distributors are seeing that credit lines frozen.
Liquidity is a massive challenge in Latin America.
And they're very reluctant to take product then second the ability to pay is gonna be impacted as well. So so I think outside of the impact of just the pandemic on procedure volumes I think there'll be some more financial distress.
In some of the non European non U.S. markets and that's a source of concern.
Okay got it that makes sense and I can sneak two last ones and and these are probably for you don't they don't forget the pass them off you said you brought it up it sort of that the fight for Cath lab time. After some of these restrictions are lifted and resources of the allocated to just remind us of the relative profitability of that other AAA service line for a house.
Well versus other Endovascular procedure, my recollection is that they're pretty pretty high into the profitability side for for hospitals, just help us at that and then my but for the last one in there sort of we think about coming out of Oh, that's do you have to be concerned.
About set price overall I think you know the concern would be you you compete against them. So much larger competitors with much broader portfolios. The question about their ability to bundle when it back and they have on new instead of a normal environment has always been out there I just wonder if we should be even more sensitive now without.
You should not see that hospital profitability and such that there could be that risk to pricing as we move forward and AAA broadly. Thanks, guys. Appreciate it.
Sure, Matt, let me start off and certainly defer to others are first.
We don't see a significant threat to.
Pricing at this point.
They're in it but that but again it is a pandemic and all resulting competitive actions have yet to be.
Yeah make their appearance, but by and large we don't we don't see pricing to be a significant threat in the market.
Actions by the competitive markets a large has been relatively prices went through the last several years.
Bundling, there's certainly a consideration.
But I don't believe.
The underpinnings of why procedure volumes have declined.
The favorably affected by an increased level of bundling I think really it's a capacity constraint as the institution level.
AAA is a marginally profitable procedure by and large.
And I believe that it is a disease state obviously there.
Is not.
Is this insensitive to their pandemic relative to its progression, meaning for delays do not starts to diminish in their growth rate as a result of the obviously a pandemic that continue to be.
These AAA patients continue to experience an increasing their diameter size evangelism and as a result will ultimately reach thresholds that can no longer be deferred and therefore.
For the delay is ultimately a transient condition in one that's not sustainable in the long run.
Right. That's all had thank you.
Thank you know.
Well hear next from memory type.
<unk>.
Hi, Thanks for taking my questions and I'm glad you're going to doing well.
One quick question on the cash containment.
Sure, you're making perhaps of question answered it seems I know in the past you had guided 239 and operating than seven year look like you tracked well below that run rate for Q1 will be wrong to assume that you have come in if all goes as planned well below that 130 million or is it too.
The phone.
You see Murray and thank you for the question and let you guys are doing well too so listen I think there's as you saw I didn't kind of break down the numbers for you guys, but yes, our operating expenses, we control the spend pretty hard here and you know as much as we could in the month of March.
R&D was down 26% clinical regulatory was down 16 sales and marketing was down 14, DNA was up seven but really when you exclude the costs of the financing it was down 15.
So we'll continue to watch it and as John and I mentioned in our prepared remarks. So these are unprecedented times.
We hope that we can start in rest somebody back into the business into the all to launch into the manufacturing ramp of Ah also and.
Making sure that we don't you know you have any foundational work.
On the shelf, so but it all depends on how the topline is going to do and that continues to be a very big challenge because the visibility so.
I think we'll continue to manage expenses and cash as we have done in years prior and I hope you have enough credibility on that but the reality will be to see what the topline doesn't thats going to drive you know our decisions around liquidity and cash build them. You know, we're all bottoms up much spending too much on anything at this point.
Okay.
You mentioned ovation Alto I know there.
But to enter save one back [noise].
Launch can you tell us a little bit more about exact timing is out of that happening next quarter is happening later this summer and I just curious if they're a little bit about the kicking ass and the logic brand to allow pets pandemic with some of the high volume Center.
Yeah, the strategy for growth going forward.
[noise] Emirates, John you could look for us introducing alto in that phase one period by mid year as I mentioned in my prepared remarks, we have a sizing study to complete.
In addition, the second.
Clinical elements of our host market work will be the randomized control trial. If she has the a.
We'll have visibility into.
Then from there, it's obviously getting I X customers converted to Alto first with higher to mid volume centers and then eventually going into the fourth quarter continues that to lower volume I X customers and then really spending a considerable amount of time.
In the developing.
Maybe modest to low volume my ex U.S into greater Alex though.
Use competitively on route to obviously, establishing broader use proficiency and then ultimately identifying the sites that would help us in the randomized control trial, which is part of the up market strategy that we described previously.
We believe the compelling reasons that support Altos introduction.
Our the design differences that we believe will translate into outcome differences.
And that is the work that.
That we want to engage high volume academic medical centers in helping us conduct.
Last question for me on that we've got to try and now they are completed enrollment. So they still look for our first PK data on some of those patients that this later this year leather virtual or in some other formats or exacting superseded kind of by the.
When you're talking about that no show in March.
Not going to take that sure. Thanks, Sheryl Palmer.
So yes is the simple answer to your question, we still plan.
On the trunk show the feedback to data that'll be a central proportion of those 95 patients at one yeah based.
Obviously, we got one just follow up over the whole in March 2021.
Our focus now really in the trial is to ensuring the we get the best follow up with the kind of those patients given the challenging circumstances, we find ourselves into clinical trials, but yes, we do plan to give visibility to the results in the Fisher.
Thank you for their Marie.
Okay. Thank you.
I would like to remind everyone. If you do have a question that is start when I.
Your next from JP Morgan Robbie Marcus.
Hi, guys is actually Allen on for Ravi I just had one quick question on kind of your I guess performance this quarter I remember heading out of the last quarter that there were some puts and takes care of U.S. business, you're kind of onetime benefit from stocking and prior year. You also had some headwinds.
In Brazil, because you pulled.
I.
I believe you pulled elevation there on of the amount I think right now my head of the ovation Alto approval in Twoq you.
So I guess like given how the quarter really did come in better than expected and optically it looks like actually kind of inline with the U.S. business with respect to covert what really went better than expected there.
The same.
Yeah, So listen I think as I mentioned, Mel and I don't think I'm in the first quarter, though things kind of better than expected we were tracking to the guidance that we had put out there and if you remember.
You're right to point out the though one of the big walk from walk items from Q1 to Q2.
To go back to growth was the fact that we actually had no product to ship for Latin America.
You know we made a decision last year to not to restart delay input ovation prime which is would be with selling in Brazil, and we did not have regulatory approval, obviously for all coal or high ex and then we also did not have regulatory approval for FX too.
Because Brazil was the last market that was still continuing to take FX one.
So so again so those were the walk items. If you will take us from the Q4 number down to the guidance of 30 million, but in terms of kind of the puts and takes to school in the U.S. business I think it was tracking as expected.
You know for poor January and February and that obviously, an independent again.
The last two weeks of March but just to give you guys an update on that we still haven't received for the C of the FX to approval for Brazil, and that's going to be a continued headwind for the remainder of the year and at this point based on you know.
Input from the regulatory body them in Brazil, and some of the challenges of covert 19, there we expect now aspects to the ship sometime in the fourth quarter.
After the regulatory cool, so thats really the NIM in a nutshell on what happened in the U.S. and kind of impact on the though because of the FXR regulatory issues.
[noise] anything further mr. Marcus.
No that will be all thank you.
Hi, good at this time I'd like to turn things Mr. back to Mr. Chen go for any closing remarks.
Thank you operator and again, thank you everyone for joining us today.
So again, you and your family's remaining season in good health and look forward to updating you on our progress in the next quarterly earnings call. Thank you.
Again that will conclude today's conference. Thank you all for joining us.
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All participants are in listen only mode.
Answer session will follow the formal presentation, if you have.
Star one.
This conference call is being recorded.
This conference call is also being broadcast live over the Internet at the Investor section of the company's website at Www Dot Endologixs Dot com.
Cast replay the call will be available at the same site approximately one hour after the end of today's call.
Before we begin I'd like to caution listeners that comments made by management. During this conference call will include forward looking statements within the meaning of federal Securities laws. These forward looking statements reflect management's expectations about future events.
And results of operations, including the impact of Coca 19 pandemic on the company's operations anticipate anticipated regulatory approval.
Well status product portfolio updates and financial and operating projections on plans.
There are known and unknown risks uncertainties and other factors that may cause the company's actual results performance or achievements to be materially different from any future results performance or achievements expressed or implied by the forward looking statements.
For a discussion of risks factors. The company encourages you to review it smells annual report on form 10-K quarterly reports on form 10-Q, and subsequent reports as filed by the company with Securities and Exchange Commission.
For the content of this conference call contains time sensitive information that is accurate only as of the date of the why podcast May 11 2020.
The watch undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this call.
Addition, today's discussion will include references to adjusted EBITDA, which is non-GAAP financial measure adjusted EBITDA is a key measure used by the company to evaluate performance generate future operating plans and make strategic decisions for the allocation of capital.
Please refer to the company's press release issued earlier today for further information.
With that said I'd like to turn things over to Mr., John All pachinko into logics Chief Executive Officer. Please go ahead Sir.
Thank you operator, good afternoon, everyone and welcome to our first quarter conference call.
Thank you also joining us today and I Hope you Wonder families are good health.
Well I think we'd be ongoing ongoing companies 19, pandemic, and resulting economic disruption and kind of material impact on the logic.
I'd like to take a moment and thank each and every one of our employees here and I know lockers and our partners for the determination Flexibilities Nab show.
Of course, the past too much.
Several of us for a different locations for today's call. So please bear with logistical challenge that may accompanies this change from prior earnings calls.
On today's call provides an update on the impact converts 19 on our results and product portfolio before detailing our response to this unprecedented crisis.
I will then turn the call over to our Chief Financial Officer, Let's see how who will review our first quarter results cost actions and liquidity profile in more detail.
After that we'll open up the call for questions.
I think her mind or we have posted an updated investor deck on our Investor Relations website directly below the webcast link.
By way, there's no stopping January and February saw a continuation of the operational momentum we have developed through 2000 in banking sales are they FX two and novation, we're trending in line with our guidance early in the quarter before being significantly impacted by the.
Hi, this procedure volumes in the second half on March is that want to for all of these elective procedures in the United States Europe and cost.
The sensitive you name it by the colder 19 pandemic.
AAA procedures told the line between you might have been non elective with larger diameter, aneurisms and symptomatic patients patients receiving treatment or national guidelines and representing approximately 20% cases that wouldn't be treated under normal circumstances.
We took recommendations from the Royal College of Surgeons in the UK suggests a suggestion of patients with AAA make considered apparel treatment.
For the three months, but will eventually require treatment.
For this reason I am confident.
Also doesn't decline we have experienced in procedure volumes is driven by deferrals and not cancellations and that many of these procedures will take place once hospitals begin to reopen for non cold winter related treatment.
These unprecedented times have necessitate an unprecedented action.
The safety of our employees and customers is and always has been our top priority and there's a lot sucks in response to this crisis, we have taken actions to create the saints possible working environment. While also ensuring that there was inadequate supply what products available to treat patients.
Can we.
We have continued to manufacture products at our production facilities in both online and Santa Rosa I was going to be injection of the critical service and the state of California, while a lot of central employees have been working from home since the issuance of the shelter in place orders.
We have very few exceptions, only employees, who produce or distribute the product and underlevered facility.
We have separated workstations in accordance with social distancing recommendations and implement cleanliness practices, including two new disinfecting all services within the facility.
We all have registered nurses station, but both of our facilities that are responsible for screen each employee prior to entering the smaller strictly entry Nexus at each facility. This facilitate optimal screening.
From a supply standpoint early on in the pandemic, we increased product availability in the field by shifting inventory the forward stocking locations from our warehouse in order to have it closer to what customers in case logistical or transportation difficulties.
Yes.
We have also taken a number of cost back.
It's an average operating expenses and liquidity, which would seem overview shortly.
We continue to make progress against our operational clinical calls, but these litigation cost actions combined with the ongoing uncertainty around procedure volumes may result in changes to our anticipated timelines over the coming quarters.
The timelines seaman items discussed today are based on the back since May currently standard, which as we all have seen are subject to change quickly and predictably.
Turning now to quarterly highlights, including the status and timelines related the best to she Bash Alto innovation IMAX.
Revenues for the first quarter was $28.5 million compared to 35.6 million for the same period in 2019 and was negatively impacted by cobot 19 in the latter half of the quarter.
We're extremely pleased to announce this afternoon.
We did enrollment in R&D, that's too I mean, you were now at 3.5 on March four Twentytwenty.
In response to the Cobot 19, and on the latest enrollments delays seen across multiple clinical trials, we submitted a 90 supplement to the FDA. We've been revised statistical analysis plan, which are aligned with the recently published an FDA guidance document.
No clinical trial on medical products during Cobiz 19 and debit.
Our submission elements a minimum sample size of 95 patients with no alteration defined endpoints.
The power of the two year effectiveness endpoint has been reduced from 93.8% to 87.4% what's the power of the studies are made endpoint remains.
Our safety endpoint remains 99.9%.
The power of both endpoints remains well above 80% typically seen in this therapeutic area.
We are now working on the PM, They submission, which we plan to submit shortly after the first 95 patients in the trial reach one year a follow up currently anticipated in March 2021.
Turning to Alto on March 16th we were excited to announce that we had received FDA approval on the basis something panel tracked P. M. A supplement that included data from the elevate trial.
I also who is a critical milestones breathalyzer test as we seek to introduce a portfolio devices designed to address the current unmet needs to evolve.
Ultimately differentiating the Barclays that offers significant design features that we believe will enhance ease of use improve acute outcomes and preserve the long term durability associated with patient specific anatomically adaptive ceiling we.
We believe it out on this ultra low profile and its seven millimeter aortic neck Lake indication gives us the brought us the flexibility.
Any end of graft in the U.S.
I think conditional approval for alto and the logics has committed to performing to post market clinical follow ups studies.
Once the protocol received FDA approval. The first 100 commercial Alto implants will be included a nice sizing study to describe aortic measurements and device sizing assessed on diagnostic CTG scans by funds implanting positions and the logics image.
You services.
The second post market study will be designed to address device performance in the real world. We have designed a global prospective randomized trial to compare the performance of also to contemporary compared or vendor graphs.
The aim will be to prune superiority of the also product platform across multiple parameters of performance, including an assessment of the word to conduct dilatation alongside traditional clinical endpoints.
Indeed, you we are finalized working to finalize the last set of test results.
And confirmation of the final I mean, you with NFC IR notified body.
Based upon what we know today, we are expecting vinyl CE Mark approval for house. So by the end of June although as I stated earlier, our timelines are subject to change as the environment remains fluid.
We are also completing final production readiness for alto across our supply chain, ensuring that our component suppliers and those who produce certain sub assemblies achieve on target performance.
Inline with our previous comments regarding us in production of Alto, our first page will convert existing ovation IX customers to alto by effectively training sites on the differences in the advantages of Alto.
We are targeting 40 high ended volume ovation I exercise, we're using proficiency and our 100 patients sizing study can be executed appropriately.
Given the current situation our Alto training program has been designed to be delivered remotely using virtual classrooms and virtual reality simulation.
By Q4, we would train and entered into Alco two remaining high extra counts and further develop site specific strategies to grow out those relative competitive position compared with <unk> ex baseline.
Turning now to ovation high X in Q3, 2018, we should be able to safety notice regarding polymer leagues with utilization hyatt's platform.
Since that note as we have continued our investigation and have recently defined the root cause but the majority of parliament leagues, which has a material weakness adjacent to the polymer filled channel, which may become compromise during his pressure pressurization with liquid Palmer.
This investigation that has been time consuming and technically complex due to the frequency of the complication and we regard the completion of this analysis as a significant achievement.
The manufacturing and device design changes required from rectify the material weakness has been delineated and have already been incorporated on the alto platform.
As a result, we believe that alto will meaningfully increased polymer leak rates compared to vision I pass.
And it's our intention to transition to customers to alto in geographies, where alto is approved.
Given our determination of root cause we held in medical Advisory Board member suggested maybe further safety update was warranted on utilization I actually platform.
This recommendation was made as the current polymer leak rate incidence of clinical harms and define root cause is relevant for positions when considering treatment options and that reaffirmation of treatment recommendations. The polymer weeks is a responsible action.
We have been working collaboratively with our regulatory partners on the content implications of the update to the 2018 field safety notification, which was issued globally last week.
The update contains information on the reduction in clinical harms associated with Parliament leagues since the 2018 notice.
We remain confident that the risk benefit profile realization I asked platform based on encore data from a real world Vasculan registry and our internal analysis of complaints.
We continue to work through the site activation process for cheap as in the expectation that clinical research will become increasingly by a whole as the year progresses.
Identified our first 15 sites for the cheapest IBT and expect to the three sites to be ready to enroll patients around the midpoint of the year.
We anticipate starting enrollment in the second half of the year as recovery from the coldest 19 pandemic allow us.
She batch remains a priority for our clinical teams due to the considerable unmet need for patients with complex AAA in the U.S. alongside developing aneurism ceiling as a paradigm altering therapy in the treatment of patients with AAA.
Lastly, we recently also announced key additions to the Endologixs team on March 12, we announced Jane carrying into appointment is a server or the endologixs more we're thrilled to add an executive of genes caliber to our board I am confident that James extensive industry experience.
Both operationally and financially will be key asset as we continue to pursue our long term growth strategy.
On April 14, Tim a better I was appointed this company's chief commercial officer, Tim brings to Endologixs over a decade of experience in the medical device industry.
Most recently served as general manager and Division Vice President of the West region for Abbott's structural heart business with responsibility for sales marketing and the piano across the Mitraclip ambassador surgical valves and copper franchises.
Prior to that you spent nine years and Edwards life Sciences and was a member of the senior leadership team.
We're excited to have came on board and his broad commercial and strategic experience will be invaluable in taking our commercial team to the next level as we launch also and build out the nellix platform.
Inline with the broader medical device industry. The first quarter 2020 was challenging.
While we are continuing to see many of these same headwinds here in the second quarter, we are seeing signs of improvement in procedure volumes, which we've seen touch on in more detail.
Despite limited visibility, we will continue to better our assumptions and scenario plan in order to manage through these challenges and come out the other side of this pandemic.
And now I'd like to turn the call over to the seem to discuss the first quarter 2020 financial results as well as our costs than liquidity actions in response to cope with 19.
Let's see.
Thank you John and good afternoon, everyone.
Revenue for the first quarter of 2020 was $28.5 million compared to $35.6 million into first quarter plenty 19.
As John mentioned in his prepared remarks sales of AFX and ovation, we're trending in line with our guidance for January and February before being impacted in March by the mobile shutdowns and the before looked elective procedures.
It took over 19 pandemic.
US revenue for the quarter was $18.6 million compared to $22.8 million a year ago.
International revenue was $9.9 million compared to $12.8 million for the first quarter of 2019.
On the product line basis global sales of both AFX and ovation, what impacted by the slowdown related to covert 19.
First quarter gross profit was $15.1 million, representing a 53.1% gross margin compared to 65.2% in the prior year period.
Well some of this gross margin decline can be attributed to lower volume associated with the corporate banking crisis.
700 basis points of the decline is related to an inventory reserve for FX two product that is expected to expire before usage in the first half of the year.
This is driven by the lower case volumes expected due to the corporate 19 impact in the first half of the year.
Excluding the impact of these onetime items gross margin operation you would have been higher than reported.
Total operating expenses for the quarter were $31.3 million compared to $35.2 million in the previous years quarter.
In the past we have discussed our plans to implement further cost control measures in 2020 to improve the overall operational profile of our business.
In response to the abrupt onset of go over 19, we have et cetera. They did the implementation of these actions already scheduled for 2020.
In addition to the some temporary cost control measures.
Our key focused ample liquidity has been supporting the manufacturing ramp up of volatile and all compliance related programs.
We do expect these cost management actions and back deliverables and commitments, we have made and as visibility into revenue improves we will communicate those changes.
Net loss for the first quarter of 2020 was $18.1 billion or 90 cents per share compared to one that loss of $22 million or $2 in 12 cents per share a year ago.
These results were primarily impacted by the slowdown with revenue related to the covert 19 shutdowns in March.
Adjusted net loss for the quarter bookings $16.2 million compared with adjusted net loss of $11.7 million for the first quarter of 2019.
Adjusted EBITDA talking the loss of $13.2 million for the first quarter of Twentytwenty compared to adjusted EBITDA loss of roughly $7.6 million for the first quarter of 2019.
Moving to the balance sheet.
Cash cash equivalents and restricted cash with $42.2 million as of March 30, plus 2020 compared to $42.8 million as of December 31st 20 might be.
The March 31, Twentytwenty balance included $10.5 million outstanding under the company's revolving credit facility with seven figure it so the gift field management company.
Our operating cash burn for the quarter was approximately $9.3 million.
Continued to closely monitor and manage our cash burn and have taken the necessary steps that focus on cash expenses form the on the most critical activities.
As announced in the 8-K filed today, we've received $9.8 million from the small business administration as part of the cares Act under the battled protection plan multiple PPP.
Turning now to guidance on April six we grew our guidance due to the uncertainty surrounding the magnitude and duration of the impacts and that go with 19 pandemic.
Visibility to the magnitude of these impacts remains limited and therefore, we will not be issuing guidance at this time.
Since we have not providing guidance I want to offer some additional color on our performance through the month of April in order to give you a better idea as to what you're seeing in the business.
Since the beginning of March we saw six weeks of continuous decline in our case creation numbers.
Equally U.S. average daily sales was down 58% versus April last year.
Approximately 52% lower than February before the pandemic.
Good news is that we saw an inflection in the mid April and have now seen three weeks of sequential improvement, although still well below where we were prior to the impacts of the pandemic.
We're also seeing the heterogeneity in case creation based on the extent of global banking and bad geographically.
We attribute some of the improvements to certain hospital system, starting to treat patients beyond that described emergent and symptomatic screening.
As a result of go over 19, when they've been decline in revenues and limited ability to accurately predict our recovery.
Revenue recovery over the next several quarters.
Audiocodes have raised a going concern doubt related to our ability to satisfy our financial obligations for the next 12 months.
We are taking actions to preserve liquidity. So that he can continue to serve our customers without disruption.
Additionally, as a result of the impacts them over 19, we think it's highly unlikely we will achieve the conditions precedent in the required timeframe that were established as part of the February 2020 that restructuring.
We are actively engaged in discussions with our lenders to ensure we remain adequately funded through this period of temporary uncertainty. So that we can continue due to the word the most innovative products for the treatment of AAA.
Lastly, I want to provide some color on the delayed funding up our 10-Q.
Yeah, working closely with that auditor to finalize the medical related to the complex that restructuring transaction that I'll quote in February 2020.
Most of the remaining work is realistic and documentation surrounding the debt transaction and we do not expect any financial impact on our results bolstered in today's press release and the inscape.
We expect to have the 10-Q on five no later than the week of May 25th.
And now let me turn the call back to John John.
Thank you are seeing once again I would like to sincerely. Thank our entire team entered into logic for all of their hard work and ongoing commitment during this unprecedented crisis.
This level of resiliency is what will allow the company to emerge from this crisis in a position of strength as we continue our mission to transform the order care for life.
Again, given the logistical challenges as being apart from one another please allow me to direct the questions. We received from each of you today to members of my team and who the best address each.
With that we will now open the call for questions operator.
Thank you at this time, if you do have a question that will be star. One again start one for questions. We'll hear first today from Matthew block with Stifel.
Oh good afternoon, everyone. Thanks for taking the question, let's start I wanted to flush out a little bit how we should be thinking back to Q appreciate thing yeah.
Terry on March and what you're seeing in April, but sort of on the most basic level. If I heard you correctly I'm really just started about thinking about the base being down.
Looking at 60% in March and and that's where the starting point and then we can see figure out what we think that that sort of recovering trajectory.
As with the imaging obviously some improvement in April that the right way to lease the right starting point to think about on how QQ will shape up.
The scene.
Sure Hey, Matt I think as I mentioned on another remarks here, we did see some improvement in April but again I owe you qualify that for the fact that within its way below where we want to be and be a way below where we would expect them to be before the pandemic.
But we do see April to your point to being the 50% to 60% range. The crime and then start to see some sequential improvement in Maine, and then try and depending on how the hospital systems hard to do the procedure logins and things like that and how they prioritize deepwater.
Or capacity continue to see some sequential improvement in June. So that's that's at least I'm very impressed that wait to kinda give you a sense on what we're hearing.
And as John mentioned all of this is subject to change and it'll come going into figured this out so 50% to 60% reduction in April sequential improvement in Maine, and then obviously a better numbers in June.
Okay I appreciate that.
A list of a couple of other quick questions. John you can direct them. Just just observation really if you just look at sort of the U.S. and L.U.S. growth performance or decline in the quarter that both fairly similar down 20%.
So again, if we take it out the recovery can factory is there anything about the U.S. versus the L.U.S. business would make one more likely to accelerate or re accelerate faster any thoughts on how to think about sort of a geographic recovery from a U.S.U.S. standpoint.
[noise], Matt I'll take that and then.
Maybe had the seasonally and.
I think it's important to recognize that the return to kind of pre pandemic procedure volume, we believe will be affected by five.
Factors first is ultimately relaxing the size and severity eligibility criteria for scheduling further away.
Who is our ability to support cases without PPP or other site specific restrictions like the testing of our reps.
So far we've been able to support our teams thus far.
Third is the availability of the Omar given the bolus of backlog collective cases that again.
I believe you will see the significant amount of heterogeneity.
Sure is I think a consistent high level of patient competence in returning to our hospital to receive the necessary care. This has been.
A daunting observation.
Many health care providers and institutions.
And then the fed related Lee is that ultimately the relaxation in the shelter in place is lifted, thereby allowing family members to support patients into and out of their hospital stay.
I don't believe there's been a significant difference in the effects of the pandemic regionally, but I'll, let the seem highlight further if warranted.
Yes, I think on a number of basis Mad what I'd say, you're right I think Europe, and the U.S. will kind of tracking.
In a similar flashing vis-a-vis some of the negative you know month over month, we get a we get declines I.
I think when you look at the O us market I still think that.
Somebody in direct markets are going to be under a lot of stress for the remainder of the yard I think the distributors are seeing that credit lines frozen.
Liquidity is a massive challenged in Latin America.
And the very reluctant to big product then second the ability to pay is going to be impacted as well. So so I think outside of the impact of just dependent make on procedure volumes I think there'll be some more financial distress.
And some of the non European non U.S. markets and that's a source of concern.
Okay got it that makes sense and I've been sneak two last ones and and these are probably for you don't they don't forget the path them off when you set up you brought it up at sort of that the fight for Ah Cath lab time. After some of these restrictions are lifted and resources to reallocate because remind us of the relative profitability of that other AAA service line for us.
Well versus other Endovascular procedure, my recollection is that they're pretty pretty high into the profitability fight for for hospitals. He just hop up at that and then Michael for the last one in there sort of we think about coming out of Oh, that's do you have to be concerned.
About the price overall I think you know the concern would be you compete against them. So much larger competitors with much broader portfolio a question about their ability to bundle when it back and they have on you sort of a normal environment has always been out there I just wonder if we should be even more sensitive now with all the.
You should obviously the hospital profitability and such that there could be tegra risk to pricing as we move forward and AAA broadly thanks, guys. Appreciate it.
Sure, Matt, let me start off and certainly the for to others a first.
We don't see a significant threat to.
Pricing at this point.
There in that but that but again it is a pandemic and all resulting competitive actions have yet to be.
Yeah make their appearance, but by and large we don't we don't see pricing to be a significant threat in the market.
Actions by.
The competitive markets at large has been relatively price went through the last several years bundling, there's certainly a consideration.
But I don't believe.
The underpinnings of why procedure volumes have declined.
The favorably affected by an increased level of bundling I think really it's a capacity constraint as the institution level.
It is a marginally profitable procedure by and large.
And I believe that it is a disease state obviously that.
Is not.
Is it was sensitive to their pandemic relative to its progression, meaning triple A.'s do not started has diminished in their growth rate as a result of the obviously a pandemic that continue to east.
These AAA patients continue to experienced an increase in their diameter size of algorithm and as a result will ultimately reach thresholds that can no longer be differ and therefore.
Of the delay is ultimately a transient condition and one that's not sustainable in the long run.
Right. That's all I had thank you.
Thank you.
Well hear next from memory type off with <unk>.
Hi, Thanks for taking the questions and I'm glad you guys are doing well.
One quick question on.
Cash containment measured you're making perhaps of question that says it seems I know in the past you had guided to about 130 million in operating than seven year look like you tracked well below that run rate for Q1 will be wrong, let's assume that you can then if all goes as planned well below that one.
30 million or is it system.
Z Murray and thank you for the question, whether you guys are doing well too so listen I think there's as you saw I didn't kind of break down the numbers for you guys, but yes.
Operating expenses, we control the spend pretty hard here and you know as much as we could in the month of barge R&D was down 26% clinical regulatory was down 16 sales and marketing was down 14.
When it was up seven but really when you exclude the cost of the financing it was down 15.
So we'll continue to watch it and as John and I mentioned in our prepared remarks. So these are unprecedented times.
We hope that we can start in rest somebody back into the business into the OCO launch into the manufacturing ramp of Ah also and I'm, making sure that we don't you know you've any foundational work.
On the shelf, so but it all depends on how the top line, there's going to do and that continues to be about you've been challenged given the visibility so.
I think we'll continue to manage expenses on cash as we have done in years prior and I hope you have enough credibility on that but the reality will be to see what the topline doesn't that some or drive our decisions that liquidity and cash build them. You know, we all bottoms up not spending too much on anything at this point.
Okay.
You mentioned ovation Alto I know there.
About the end to save one.
Launch can you talk a little bit more about exact timing as out of that happening. This quarter is happening later this summer and I'd be curious if they're a little bit about that's picking up and the logic brand through outfits pandemic with some of the high volume center given that were part of the let's strategy going forward.
[noise] Emirates, John you could look for us introducing alto in that phase one period by mid year as I mentioned in my prepared remarks, we have a sizing study to complete.
In addition, the second.
Clinical elements of our hosts market work will be the randomized control trial, which the FDA.
I'll have visibility into.
And from there, it's obviously getting I X customers converted.
Two alto first with higher to this volume centers and then eventually going into the fourth quarter.
Continue that to lower volume by X customers, and then really spending a considerable amount of time in the developing.
Maybe modest to low volume my ex U.S into greater Alex though.
Use competitively on route to obviously, establishing broader use proficiency.
And then ultimately identify the sites that would help us in the randomized controlled trial, which is part of the up market strategy that we described previously.
We believe the compelling reasons that support Altos introduction.
Our the design differences that we believe will translate into outcome differences and that is the work that.
That we want to engage high volume academic medical centers in helping us conduct.
Last question for me on that we've got two trial now that it's a completed enrollment.
No look for first PK data on some of those patients that little later this year weather virtual or in some other formats or and that being superseded kind of by the one your follow up but you know show in March.
Now, let's say that sure functional clever so yes is as well so two questions we still plan.
I'm trying to show the feedback to date.
For the central propulsion about is 95 patients at one yeah beef.
This study we got one just follow up over the whole in March 20, but as long.
Our focus now really in the trial is to ensuring the we get the best follow up with the kind of those patients given the challenging circumstances, we find ourselves into clinical trials, but yes, we do plan to give visibility to the results in the issue.
Anything further Marie.
Okay. Thank you.
I would like to remind everyone. If you do have a question that is start went up.
Your next from JP Morgans Robbie Marcus.
Hi, guys. This is actually Allen on for Robby I just had one quick question on kind of your I guess performed this quarter I remember heading out of the last quarter that there were some puts and takes you out you guys business you had kind of onetime benefit from stocking and prior year. You also had some headwind.
From Brazil, because you hold.
I believe you pulled ovation there amount I think right now I'm ahead of the ovation alto approval into Q.
So I guess like given how the quarter really did come in better than expected and optically it looks like actually kind of inline with the U.S. business.
With respect to Cove, it wasn't really went better than expected there.
The same.
Yeah, Silicon I think as I mentioned, Alan I don't think I'm in the first quarter, though things kind of better than expected we were tracking to the guidance that we had put out there and if you remember.
You're right to point of the though one of the Big walk from walk items from Q1 to Q2 to go back and broker was the fact that we actually had no part of the ship for Latin America.
You know we made a decision last year to knock that we started the line put ovation prime which it would be with selling in Brazil, and we did not have regulatory approval, obviously put all coal or high ex and then we also did not have regulatory approval for FX too.
Because Brazil was the last market that will still continue into that FX one.
So so again so those were the walk items, if you will to take us from the Q4 number down through the guidance of 30 million, but in terms of kind of the puts and takes to sterling. The U.S. business I think it was tracking as expected or poor January and February and that obviously, we can depend them again.
And you know the last two weeks of March.
But just to give you guys an update them up and we still haven't been theme for us. He is the FX to approval hold Brazil.
It is going to be a convenient have them for the remainder of the year and at this point based on you know.
Input from the regulatory bodies and in Brazil, and some of the challenges of corporate banking there, we expect no FX stewardship sometime in the fourth quarter.
After the regulatory cool so that's really the in a nutshell on what happened in the U.S. and kind of the impact on Brazil, because of the FX to regulatory issues.
[noise] anything front, our mature markets.
No that will be all thank you.
Thank you at this time I'd like to turn things Mister car. That's Mr. I was hoping you can go for any closing remarks.
Thank you operator, and again and thank you everyone for joining us today I hope, but again, you and your family's remain season in good health and look forward to updating you on our progress in the next quarterly earnings call. Thank you.
Again that will conclude today's conference. Thank you all for joining us.