Q2 2021 ABIOMED Inc Earnings Call
[music].
Ladies and gentlemen, please standby your conference call will begin momentarily. Thank you for your patience simply standby.
[music].
Ladies and gentlemen, thank you for standing by and welcome to ideal image second quarter 2021 earnings Conference call. At this time, all participants' lines on a listen only mode. After.
After the presentation, there will be a question and answer session to ask a question. During the session you will need to press Star then one on your telephone.
Be advised that today's conference maybe recorded.
Require any further assistance. Please press star and then zero I would now like to hand, the conference over to your speaker today Mr. Todd Trapp, Sir you may begin.
Good morning, and welcome to the Abbey mid second quarter 15, 2021 earnings call. This.
This is Todd Trapp, Vice President and Chief Financial Officer.
I'm here with Mike Minogue, Abby, Mitch Chairman, President and Chief Executive Officer.
The format for today's call will be EPS falls.
First Mike will discuss second quarter business and operational highlights and then I will review our financial results, which were outlined in today's press release.
After that we will open the call to your questions.
Before we begin I'd like to remind everyone that today's call includes forward looking statements.
The company cautions investors that any forward looking statements involve risks and uncertainties and are not guaranteed in the future.
Actual results may differ materially due to a variety of factors identified in our earnings press release, and our most recent 10-K and 10-Q filed with the FCC we.
We do not undertake any obligation to update forward looking statements.
With that let me turn the call over to Abby image, Chairman, President and Chief Executive Officer, Mike Minogue.
Thanks, Todd and good morning, everyone.
Over the past seven months Weve navigated the challenges presented to our patients customers and employees by COVID-19, and coronary artery disease.
Our ability to put patients first and adapt and execute as an organization has done or strain.
We have created the new Abby med to not operating procedures, while significantly investing in innovation and clinical research to revolutionize the standard of care for human I'm support I am proud of the patients first commitment and leadership from our employees and customers to recover Hearts and save lives every day.
For fiscal 21, we.
We designated a three phase red yellow green approach to address the evolving coated co night COVID-19 environment Q.
Q1 was the red phase, reflecting the broad restrictions on elective cases limited access to hospitals and limitations on travel meetings and headquarters operations and our Q2, we moved to the yellow phase with the acceleration of Abbvie met chewed auto and preparing to return to growth during our.
Summer quarter with essential procedures.
We were focused on sequential and year over year growth, which occurred in hospitals and geography is better positioned to handle the resurgence of Cove in 19 patients.
However, two elements remain challenging in Q2.
First patient anxiety caused delays in seeking treatment for urgent and emergent care second hospital I see you availability impacted patient referrals further, causing delays in cardiovascular treatment for patients without Corona virus.
These factors keep patients home longer.
Suppress the referral network and simultaneously increase patient risk in cardiogenic shock rates.
This phenomenon has been reported for high risk PCI.
Stephanie in cardiogenic shock.
However, in this kobin environment staging PCR height, and high risk open heart surgery called cabbage, our last preferential and the heart failure patient populations at the hospital tend to be higher risk and sicker.
As a result in our Q2 yellow phase, we have pockets of sustainable growth and recovery across the us Europe and Japan.
In Q2, Abbvie met delivered a 210 million in revenue up 27% sequentially over Q1 and up 2% year over year.
During the quarter patient utilization increased each month led by recovery in high risk PCI essential procedures and.
Had positive growth in cardiogenic shock.
We believe that this trend will continue but we do not expect a perfectly linear upswing given the volatility with Kobe resurgence.
Outside of the U.S. revenue increased 25% sequentially and increased 14% year over year as we saw strong recovery within the quarter in both Europe and Japan.
Despite the crisis in Q2.
We remain operationally disciplined and focused on our fiscal 21 goals and tactical plan we.
We delivered 29% operating margin, while continuing to invest in research and innovation at record levels for the company.
Our balance sheet remains robust with 736 million in cash and zero debt.
And we continue to expand our lead with one of the strongest patent portfolios in med Tech with 929, Impella patents and 835 patents pending.
Overall I am proud to report that we achieved our Q2 yellow phase goals and grew sequentially. So.
Stabilized revenue in the U.S. and increased revenue double digits outside of the U.S., while advancing our regulatory clinical and engineering milestones.
For today's call I will provide three updates.
First on our planned transition to the Green phase.
Second the new Impella clinical data.
And third our progress on new technology milestones.
So first operationally, we achieved our Q2 yellow phase goals.
We also ramped manufacturing back up to full production in Danvers, Massachusetts in Aachen, Germany.
And we continue to expand training and education online with over 1000 physicians trained in the quarter with virtual calls and leveraging protected PCI dot com and cap PCIA weekly live Impella supported cases.
We are preparing for our transition to the green phase by the end of the third quarter. Despite the resurgence of COVID-19. This.
This transition to Green means we're playing offense versus defense utilizing hospital protocols to improve outcomes and grow impella and EQT Pella adoption.
Internally, we are now routinely screening and testing employees for co bid in our manufacturing facilities in Danvers and Aachen.
This enables abbvie med to invest in innovation achieve our timelines and treat a record number of patients in heart failure, including those with Corona virus.
Mmm chewed auto allows us to adapt our execution on training data and time with the objective to minimize patients I'd and maximize the referral network with protected PCI cardiogenic shock protocols and FDA emergency use authorizations for Covidien.
<unk>.
Transitioning to my second update two weeks ago, we present, the most robust clinical data at TCT in company history.
Impella was highlighted with three prospective sta.
Post approval studies and more than 20 presentations and abstracts, including our newest protect threed data presented from the TCT connect main stage.
And the first look of the restored EPS study.
Which demonstrates a clear improvement any rejection fraction and patient quality of life as a result of the Impella supported protected PCI.
The benefit of injection fraction improvement with Impella protected PCI is no longer debatable and these clinical endpoints are validated.
In multiple perspectives studies as compared to the in and out PPI treatment technique.
The protect three study also demonstrated even lower impella race of vascular complications bleeding and stroke at 1%, 1.8% and 0.4% respectively compared to Impella 2.5 in the <unk>.
Protect II study.
To note the intra aortic balloon pump stroke rate was statistically higher than impella in protect two at 30 days.
And the intra aortic balloon pump is now team in the United States class three or harmful for post cardiac arrhythmia cardiogenic shock.
As a reminder, we hosted a TCT recap call with QNX led by our Chief Medical Officer last week and the link to this webcast can be found on our investor website.
Impella is the most study in heart pump in the history of the FDA with 14 years of studies originating in 2006 and continuing to today.
Impella has over 780 clinical publications seven completed EPS, the studies and five post market studies completed or ongoing validating impella exclusively.
Safe and effective for protected PCI, cardiogenic shock and right heart failure and.
Capello also received FDA emergency use authorization for Capella and Impella RP for co bid related complications.
We will continue to study and publish best practice protocols as we pursue class one guideline recommendations with semi DQ protect for and recover four studies.
We are currently enrolling our STEMI DQ study and plan to initiate our protect worst study with the goal for our first patient treated at the end of this fiscal year or Q1 of fiscal year 22.
Now I would like to share a recent patient story, highlighting the exclusive benefit of the Impella RP to Percutaneously treat right heart failure.
Andrea Setter, a 57 year old retired teacher was visiting her daughter and son in law and her two day old grandson once.
When she began experiencing dizziness and other concerning symptoms.
Her symptoms return the next day, followed by convulsions. This.
Despite the pandemic Andrea was rushed by ambulance to Palm Beach Gardens Medical Center in Florida.
ER Doctor and a shots Patel diagnosed right ventricle heart failure with a life threatening clot in.
Inserted the Impella RP heart pump Percutaneously.
To allow her heart to rest and administered drug to dissolve the clot.
After three days of support the Impella RP was weaned annex planted.
Andrea was discharged home a week later with normal each action fraction for her right ventricle.
Today, Andrea is grateful for quality time with your family and she is especially grateful to hold your grandson.
Moving onto our third an update on product pipeline, we continue to make our products smaller smarter and more connected.
The Impella 5.5, the smartest is now at 121, U.S. sites, driving a 53% year over year increase in revenue for surgical heart pumps. This.
This forward flow heart pump is smaller than the five FFO.
Easier to implant via the X., Larry artery and avoid the Sternotomy and coring of the left ventricle to provide full hemodynamic support with smart algorithms designed for management.
Leaning and identification of right heart failure.
We also continue to receive positive feedback on the blood compatibility with the most positive testing data on record for Vas.
This game changing device is designed for heart surgeon and answers the clinical need.
Our exclusive Impella connect capability is now live at 477 us sites more than doubling the number of accounts compared to last quarter.
Additionally, nearly half of our US patients are now monitored in the cloud with Impella connect.
We have an additional 484 sites with the hardware already on the console requiring only hospital Wi Fi permission to activate the Impella connect account.
Lastly.
We submitted for five 10-K approval last quarter for the XR sheet with the Impella 2.5 and remain on track for a limited market release by the end of Q3.
We are delivering ahead of schedule on key regulatory milestones on October 26, we announced five 10-K clearance of the Ivy Meds breed Oxy, one system and will initiate our controlled launch at our first five hospitals in Q3.
We are very excited to add ecmo clinical capability of and Oregon, Oxygenation and combined therapy to include unloading with acapella.
During the Kobin crisis, we have further study the EQT pellet benefit and will expand our patient population to include respiratory therapy alone.
On October 28, we announced a successful first in man series of two patients in the US FDA early feasibility study for Impella CP, the world's smallest heart pump.
There are two procedures were successfully perform at essentially St_john in Detroit and Christ Hospital in Cincinnati.
The Impella CP, which stands for expandable cardiac power is an innovative true.
True nine French accessclosure pump with CP like flow.
We believe this is a game changer for high risk PCI.
In conclusion.
We executed during the yellow phase and are transitioning to the green phase in the second half of the fiscal year.
Cove in 19 patients present, with heart kidney and lung failure and the fear of COVID-19, keep some patients with coronary artery disease at home, causing them to be more high risk when they seek care.
[noise] hospitals are now better prepared to handle the resurgence of COVID-19 patients.
And admin Trudeau is in full swing with online everything, allowing support of our patients and physicians in the cloud and App. The hospital bedside 24 by seven.
Our technology platform of Impella enactment provides unique solutions for heart muscle recovery, and Oregon oxygenation for Corona virus coronary artery disease in cardiogenic shock patients.
No other Medtech company.
Has this innovative vision or core competency.
At Abbey Med, we remain steadfast in achieving our fiscal 21 goals focused on innovation, improving clinical outcomes and growing revenue.
We are playing offense with technology and clinical research and we will emerge from COVID-19, as a stronger company uniquely positioned to change the standard of care.
We appreciate our shareholders for their continued support on this journey.
I will end by thanking our customers and employees for their hard work and dedication to recovering hearts and saving lives.
I will now turn the call over to Todd Trapp, our CFO.
Thanks, Mike and good morning, everyone.
In the quarter, we delivered revenue of $210 million.
An increase of 27% sequentially and an increase of 2% versus prior year.
While our business continued to be negatively impacted by the COVID-19 pandemic, we saw a gradual improvement in patient utilization in our key geographies over the course of the quarter.
By region, the U.S. reported revenue of $172 million up 28% sequentially and flat versus prior year.
You must patient utilization increased 24% sequentially and was down 4% year over year.
Sequentially high risk PCI and am I cardiogenic shock grew 33% and 20% respectively.
Versus prior year, cardiogenic shock increased 1%, while high risk PCI declined 8%.
As we discussed on our last call we saw resurgence in cold cases in July across some of our key markets, such as Texas, California, and Florida, which impacted our utilization in that month.
Within the quarter, we did see a recovery in some of these regions and overall, we saw a sequential improvement in U.S. patients in August and September.
In the us at the end of September the Impella, two five and CP have reached 1468 sites.
The Impella five zero has been placed in 657 sites.
In the Impella five five with smart assist is now in 121 sites of 31 sites versus prior quarter.
The full market release of the Impella five five continues to deliver as our left sided surgical portfolio, including the five though the LD in a five five reporting the 53% increase in revenue versus prior year.
Finally, the Impella RP is in 552 sites up 14 sites versus Q1, with RP revenue, increasing 4% versus prior year.
In the U.S., we continue to see favorable sales mix as we transition to Impella CP with smart assist and Impella five five with smart assist.
In the quarter, the reorder rate was 100% a slight improvement over last quarter.
Average combined inventory at the hospitals for the Impella two five in CP was approximately 4.6 units per site.
In line with the inventory levels, we saw last quarter.
Outside the U.S. revenue totaled 38 million.
Up 25% sequentially and up 14% year over year.
Our European revenue increased 29% sequentially and 17% versus prior year.
Driven by a recovery in Germany, Switzerland, and Italy.
And favorable foreign exchange.
Specifically German revenue was up 29% sequentially and up 17% versus prior year.
The year over year performance in Germany, we've driven by higher patient utilization save.
Favorable foreign exchange and timing of Reorders.
In Germany, both high risk PCI and cardiogenic shock grew mid single digits in the quarter.
In Japan patient utilization was up 32% sequentially and up 29% year over year.
In Q2, we delivered 10 million in revenue up 15% sequentially and up 7% year over year.
Primarily driven by higher patient utilization, which was partially offset by lower site openings in console sales.
As discussed on our last earnings call, we communicated lower site openings in the quarter versus prior year.
We opened up 14 sites in the quarter and now around 142 sites in Japan.
Moving to key financial metrics gross margin was 81.5% in the quarter compared to 83% in the prior year.
The year over year variance was driven by sales mix and incremental cost to accelerate the impella connect rollout.
One of our main objectives during the yellow phase was to continue to invest in innovation. Despite the short term headwinds.
In the second quarter R&D expense totaled $31 million, an increase of 27% versus prior year.
We continue to focus on breaking the small bore barrier with investments in the ECS, our chief the nine French PCP pump in the Impella five five with smart assist.
We're also investing in clinical studies like STEMI deep you protect for and recover for with the goal of achieving class one recommendations in STEMI high risk PCI and am I cardiogenic shock.
SGN expense for the second quarter totaled 79 million down 8% versus prior year.
We remain focused and disciplined on managing our discretionary costs.
We're also benefiting from lower expenses, and Colgate impacted related activities, including TNT and trade shows.
In the quarter operating income grew 2% to $161 million translating to an operating margin of 29.2%.
We delivered strong margins, while making what we believe are the necessary investments in aby mid 2.0, including innovation clinical data in online training and education to drive long term growth.
GAAP net income for the quarter was $62 million or $1.36 cents per diluted share versus $13 million or 28 cents in Q2 of two point.
The year over year improvement was primarily driven by a mark to market on our Shockwave investment and a lower effective tax rate.
Our tax rate for Q2 was 14.7% versus 24.7% in the prior year due to higher excess tax benefits in this year's rate.
We had another solid quarter on cash as we generated $77 million of operating cash flow.
Our balance sheet is robust as we ended the quarter with 736 million of cash and marketable securities and no debt, which provides us continued security and flexibility.
With the impact of the pandemic evolving differently across geographies, we will continue to adapt to meet the needs of patients and physicians.
Although there is much that remains unpredictable to provide transparency to our investors. During this time, we want to give color on our top line expectations for our third quarter.
Similar to our performance in Q2, we do expect to see a sequential improvement in revenue throughout the quarter.
We expect this to be a factor of hospitals being in a better position to anticipate and be prepared with the resources needed to manage patients under the current circumstances.
We also expect an increase in volume as sicker more high risk patients begin to return to the system for care.
At this time, we expect Q3 global revenue to be in the range of 221 million to 230 million, representing flat to 4% growth compared to Q3 of last year.
So in summary, despite the unpredictable environment, we delivered solid operational and financial performance in the quarter.
While we navigate through the uncertainties of the pandemic, we remain focused on executing our fiscal 21 goals and transitioning toward green fees, while we continue to progress towards changing the standard of care with Impella.
Through our proven formula of training data and time.
Operator, please now open the line for questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star followed by the number one key on your assumptions.
If your question has been answered or you Miss or move your thoughts on the queue. Please press the pound key.
Our first question comes from Margaret Poser from William Blair. Your line is open.
Thanks for taking the questions.
First I wanted to talk a little bit about the green fence and your comments, Mike on being able to go.
On the offensive here. So can you give us give us a little bit more color around what that means and then you had talked about patient tiers is that something that abema can directly address or is this more about being able to go out and kind of try to reinvigorate those referral networks and get some of these patients that may be our backlog or.
On the sidelines and get them into the hospitals coming up in the fiscal third quarter.
Thanks, Mark for the question, let me start by saying that I'm very optimistic about the quarter and getting to green as well as the fiscal year. The impressive work the engineering and the clinical teams are doing and most important in the future. So may cover what it means to go to green So in this.
Transition to the green it means we want to treat more patients than ever before because the population at the hospitals is greater than it's ever been because the patients are sicker door to balloon times longer non STEMI patients wait longer. So everything is every patient sicker as a higher risk. We don't have elective cases that abbvie met we have high risk.
PCI Weve urgent and we have emerge and our patients have some of the highest risk factors of any patients any patient in the hospital from a cardiovascular perspective, so that part of us needs that means we need to be better able to adapt and execute and the way. We are doing that is working with the hospitals in the societies, which are.
Much better prepared I mean that it starts with being prepared so we have more knowledge around cobot, we know it's airborne.
We have better testing from temperatures.
Okay, Great and then if I can I'll ask a little bit about the third quarter guidance, what sort of stems into that.
Florida, we saw resurgent in cases in July but made a strong recovery in August to September and actually grew year over year quarter. So the timing of the bounce back of the recovery is tough to call, but as you know, but we know it's going to happen as hospitals are better prepared to handle the resurgence and again our patients are not elective they are sicker and they are in the.
Need of hemodynamic support I would say the high end of the range. We continue to see a gradual sequential improvement some lift from the robust clinical data from TCT that Mike highlighted earlier on the call around protect three and every story ETF and again, we'll just continue to be transparent on the trends that we're seeing.
Great. Thanks, guys.
And our next question comes from.
Revenue O'brien from Piper Farmer your line is open.
Thanks, Good morning, I'd like to just follow up a little bit on the Q3 guidance, especially in the us.
I know, it's a nice sequential bump that we're expecting here, but I think it's probably a little bit softer than some people may have thought just based on a little bit easier comp.
Versus Q2.
Into Q3, and I think just based on what you said about the interest level and by five and RP.
It would imply that there's still a lot of weakness on the on the high risk PCI side of things. So can you just just talk a little bit about.
Why that would be the case and then Mike you've been doing this a long time is this kind of.
Similar to what you've done historically, we're just trying to be as conservative as possible on that number just given all these different variables that are difficult to predict.
So Matt I'll take the I'll take the question. This is Mike. Thanks for the question I think it's.
Does that need to be treated and if they're not treated unfortunately, they will they will die or they will have some permanent damage that will limit the ability to treat them in the future. So we're in a situation here, where again, we're confident that we're gonna be able to continue to grow sequentially.
The ultimate goal of growing growing year over year as we did in the summer quarter in queue too but.
But we're going to be prudent about our guidance and try to do the best to give full transparency to what we're looking at coming into this transition to green.
Okay Fair enough and then on the sheets side of things you know great to hear that the timing for for that is on track.
Q3, 21 for the limited launch there can you kind of frame up how often two five is even used anymore and these PCI cases that we don't really get into that.
At this point so.
Given that it's gonna be two five with that cheap how impactful could that product B Q3, Q4 and even into.
Physical 22, thank you.
Not the question on two five and to use less because we have the in policy P. However, there is probably a patient out their population out there that doesn't get it used at all that are more female you see that in our bailout studies were smaller sized individuals where that next physician group that's more.
Worried about access closure might.
Might be more willing to use it for that patient population remember the protect too was only the 2.5.
So we think we're going to get some of those new smaller patients more female patients get those doctors more comfortable it certainly does a lot more than a balloon pump in many cases places are not using balloon pump there either just they're getting in and out or they're getting in and out and trying to stage and meaning they'll bring him back again in 60 days and staging is something that is going down.
<unk> currently with Covid environment, and a lot of these high risk cabbage patients are less likely to get cabbage, so they're going to be referred in too.
<unk> cardiology.
We also know that for high risk PCI that single access by are more relaxed expert experienced user is around 40% of their protected PCI. So they have a product that very comfortable with single access continues to grow and what we're doing is we're really trying to address the different levels of our users those that are early ado.
Doctors versus early majority versus late majority and we know that access closure is very important and that's why you're seeing us really leveraged protectory data to show that the vascular complications are now numerically lower and in some case statistically better than to protect two numbers, especially around the insurance.
Balloon pumps, so we think that within the combination of the XR sheath and the new data that's out there and then our training and education program, we're really going to minimize that fear of access closure that keeps some of the physicians from holding back in again the goal of doing a PCI is to get complete revascularization because by doing that you enable us the improvement.
<unk> an improvement in quality of life that has now been proven in multiple studies, including FDA studies as well.
Very helpful. Thanks, Mike.
Thank you all.
Our next question comes from Chris Pasquale from Guggenheim.
Your line is open <unk>.
It might just following up on the expandable she's question, what's the timing on the C. P compatible version because that's obviously more meaningful in terms of your current product mix.
What we had said and we will we continue is that we're going to follow up.
And then the following quarter, so we're talking about and to Q3 and Q4 to submit for the CP and then depending on the cycle for that five 10-K that will lead us to the limited market released on the CP.
Okay. So it still thinking about some time in the first half of FY 22 for the market release.
Correct Okay.
Okay, I went and I would note, though that that when we talk about impeller one of the things to look at his tavern. So a lot of the same centers and some of those a sophisticated users they've already mastered doing at 14, French cannula, all the way through remember the impel us for the CPE. It just has a 14 French motorhead.
The rest of the catheter in the pump his nine French so that's why our XR sheath is unique because it expands and recoils. So you can close with the nine French so that's even significantly easier than the ones who are comfortable doing a tavern. We also know that again the single access technique is very popular and most important what.
Protectory shows is over the last two years the best practices. The training you really are looking at adverse event rates on complications such as.
Vascular complications and bleeding similar to the race around the balloon pump and protect too and in the case of stroke, you're looking at statistically better outcomes than what we've seen historically with balloon pump.
Yeah, I think that's a good point, Mike maybe help square. This for me given that context vascular complications are down we've gotten better at large bore closure, so easy expandable she's a real catalyst for the business or is this sort of solving a problem that's already been solved by technology ever.
Lucian and in other areas.
It's a combination it's all of the above Chris. So remember we have different sized users and different comfort levels. So what we're doing is we're giving a solution starting with regular education here are the actual results of what you get and what you see in the last two years, Vassar complications bleeding and stroke and the one thing to point out and.
The circulation publication of a mean it does not give net outcomes for any of those three components. It just gives an odds ratio. So we continue to try to pursue.
Circulation to put out that net numbers because in our own investigation and buying the data you'll see that all of those are single digit there lower but because you have 4000 in Palo patients and 40000 balloon pump patients you can get a P value difference of 1% when it's low single digits.
Reasonable and the database that doesn't even track it. So we're going to continue to drive the education, we believe that where we are today and best practices is that we've really gotten those adverse event rates to a very reasonable number and the overwhelming benefit of the hemodynamics support and being able to achieve complete neovascular zeeshan Israeli the message or here.
Bring from the physicians around the Protectory data as well as and restore yep proving to physicians, if we're going to do high risk PCI. The ultimate goal is to do the best we can and a single setting because it has an improvement in the patients quality of life and ejection fraction. The same way you get for cabbage, where they removed and so.
And without having the invasiveness of her sternotomy, so and excite it's the most exciting time for us as far as clinical data education and training and the Covid World has really opened up a new opportunity for US we had planned to do online training and education and live cases, but we're going to be able to have more input.
Now than ever before with online training and education, We do weekly cases, where our users log in and because they have password protected identification, we know who they are we know their outcomes. We know they're indications, we know where they're at from in Pelican Act with the sole of getting a train and making a more comfortable so they can continue to.
Prove outcomes for both hires PCI and cardiogenic shock so while there's a lot of negative things with the Covid world. There's many things that are going to be very positive for us and if what you're trying to do is become the standard of care and train the masses from small to large centers.
This whole network, we have now with physicians logging on and watching cases, and and answering questions to each other did not exist a year ago and so with everything we're doing from impeller connect to online training. We think we're going to be able to get in 12 to 18 months, where we would've and would have taken us four to five years.
In a normal world without Covid.
Thanks, That's helpless last one for me picking up on your point about maybe some silver linings to what we've gone through this year.
Highlighted some of the covid related approvals that you've gotten over the past six months or so are you actually seeing meaningful utilization in covid patients, who you wouldn't otherwise be treating Ah can you quantify the impact of that at all.
I think there's two pieces to that answer Chris first or is that the majority of all our patients because of covid.
They are sicker, so an average door to balloon time now is three times higher than it's been the non sammy's have a higher mortality rate semi to have a higher mortality rates. So there. It is increasing that component of the patients are sicker, but and they get to the hospital for Covid itself.
We're getting some incremental opportunity, but I still think there's a lot more education, we need to do both around pulmonary embolism for people that get right heart failure as well as act Pella and just unloading in general So we're going to continue to further publish papers on that on those populations.
Thank you. Our next question comes from <unk> from Jeffery Your line is okay.
Alright. Thanks, Good morning, maybe Mike I could start with the C. P. News. This week you know some of the early feedback there seemed to be quite positive on that device, maybe you could describe a bit more about the past from here and what that initial early feasibility. So it looks like when you transition to something a little broader.
Sure. So I was in Detroit for the first case the impeller ECP has been in the works for a while these are very difficult pumps to do tourists and ceased our chief Technology Officer is a co inventor of it and when I bought the original in Pella Company I was not able to secure ECP and I had been trying to.
Get it back from the day, we closed on in Palo. So that was a great acquisition back that is probably the one competitive product that would compete with them policy and it is now part of <unk> portfolio and it did it did you need to utilize our our core impeller Patton's in order to come to the market that being said, we see them.
Market, having different needs. So a high risk PCI patient may need four to six hours a support whereas a cardiogenic shock patient may need for days and support with smartest algorithms AI and running the cloud and then longer term pumps that we're working with five five in the appellate BTR can really focus on those chronic patients. So we've got.
Components that we're working on now what the path is for ECP is you have a product early feasibility process with the FDA.
So we're looking to do the first five patients, which we should be we should be done with shortly for hiring PCI will do a preliminary screen with the safety monitor and go back to the FDA to do the next 20 that consider that the pilot phase and that will be an ongoing process. After the pilot phases over within anticipating and this is <unk>.
Not been confirmed and agreed upon yet with the FDA, but our current plans would be that will move into more formal of a pivotal study will be now going.
A bigger number in high risk PCI, and where most likely be comparing it to our current data that we have coming in on the multiple studies for the impeller 2.5, and CP, especially from the Protectory datasets. So that's the current plan, but the nice thing about the early feasibility processes. Once you enter the United.
<unk>.
And we are here and it's not going to go away and we're going to continue now to expand the number of centers that get access to ECP.
As we continue down the path to get approval.
And just to put a point appointment that's when you move into that pivotal say late this year at least this fiscal year. Maybe early next when when do you think that product might ultimately get approved for for much broader use.
Yeah Rogers, it's a valid question with everything going on right now, let us get through the early feasibility study and we can tell you that.
But it's going well, it's it's a pretty incredible product nine French now you are talking about something that's essentially similar size to a balloon pump, but it actually can flow at rates similar to the impeller CP. So it's it's a dynamic breakthrough product I think all the physicians done I've been waiting for it or excited and I hear from many physicians that.
Now all my partners will use the ECP, but what we're trying to do with their partners is show them today. They can get low adverse event rates on vascular complications of bleeding with today's product would training the XR. She it will make it better and then obviously the ECP, we will make it even easier. So that's our that's our path.
Right, Great again, uhm sort of similar questions on protect for you know would protect <unk> been presented it sounds like you're moving aggressively to protect for but I don't think you've ever fully outline for us the size of that trial, how many sites. When do you think it might be when it might be done. So anything you are willing to offer today on on the path there.
Sure one of the benefits again of Covid is the physicians now are routinely online. So we've had weekly calls on protect for.
You look at the Executive Committee. The P is the technical Committee. These are the world leaders in both their triallist world leaders in studies around stenting or valves.
And we've got complete engagement, we've locked in the protocol we've locked in the steering committee of the country leaders that will be a global study. It does not require a an FDA ITE because we're already on label. However, we're working with the FDA.
To ensure that they know what we're doing and we're looking at many things to potentially expand our label later on and we've routinely worked with the <unk> give them an update every quarter. So.
Will let them know how we're moving but we can also give us the ability to move faster. We expect to have 1200 patients it'll be an adaptive design plus there'll be a registry of another 30 or another thousand patients that are not in.
In this study that will track a big challenge will be to make sure from Ah ethics perspective that all patients randomized will be able to do that because we will we will know every patient every center because of Impellent connect and the and the IQ database.
And we.
We expect to have our first patient and protect four at the end of this fiscal year.
Or the first quarter of next fiscal year. So we're moving fast. We're excited the reason that this study is set up to have a long duration of of tracking so after the first year. We're then going to start.
Looking at the data from 30 days to six months to up to three years, we really believe there's a separation of the curve for patients that get better revascularization and see an improvement in their eef and because of that and the way to study setup is it really is designed to to have the strongest recommendation too.
Two.
Meet all the requirements for a class one guideline, which would then essentially mandate.
Usage of this device not just here in the U S, but in a sense globally and as you have been watching with the balloon pump the balloon pump. His his class three meaning it's harmful for shock in Europe, and Asia and now the class. It's a balloon pump his class III harmful in the United States by the surgical association for patients that can't come off the heart lung machine.
Post cabinet so.
It's a really important thing that we both get class one guidelines foreign pella as the world moves the balloon pump the class III unless it more as harmful. So exciting time, that's that's a great group and I think protect forward is going to be probably one of the most revolutionary clinical studies in olive cardiovascular medicine.
But I guess.
1200 patients and now you're describing a potential follow up period that could be as long as three years.
When do you think you'll be in a position with enough data to uhm actually move to where it could justify moving to the two across one indication uhm, maybe a follow up to his when when do you think that 1200 patients might be enrolled so we could even start to see some early 90 day kind of <unk> and point data from it.
Yeah. That's a good question and in some cases, a lot of times companies do 30 days or 90 days, because they're they're rushing to get to the number to get the P value. So they can go before the FDA panel and get approval, we already have that approval. So the way it is going to work Rogers at the at the end of one year. After the last patient then we're going to have the data then we have to process. It.
But it's really think of it as one year. After the last patient is after three years of tracking will be then putting out the data, but what we'll have in that data is we'll have the 30 day to six month to one year and then beyond that so that will have the.
The kind of data that you really need to show what happens when you do better Revascularization and what we expect to happen is our patients will have better yaps more active and or protect three datasets shows are best practices, but the restore E F.
Protocol is similar to protect for which really continues to show that you can treat these patients get a massive improvement. So you are talking about a net 10% to 15% improvement in E. F. So if you have a 30% eef going into a protected PCI and you come out with 45% your quality of life is different.
If youre EIF goes up that much it improves the curves on your survivability. So we're going to test that and they also feel better in many cases avoid having to have an ICD. So there's a cost savings for that as well. So that's the reason we're doing this we already have the label we've already shown the best practices, but to protect for it is really swinging for the fences to document that this is the way to go.
Similar to.
The way Tavern has proceeded and driven the conversion for their patients.
Great I just wanted to squeeze one last one because I don't think I've had a chance to ask you about this since it came out last month, but the final reimbursement rates for apology R. D 215, no. It was down I think it roughly 11%.
Any broad thoughts you won't offer on on if that's going to have an impact and kind of really the future direction of reimbursement.
Yeah, we always say the reimbursement exercises a math exercise. So if the hospital charges go up then the reimbursement goes up in hospital charges to go down and then it goes down remember, though we have a mix of patients we have a high risk PCI to shock. So if a patient is high risk PCI and they do well and discharge and they can make a little more.
<unk> if the patient is in shock and not everything goes well they can lose money. So what they do for those as they submit outlier payments to get back some of the reimbursement and if the if CMS gets it wrong in that hospital charges higher it goes up the following year. So we continue to monitor it I don't see this as as an impact pro or neck.
Give them, we've talked about that for years, because what's happened is CMS HHS in the federal government has set up a system that there's multiple ways to get paid for empower whether you're at the hob or the spoke you can get DRG. One you can get DRG three without power you can get DRG, one with Biventricular palette, you can get 215.
As the DRG, you're talking about where you can get DRG 268, which means you have accepted in power on patient on empower already three of the four have gone up and so again into the system of care, we're very grateful to CMS in the FDA that they've given us exclusive FDA approvals are safe and effective and especially appreciative to CMS that they've given.
US exclusive ways to get paid for impeller that they've deemed reasonable and necessary.
Great. Thank you.
Thank you.
Our next question comes from Danielle and coffee from Anthony D. Late right. Your line is open.
Good morning. Thank you so much for taking the question maybe the question for you, but you mentioned that July went down utilization was down 4% acquaintances I think that was I'm sorry year over year I believe.
And then but you are at 4% for this whole quarter is there any way you can give us a little bit more color on what happened in August and September obviously would have had to grow much faster than that 4% and then I have one follow up.
Yeah. That's a good question Danielle I think.
When we talked about on the call in my prepared remarks, as we did see sequential improvement and patience in August versus July and September versus August. So again, we continue to to see the sequential improvement both revenue and as well as in patients in the U S and.
Oh really that's what our focuses in on getting better each month and seen sequential improvement in.
That's what we saw in July and August and September and in the U S.
Okay is it fair to say, maybe I mean, just doing the math I mean, it would've had to be relative.
Relatively meaningfully to get to that 4% for the quarter is that fair to say.
If you look at it if you do the math and again, it's some of it's just a year of your comparison I would say, 4% and in July we got a little bit better in August and July and September I'd say, it's a little bit probably more kind of breakeven on a year over your perspective.
Got it Okay and then my follow up is around had a look at that go forward growth outlook X covid sort of getting rid of all the noise around coalbed and one of the things. We've been hearing is that the high volume users are still very much believers and Abby and that's why I was wondering if there is and it's been a lower volume users that I've been sort of decline 18th.
The client can you say again, so I was wondering if you could help us sort of characterize how the high volume users has been growing versus the low volume users and sort of great just to watch.
<unk> watched it go forward X covid outlook could be just sort of.
Looking at those different dynamic thank you so much.
Danielle Thanks for the questions. It's a very good question is something we track and we have such visibility to our doctors are indications on our hospitals that we track. This on a daily basis, and we get an email for every patient all day long and if it's an independent we ultimately find out about it either it's on in Pelican.
Directly so we know about it or in a reorder that being said is we've analyzed the actual smaller to medium hospitals.
Have gone up sequentially in the 20% range, but they actually are up year over year in queue too and the reason is is because these patients don't want to go far.
You're going to see this trend, where you're going to end up with more spoke hospitals. Those physicians are doing the patients are sicker, when they do high risk Dci or potentially that's where they're going for shots. So collectively we're doing pretty well.
In those centers, it's a good trend for us it's widening online and training Education's helpful. We can get those physicians to log in and watch cases on camp PCI.
They can ask questions of the experts.
They can even get Proctor, if they go through the studies or.
Curriculum, that's online as well now when you end up looking at the large center. So our top 20 centers that we've talked about in the past that to about 50%. They're up also in the 20% range sequentially in queue to which is a good trend, but you're looking at and being down a little bit from 5% to 10% and we think there's a couple of things.
For that reason wanted they're already doing the high volume so when when they're referrals get cut down or are physicians in the community don't want to refer instead of Big Center.
That hurts them and one of the reasons that we speculate is because they've <unk> they've become the covid fifth.
Hubs right there the big centers in there they tend to take the biggest bolus of the covid patients so that that challenges them, a little bit and when you have a flare up a resurgence their ICU best either.
Fill up or it's the fear of filling up so that's one the other reason that we think we can help them is we're going to go out and start running our commercials in these areas and our commercials won't be the classic protected PCR cardiogenic shock, they're going to have a feel of a public service message that will.
Then ask them if they do have chest pain. These are things they shouldn't say stay home and then recommend that they of course consult with their physicians and look for experts and so we'll get that referral program back and last is on access.
Even with the resurgence within Pelican next we have access all all the time for all these patients. We also have all center and we also have our people that majority of all of our field base trainers and people have access to the hospitals with exception of some hospitals in in California in Germany, where we're seeing another <unk>.
Surgeons remember that it's not for essential workers are arkin facility staying open and our team is also maintaining ravelin rebalances and access into those hospitals as well. So that's that's what we're watching we think we can help our largest centers. The interest is still they're they're super excited about protect three and your.
To see that Protectory is being presented and.
The road shows we used to new where we'd have to fly into the city of those road shows are happening online almost every week multiple nights a week with 50 to 150 physicians on calls learning about all our new data. So thanks for the question.
Thank you.
Thank you and our next question comes from David Little from Morgan Stanley. Your line is open.
Hi, Good morning. Thanks for taking my question. This is Calvin on for David just on two questions for me. The first is it's a little bit of a follow up question to Daniels question could you help us Digest hope it more on business trends this quarter versus June and July transit you share it last quarter.
Here's this corner in Palo revenues up 1% so that's.
So that's lower than tune in July monthly times, which I think will four 8% increases respectively.
The underlying July patient trends was down for so appreciate that September last year with the top come so was there any.
Other dynamic like were there any extra selling days or perhaps extra patient days in a year ago period that further created some tough comp or what other factors could you share with us that can bridge that revenue close relative to June and July quick follow up.
Yeah, So [noise] Kelvin.
Thanks for the question I think when you look at how our patients progressed over the quarter from July to August September again every month, they got better and some of them more. It says you mentioned accomplish you I mean, our patient growth and fiscal year 20 in September was up 24%.
So it was we were lapping some some very difficult comps in September but again sequentially. The patients got better from July to August to September and when you think about the revenue kind of walk from in queue and Q2 from a patient to a revenue.
Perspective, again patients were down 4%, but we continue to see positive sales mix as we transition from the 252 Cpus smartest as well as the five O. Two the five five Cpus Smart assistance. So we're seeing a benefit of a positive sales mix there from Ah.
Higher average selling prices somebody you kind of just think about the walk from a revenue standpoint in queue and Q2, it's literally patients were down 4%. We saw probably three points of positive sales mix and then Ah.
A little bit more I would say on the service side to get to work from the negative 420.
Got it Okay. I just got my second question is I I wanted to clarify one point about three data that was presented tct's. So I think in the presentation you showed pittu like patient and T. Three verses two results across both arms. So I think in last year's TCT. When he presented the interim Guy that you also showed.
A similar slide that compared P. Three bad at a P too, but I think the patient population shown in a year ago a presentation for for P. Three had 469 patients and that number.
<unk> declined to 373 this year and was you know so so could you help us understand the difference between those two was the 469 number from last year not the P. Two like cohort and perhaps a broader cohort. Thank you so much.
Hey, Kelly and that's a that's a really big question with a lot of things to clarify. So first is I'd encourage you to go and watch the presentation again with Dr. Chuck Simonton, who gives all the details second I'm happy to get on the call with you. After this go through it line item, but at a high level protect three that was shown last year was interim.
<unk> approval study and the number has been growing so now it's up to 1600 and last year. We just gave an interim look to compare to protect too, but we did not propensity match. It we do not have the landmark analysis.
And we hadn't had the data adjudicated in reviewed with a core lab, so what you're saying now is.
Is essentially a publication report, where we've had a number where able to check all the blocks and to compare it with propensity matching which was not done it interim and I think the numbers you be pointed out on protect you were off a little bit so.
We'll take that offline, but I think that answers the high level of your question.
Thank you.
Thank you and our next question comes from Marine five bought from D. T. I G. Your line is open.
Hi, Thank you for taking the questions I wanted to ask one here on three in the recent uhm.
Clarence you that that I would love to hear a little bit more about what you're calling for the limited release and let you talk to your parents fast I'm experiencing.
Thanks for <unk> for the question.
<unk> has been the leader in hemodynamics support.
We've done over 10000 patients with act Pella and the reason they work well together is certain patients need oxygenation, but if you're just oxygenate the body with retro great flow you will overwhelm or you will get retrograde flow and make the hard work more so it's detrimental unless you can unload that patient.
Within a period of time those publications have been studied and we'd posted those slides online with are are a corner update and what we hope to see.
One is continue to find the best practices in the protocol, whether the patient gets a five five through the axillary with that color or has the CP.
And then two Oh, we.
We plan to start integrating with smart assists looking at optimizing both to him and I would support and the oxygenation. So we can win this patient appropriately so that they can again get native heart recovery one of the issues in the Pappalardo study from from Europe showed that not only had better survival, but the majority of pain.
<unk> had native heart recovery versus just survival and unfortunately, when you oxygenate the body at the expense of the heart. These patients that are that remain alive tend to either require a transplant or an elevated to a transplant or in some cases won't qualify and and never get just charged from the hospital. They go to hospice care. So.
We really want to we want to maximize the integration of both functions and there is a new population out there for just auction a nation. So it expands our patient population and it gives us something else to add for our pediatric product line. So we're excited about it we're going to turn our abdomen engineering innovation in clinical research team on two Ecmo, we know.
A lot about it and.
To note with for the investors I don't believe there's ever been a single FDA study on Ecmo. When you haven't seen it I've seen an independent study sponsored by the Ecmo companies in the last 15 years, and we're going to bring the research to it innovation and make it better and I think we're excited.
Now more than ever because ecmo something that can help covid patients and in the future patients that also have just respiratory failure.
That's great. Thank you for that one quick follow up on along the lines of F. E M pricing dynamics. It sounds like some of these steps towards the higher priced devices. It sounds like a sustainable crime wondering if that's true or if there are other dynamics, we should think about going.
Ford R. A F T and then.
Kind of an accompanying classroom there might regret to <unk> Kosta performance Uhm gross per year over year has been strong that revenue was a little weaker there was that just the results can you recite openings in your Comcast pillows or with sales there or was there. Another day ma'am bye now thank you for your questions.
Yeah. Thanks for you so I'll I'll actually answer both of them. So from an ASP perspective, we do continue to see that creep up again, it's a function of our <unk> pumps volume, they're going down and.
P. R. Two five in somewhere in the 20 $20000 range and CP continues to to increase faster than the average selling price of somewhere around 2425, there and again, we have the same phenomenon occurring with the five O and the five five I mean, we're selling more five five today at.
Had a higher average selling price anywhere from call $35000 versus the five O, which was somewhere in that 26 27 28 range. So I do expect to see that trend continue over the next several quarters as a mixed with over a business changes. Your second question with regard to Japan again.
I think we had a very solid quarter. There again as you mentioned, we had patients were up 29% of the quarter. They were up over 30% in the last quarter and it was just a function of just opening fewer sites and the quarter and we talked about that last year last quarter as well as last year is that we frontload.
<unk> last year some of the site openings in Japan.
To accelerate the CP smartest CP rule out there as well as the.
PM da studies, so I think that will normalize and the second half of the year, but it was just a more of a function of less site openings that we had versus last year. We saw that scene phenomenon as well in Q1, and again I think that normalizes and the second half of the year.
Thank you and our next question comes from Ralph I've gone from Steven Your line is open.
Good morning. This is drunk on for Chris I'm, just calling up on Marie's question can you discuss expected contribution from breathe and the physical <unk> and then the second half of the year on a standalone basis on in terms. That's kinda like this is.
Yeah. So thanks for answering the question I would say right now we're expecting a very minimal impact in Q3 and probably into the queue for as well I mean, we are launching at five five sites. During the LMR. We're still working right now I think finalize the pricing strategy. It will be similar to I would say that raised a reasonably model that we have.
With impel, Delaware will sell consoles for.
Somewhere 60, 70, 80000 with an annual service contract and then we'll continue to.
So what I call the disposables, which are the pumps in the auction eaters.
Again, ranging from six to $9000. So I think that's kind of where we think the business model will be right now again will work through the the pricing strategy with the first five sites, but I wouldn't expect much of an impact right now from a revenue standpoint, really in Q3 and and for that much in queue for as well, it's probably more of a joke.
Let's clear of 2022 story.
Great. Thank you.
Thank you.
And our last question comes from Jason Bedford.
Your line is open for my New <unk>.
Good good morning, Oh keep it quick has been a long call.
<unk> card is there a way you could approximately.
The split between five cargo and Clark five in the U S and just to be clear you'd want five five.
Summer fall correct.
That is that is correct. It's more of a Q3 I mean I don't have the numbers of time, we are showing more five five we have more higher revenue in five five in the us today.
As a result versus the five Oh now it's a function of patients and it's also a function of of site openings as I mentioned.
Prepared remarks, we opened up another 31 sites.
<unk> five in the last quarter versus for for five Oh, So we're seeing higher patients as well as higher revenue coming out of five five.
Okay.
How many patients to enroll in the semi D to study.
I mentioned in Russia. So we're at a 15 sites now close to I think it's close to 30 patient now so that's where Ah.
Okay, and then just getting back to an earlier question I'm protect court will we see in term data either 130 day or a 90 day outcomes or what would you have to wait for all of the data said warrants after one year.
We're going to have to wait until one year after the last patient.
But you'll already have most are much of that data already in house and the reason we're doing that is because now you're going to have something.
That will have up to a year that we believe is gonna statistically show a difference in the curves and we're setting the study up to have the highest level of evidence so that we can.
Meet every criteria for classroom guidelines and to remind everyone that people are doing this study or the Premier trial is there also the people that way in on the strength of guidelines in general. So that's why we're doing it this way, but we already have safe and effective FDA approval, we already have our best practices and for those sites that are not going to be in this study we.
Expect to see further adoption with our training and data in time strategy.
Okay. Thanks.
Thank you and that does conclude the question and answer session for attending offence and I'd like to turn the call back over to make my note for any closing remarks.
I just want to thank all our investors for your support during the journey. These are challenging times no that that <unk>. We're grateful to help patients were optimistic about the future and we're tracking as a company with close to $1 billion in sales of $1 billion in cash one Patton's 1000.
Patents pending and a product that will revolutionize the standard of care for patients that have heart failure in Oregon dysfunction that need oxygenation. So will follow up with questions. If you have any thanks for your time and have a good day.
Ladies and gentlemen, thank you so much for some painting and today's conference that does conclude the program you may I'll disconnect everyone have a great day.
[music].
[music].
[music].
[music].