Q3 2020 Shockwave Medical Inc Earnings Call
[music].
We will be facilitating a question and answer session towards the end of today's call.
Reminder, this conference call is being recorded for replay purposes I.
I would now like to turn the call over to Debbie Kaster head of Investor Relations at shop wait for a few introductory comments.
[music]. Thank you also participating in todays call joining me today from Shockwave medical or that Don <unk>, President and Chief Executive Officer keeps talking Chief Medical Officer, and Dan Pocket Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter ended September Thirtyth 2020.
Copy of the press release is available on shockwaves website.
Before we begin I'd like to remind you that management will make statements. During this call include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 any.
Any statements contained in this call that relate to expectations or predictions of future events.
Ultra performance are forward looking statements.
All forward looking statements, including without limitation statements related to our sales and operating trends.
[music] future product development and approvals are based on our current estimates and various assumptions. These statements involve material risks and uncertainties, including impact of COVID-19, pandemic that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not.
Place undue reliance on these statements.
A list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our annual report on form 10-K on file with the FCC and available on Edgar and in our other reports filed for periodic leave with the FCC.
[music] Shockwave disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information and is accurate only as of the live broadcast today November nine 2020.
And with that I'll turn the call over to Doug.
[music].
Thanks good.
Good afternoon, everyone and thank you for taking time to join US to review shock with results for the third quarter of 2020.
I would like to start our discussion today with a quick snapshot of some meaningful recent achievements.
We recorded 19.6 million in revenue for the third quarter, representing a 73% increase from $11.3 million in revenue in the third quarter of 2019.
In late August we submitted our PMA application for FDA approval of coronary ideal.
Related to that I, just less book results from arc disrupt Cadthree I'd. He study were featured does it late breaking presentation at the TCT connect conference.
Our disrupt pet three peripheral trial results were also featured as a late breaking clinical trial presentation. That's either 20 this past weekend.
We continue to build our our U.S. field team in anticipation of our coronary launch with a total of 100 over 100 people as of September.
September 30.
Today, our team has been busy would be an understatement has we have achieved significant milestones in varied and virtually every operational area over the past month.
That's helpful.
Having just come off the TCT Enviva, where we were honored to have data on both coronary and peripheral applications of Ivy Hill presented in late breaking sessions that these key medical conferences.
We want to begin today with a discussion of our clinical data and progress.
Both comfort has provided us with an opportunity the opportunity to share high quality data confirm the safety and effectiveness of ideal on large and challenging patient cohorts.
Showcasing the consistent performance of ideal.
And to provide more perspective on the clinical data I am fortunate to have with me today stuff to keep talking to our Chief Medical Officer Keith.
Thank you Doug.
The team here at show waves of some extraordinary job and the results we've seen a really very impressive.
I do see the late breaking disrupt three clinical trials, so well received by the clinical community.
Cadthree adult perspective, Bloody study of car audio.
The treatments of de Novos calcified coronary.
Cardiac transition process.
It is a single arm studies 394 patients 47 sites in the U.S.
States, France, Germany, and the United Kingdom.
The patients and had three had the longest the most complex.
Most calcified coordination other studies in a controlled clinical trial.
We discussed the detailed results from the study during TCC, which showed the cardiology on me but.
I see and the effectiveness goal since it's so today I'm going to provide more.
Right around what we saw what it means.
On the everyday prices of treating calcific coronary disease.
Well that was the pricing interventional cardiology inside the good fortune to be intimately involved in patient care, but most of the major innovations.
We introduced into clinical practice.
In my view, the three fraud transformational product introduction what balu.
And your thoughts.
That metl span.
Drug Eluting stents.
Since 2002, when the system was introduced as not being another disruptive innovation until shockwave introduce ideal.
Patients are living longer and suffering from diabetes is increasing right more and more of the patients with cardiac disease and presenting with calcified vessel.
Approaching the mid 30%.
These patients are materially more challenging for clinicians to manage successfully.
Felipe said struggled to open the hod lesions adequately and atherectomy cars adverse event.
Use this technique challenges the keep its use to less than 5% PCR procedures globally.
Hi, this is it becoming more challenging and this is reflected in the patients treated in Q3.
We had 17 countries did not just me see a primary endpoint they showed excellent results.
Core lab adjudicated in the kinds of complex cases that are a challenge in everyday clinical practice.
Didn't carry AACIS also presented data showing no significant difference in outcomes between the initial 47 wrote in patients.
The 394 patients.
Oh.
This reinforces another effort by the L., that's it's been resonating globally.
Easy to use.
Atherectomy is a great tool legislation, but a lot.
I was just will not use it.
We're not trying to use the technology.
Patients are either a thought elsewhere well treated suboptimally.
Ivy Hill is a tool that every interventionist.
I'd use safety with minimal training.
The extremely low adverse event rates reflected in the Cadthree deficits combine with the simplicity of the ideal system will make calcium intervention easily accessible I did choices.
Any interventional cardiologist pricing.
To close on Cadthree.
Studies successfully demonstrated the effectiveness of corn.
Treating calcium with large lumen game facilitate deliveries.
We're pleased to submit these data as part of RPM application to FDIC in August.
We continue to anticipate approval.
Fuss courtroom 2021.
Let's now turn to disrupt had three.
It was also presented as a late breaking trial just this past weekend the Veeva 20.
Hatcheries, the largest randomized study of severely calcified peripheral lesions ever conducted.
It does not come into other randomized core lab adjudicated trial in the periphery in general.
The one that seemed to calcified lesions.
Had three evaluated lesions so they're almost always excluded from other studies.
And even in this most complex populations.
Still demonstrated superiority on the primary endpoint.
The primary objective of pad three was to demonstrate that ideal delivers improved persico success.
Asked me a sense of.
Fewer complications when compared to standard balloon allocation process DCP.
We want all the all important.
I had three demonstrated that ideal usage resulted in a significant reduction in the section.
Additional settings, such as P.T.I. I did ideology low residual smoke.
With lower pressure lessen the proposed solicitation appeal complications than P.T.A.
Pets reconfirmed the consistent safety and effectiveness of Ivy Hill from previous studies in multiple multiple vascular beds.
The data from these two trials helped reinforce why I feel it's being adopted so readily in many applications.
Reducing the severity about your other section minimizing the need for instance in peripheral vessels and doing so with the balloon delivery system that has almost no associated Campbell at risk.
Resonates with the submission.
Typically when procedural sites.
How about concern.
There was an interesting juxtaposition between these two trials.
Pardon me.
Yes. It is the safety prepare the vessel to facilitate optimal sensor deployment.
In the periphery the objective in this trial I didn't most peripheral intervention.
I find that the lesion without having to pay them.
The common thread you know I feel that the patient is safety and ease of use.
Both of these attributes have been well demonstrated.
I look forward to taking your questions, but for now I will turn the call back to Doug.
Thank you Keith.
Shortly after showing a strong commitment to clinical research and we're generating the largest collection of high quality data in the complex calcified patient population across both peripheral and coronary applications now having over 100 published papers on Interbasin lithotripsy and data on more than 2000 patients.
The response to our CAD three data has been extremely positive thus far.
The good fortune to sit in on multiple Cadthree data reviews with some of the busiest coronary interventional it's in the U.S. and.
The two most common responses occurred after a keen walks through the safety data I know see to see T. images, our game changer and when can I have it.
The PADD three data are still hot off the presses, but that is but that too has been very.
Very well received thus far and we're looking forward to sharing this unique data set with our current and prospective customers.
You are so fortunate that these two unusually strong core lab adjudicated data sets to further confirmed that our costs, what our customers already know.
International to trip seats is effective sales and easy to use.
Moving to the commercial side of the business.
Average daily sales continued to build throughout the third quarter as we had predicted U.S. peripheral cases work almost back to normal by the end of September.
But most of the covert backlog being cleared over the course of the quarter.
Our large bore strategy can continue to resonate with physicians and we're seeing I'd be able to use the newly exposed for access and symptomatic indications.
Growing fastest amongst our various above the knee applications.
Hi, rest for all the rollout has continued to build in the U.S. and we're progressing well with our limited launch in Germany.
What we found most encouraging about the quarter commercially was that as soon as procedures started picking up so did the utilization of shockwave.
That was in the U.S. were international and whether it was coronary or peripheral.
We believe the noticeable bounce back we saw during the quarter confirms that Ivy Hill has become an integral component of the treatment algorithm for both peripheral and coronary interventional who use our device.
Overall it was good to see how quickly hospitals were able to recover after such a devastating second quarter.
And gratifying to see the shockley momentum build at an even faster rate than procedure recovery through the quarter.
Unfortunately as has been well documented covert cases are now increasing rapidly in the U.S. and at an even higher rate in Europe.
September was an extremely strong month for us on an average daily sales basis that October was similar although down slightly just as we witnessed last year. It was north is normal monthly variability, particularly in the first month of the quarter.
We entered this quarter with strong momentum. So we were expecting very good sequential growth such as we experienced last year.
But given how quickly the situation with the virus is evolving and the uncertainty of the effect that could have on procedures. It is quite challenging to confidently predict where the quarter will land.
We will continue working hard to serve our customers and their patients.
But we will be negatively affected impacted its procedures drop off for a bit due to this latest covert surge.
In terms of 2021, we expect to be in a position to provide guidance early in the year, but we anticipate particularly based on the recovery we witnessed last quarter.
Growth will accelerate as we get past this current virus wave and we will see further acceleration following the approval, we'll see too.
Turning now to our sales preparations as you know expanding our field team in anticipation of coronary approval in the U.S. has been a key focus for the past several months and we are impressed by the capability of the team we now have in place.
We've also rounded out our sales leadership group with a local roster of nine area directors in place but.
Which gives us the bandwidth to effectively manage this much larger team.
We are now focused on hiring clinical specialist with the goal of getting to a one to one ratio of territory managers and clinical specialists specialists, which will give us the coverage and flexibility to launch C. Two and maintain peripheral girls.
Our coronary training is well underway now as we prepare for the sea to provoke the U.S. In addition to our in house training, we have enlisted several leading interventional cardiologists to help educate our team on complex coronary interventions.
Ill will fit into their practice and the overall treatment continuum.
Our team will be well trained and ready when the p. any it's proof.
We believe that the best approach to the C launches to progress in a deliberate way through a focus list of targeted accounts.
Within this priority target list. Our plan is to go account by account and to effectively train and install see two to ensure that every interventional cardiologist and the key staff members at each hospital are fully educated and prepare to use IPO independently.
Once complete the team will move onto the next hospital on their priority list and repeat the same process of training and installing see too.
This disciplined approach will ensure that our customers are comfortable using shockwave independently and appropriately and will enable us to sustainably build out our coronary launch.
On the regulatory front the team is fully committed and working through the final stages of the PND review process in parallel we're pressing forward with the regulatory process in Japan.
As a reminder, the coronary CE mark and our U.S.P. and they are based on 30 day follow up booking them to gain Japan record 12 month follow up following our cats for patients.
We have very productive meeting with the PMT a few weeks ago during which we presented to the authority a request that we'd be able to submit with less than 12 month follow up on patients in the study.
Then supplement when the 12 month data were available.
We were pleased that can be agreed with this proposal and we will now be able to submit a few months earlier than we had originally anticipated which ought to then result in an earlier approval as well.
Touching quickly on reimbursement as you are likely aware hello, lower extremity Endovascular baskets was withdrawn from the early October CPT panel meeting, but this aside societies.
We continue to have limited visibility into what is happening behind the scenes. So right now all we know is that the basket was withdrawn.
We will of course to get close to the process as we can.
We had always assumed the most likely scenario was for the new basket of codes to go into effect in January of 2023, and this is something still remains.
In terms of coronary reimbursement, we have applied for a new technology add on payment oriented for inpatient procedures.
Which if successful would result in additional payments in October of 2021.
We deployed now because the CMS inpatient group works on an annual cycle and they permit application prior to approval.
CMS outpatient programs work on a quarterly basis, and we'll be able to address those opportunities after up to you to Google.
We are hopeful that our breakthrough device designation will help for both inpatient and outpatient reimbursement programs.
And lastly, before I turn the call to Dan.
We have made great strides on the production front and are poised to start work on a new clean room within the next month or so.
Cobot has dragged out the permitting process that permitting and construction start but fortunately as is reflected in this quarter's gross margin.
The operations and quality teams took advantage of the leg and made meaningful improvements to our production.
We added an extra line in our existing space lowered scrap reduce the amount of time spent training and reduced assembly time for catheter, which collectively led to some encouraging results for the quarter and bodes well directionally for the future.
And with that I will turn the call Dan to review the financials.
Thank you Doug good afternoon, everyone Schalkwyk medicals revenue for the three months ended September Thirtyth, 2020 was $19.6 million and 73% increase from $11.3 million from the same period of the prior year.
Watch revenue was $11.1 million in the third quarter of 2020.
Representing a 77% increase from $6.3 million in the same period of last year.
As we pointed out in the last call April was a coded low point in terms of sales.
The increase in this quarter represents the continued recovery from the impact from coated and to growth driven by your sales force expansion into new territories.
International revenues $8.5 million in the third quarter, an increase of 67% from the $5.1 million in the same period of last year we've.
We've seen similar recovery in the international markets as the U.S. and where we are now commercially selling ideal in 49 countries outside the U.S.
Looking out a product lines or peripheral products emphasize and S. Four accounted for $12.3 million of the total revenue in the third quarter of 2020.
Her to $7 million in the same period of 2019, 77% increase.
According to try to see two accounted for $7 million of the total revenue in the third quarter of this year.
$3 million to $4.2 million in the same period last year, representing a 67% increase oversee two revenues currently international. In addition, the sales of generators contributed $270000 in revenue in the third quarter of 2020.
But the $195000 in the same quarter last year.
Gross profit for the third quarter, 2020 was $14.3 million compared to $6.9 million in the third quarter of 2019 gross margin for the third quarter, 2020, or 73% as compared to 61% in the same period of last year.
Contributors to the higher gross margin included continued manufacturing productivity be constant efficiencies.
Total operating expenses for the period were $27.1 million, 36% increase from $20 million in the same quarter last year.
Sales and marketing expenses were $13.6 million in the third quarter of this year compared to $8.2 million in the same period of the prior year.
The increase was driven primarily by sales force expansion.
R&D expenses in the third quarter was $7.9 million compared to $8.4 million in the same period of last year.
The decrease is driven by clinical expenses as most were major clinical studies concluded enrollment in the first half of 2020.
General and administrative expenses for the third quarter of 2021 $5.6 million compared to $3.4 million in the same period of last year.
The increase is primarily due to headcount increases to support the growth of the business.
Net loss for the third quarter, 2020 was $12.9 million compared to a net loss of $13 million in the same period of last year net loss per share for the period or 38 cents.
We ended the quarter with $215.3 million in cash and cash equivalents on.
Ill now turn the call back to Doug.
Thanks, Dennis display.
Despite the multiple challenges that we've all been facing the Shockley team has made great progress this quarter.
With our recently published clinical data and encouraging rebound in the use of Ivy Hill as soon as cases resumed.
We can continue to see mounting evidence that intervest or lithotripsy isn't important disruptive therapy for patients suffering from calcified vascular disease.
I want to thank you all for joining us for the call today and I wish you continued health as we head into what is likely to be a challenging winter season. Please.
Please wear a mask for.
With that.
We'll open the call for questions.
Thank you [laughter].
Ask the question you need to press Star then one on your telephone to withdraw your question. Please press the pound King.
Our first question comes from the line of David Lewis with Morgan Stanley. Your line is now open.
Hi, Good afternoon. Thank you taking the question just a few for me maybe Doug maybe two for you and then one for one for Keith but just to clarify the comments in the fourth quarter last year, you were little more concerned in the fourth quarter, just given distributor dynamics have you seen sort of changes in the fourth quarter. It relates to procedure cancellation outside of sort of normal.
Distributor activity just question of is it just a statement around conservatism or have you seen some changes in the channel and the other one for you is just thinking about coronary next year you saw our cardiovascular companies have seen impact on launches tied to obviously coal dynamics and then again I think about cadthree illustrating how easy this product is to use so I would think the training to them.
So you are not that dramatic so just any thoughts you haven't sort of new product adoption next year in coronary and then a quick follow up for Keith.
Yeah.
It it's Oh, we really struggled with how to describe [laughter].
What might happen over the next six eight weeks because it's.
The business is trending.
Reasonably well through October very much mapping to what we what we saw last year frankly for in terms of the September to October trend.
And yet it's.
You start to hear about patients getting a little bit concerned about coming into hospitals and.
As Keith and I can attest he's he's over in France right now he has to get a permission slip to go out and go anywhere so the.
That's not too dissimilar to what the way things were trending in the spring. So so its.
We felt it important to be a bit cautious about.
Good.
Guaranteeing that we're going to be growing this quarter because it did seems hard to fathom that the scale of the current covered we wouldn't have some impact on on procedures and and then.
So we're forecasting a virus is not something we're we're all that good at doing which makes it challenging to then extrapolate what that what the unknown trends on uncoated are going to do to to our procedure volume. So luckily.
Great traction in the third third quarter Conns continued very strong into.
Interest and support from both existing and pending customers.
Then you had ignoring the potential cavaday overhang would seem.
Not very prudent.
The.
We're hearing of possible.
Procedure cancellation type things, but we haven't seen a lot of it yet but it does seem that that it's in places like Italy, it might be happening we're about to start happening.
[laughter].
Yeah in terms of the sea to launch.
One of the beauties of our device as Keith highlighted is it's a remarkably straight for ease of use very little training required.
We have.
Hundreds of cardiologists, who have already been trained on it and U.S. just for peripheral application, but there's very little incremental to learn what applying to the coronaries.
We do however want to make sure that all the staff is well trained et cetera. So so if we have to be.
Creative or or find new ways to train if we aren't through this cold winter, although I think we will be come come first quarter.
Luckily, we're we're not a perfectly labor intensive device when it comes to training. So I don't I don't anticipate that the actual training would be an impediment.
The only be more of a patient volume question is there is there still a real slowdown in elective procedures and again I I.
I would expect first halfway through the first quarter it'll be more like a september than it will be like like.
Like like especially of course.
Okay very helpful. In the key just spoken to you.
Obviously, the obvious and successful a lot of different vessel size, but the places probably struggling the most on a relative basis was the SSH just given perceive clinical benefit and obviously reimbursement I wonder just in light of pad not Petrobras majority S.A., they're very robust results in calcified lesions. I mean is that that begin to change this perception of sort of relative value in the S.
Okay. Thanks.
Thanks, So much I am sorry to hear about the hall pass that's required over there.
Thank you David for your concern.
Obviously in terms of dividing up the lower extremity to dig down into.
The different parts of the lower extremity and the results.
From a 360 patient study is quite challenging what was what is interesting to US is the result.
Really do merit a mirror the the pad three observational studies, which obviously is much larger and we'll have a adequately powered.
I, just said for each part of the lower extremity.
And one of the themes that you will have seen actually just a CRO vascular beds is that just.
Just a very simple mantra, you know ease of use.
Effectiveness, good efficacy good safety and particularly good safety, obviously, the lower then I feel that the cardiologist is a bit like the wild West you know lots of different devices.
Not a lot of data that we were very encouraged.
Provide a randomized trial, which really confirmed what.
Interventions to one sort or another we're finding it multiple times going a bit we're particularly interested obviously in below the knee and when it went now.
Electing a little bit below the knee data with a score and that's another area, which is quite challenging for intervention. So I'd.
I think the theme is common across the basket and we shut in that now with two late breaking trials and quick.
Great. Thanks, so much.
Thank you. Our next question comes on the line of Bob Hopkins with Bank of America. Your line is now open.
Well, thanks, and good afternoon.
I guess one quick follow up here is just on the on the coronary side in the U.S.
How long do you think it'll take to kind of get a critical mass of hospitals trained and and when would you have us be thinking about the timelines for when you would kind of be in full launch mode.
Yes. So we're we're interested in a first quarter approval.
If we're on the exact 180 day clock it will be a right around probably March onest or so.
And we will go into full launch mode right away although.
What were what we really want to guard against is.
He is running from hospital hospital, covering cases, pallets and inefficient use of our time and it's not the optimal.
Way really frankly, even help the hospitals, we'd rather.
Sort of thoughtfully go account by account.
And.
Fortunately there seems to be.
Plenty of interest from from sites to come on board do.
You do have to still go through a vac process. Unlike sort of some who may think they are ready may take a month or two to get through that process.
But we anticipate that within the first week, we'll start having accounts sort of installs he too so so what we're.
Well, we don't we don't we don't count success by numbers of hospitals. So we're not we're not going to try to Max out and try to get it all through.
1200.
PCI sites to use shark week right away. Because then we will probably be underutilized and we'll end up having to spend a lot of time going back and retraining and.
And and.
Re educating.
So I.
Hi, I fully anticipate that all hundred folks hundred plus folks are going to have in the field will will be.
Working.
Rather aggressively to both.
Creek create new coronary customers while also.
Making best use to use of their time to continue growing our peripheral business, which is why we think it's so important to have a big.
A good balance of of.
Sales and clinical specialists.
Partners.
And and so I'd pay.
I don't know how you would define a full launch but for US full launch starts day, one and it's it's.
Methodically building out the business because we think nine months later, but that will create a much larger business than if we try to just run around in case, she's she's cases, yeah, no that makes sense and but also curious like it at this point do you have the resources internal and internally in terms of personnel.
Yeah, because obviously, you've got a lot going on with.
Below the knee launch and the new pad data in the coronary launch do you do you have the people you need you know right now to make you comfortable that that that this that you can kind of maximize the opportunity over the course of the next 12 months.
Yeah, well, if we hadn't <unk>.
If we had the good fortune of getting it through today, we would launch it today and.
And we're not far off of of our sort of a minimum target that we would like in terms of field coverage. Okay.
We are we have been beefing up our marketing team on the coronary side.
Just had an excellent through team member.
There weve.
Really revamped mid co vivid and meaningfully upgrade of our training program. So we brought in.
A real strong training leader, which.
Was fortuitous timing that he came on right around the time things slowed down on Colin because we had to be really creative about how to train when you're never seen each other in person.
So.
None of us are sitting around saying Gee I wish we had this many more people and we can't quite.
We're not quite ready.
We are continuing to hire and we are.
We focused on territory managers in the summer and now were focused books and clinical specialists.
We're very lucky that our customers seem to say very nice things about our technology because people are hearing good things in the field and that's helped helped in terms of recruiting.
And then just real quickly house BT keep going like how would you qualify the launch and.
One of the important developments I guess over the over the last week has been becton Dickinson announcement that.
It seems to be almost you know probably permanently delayed on on their own. So just kind of wanted to some quick comments on MLP Teekay is going.
Yes, it's going well.
It's.
It is a it's a.
As Keith said, but it's a it's a complicated space below the knee and like.
Like the rest of peripheral folks have there.
Their preferred approaches the some of the folks who create somebody and just last week.
And he always you fuses balloons never ever uses atherectomy, unless absolutely necessary and other others use atherectomy whenever possible below the knee. So it's a it's a curious space and we don't have.
The kind of data that we just.
Provided and pad three.
On the other hand.
The sections are more of a concern below the knee embolization is certainly more of a concern below the knee I think pad three is very extrapolatable to other peripheral vessels.
Even though we can't claim it's the same vessel I think customers will will extrapolate that themselves. So I think that will be helpful adjunctive bit of data for us to educate our customers with.
So overall, I'd say as far as going well.
Read the relaunch that really took place in the late summer we've also been augmenting.
With with some senior leadership engagement and that seems to have also been bearing fruit with with some of the very high volume below the knee operators.
So so far so good I would always take a.
Better, but it's it's going it's going very well.
Great. Thank you very much.
Thank you. Our next question comes from the line of Larry We host of Wells Fargo. Your line is now open.
Hey, guys. Thanks for taking the question and Doug Congrats on a really nice quarter. So a couple a couple from me one on Japan Court I think that's a corner its coronary only right Doug I'm just correct me on that okay.
Hi, guys I don't know from Japan that they loved our pad three data. This morning. So that's good [laughter] now up to start up our peripheral efforts in Japan.
Okay. So could you be more specific please on the timeline. There you just said they were willing to accept less than 12 months, if I heard correctly. So I think the old timing was it 2022 launch what's the filing their approval and reimbursement win for coronary what's your best guess today.
So best guess best.
Our best guess prior to the meeting with PMDA was that we would have been submitting right at the end of June. So we think we just gave three months off for that.
So circa end of March beginning of April.
We we always estimate about a 12 month cycle so for European da So assume about a year later.
He would get approved and then you start the reimbursement process.
And and while we will we will do some commercializing in advance of reimbursement most of the efforts would take place.
Once reimbursement is in place and.
Best guess would be that.
That would be kind of fourth quarter of 22.
Got it. Thank you it wasn't a big picture question, Doug You know I asked this question to Dr. curiosity on the TCT call.
5% penetration today in the U.S. of atherectomy.
In in coronary.
I asked if we could double in the next five years.
He said he thought it would happen faster.
You know what a can you provide us Doug with your you know that and where you see penetration going and where.
We're modeling you guys capturing about half of that in five years. So if the market goes to 10% you guys have half.
How are you looking at this longer term thanks.
Yeah. So there's the.
Patient population, we would be applicable for.
And then sort of what's the realizable percentage of those patients we could achieve.
Non scientifically and Keith can probably.
Feel free to correct me if I'm, if you will augment Keith but.
About 30% of the.
Coronary patients have kind of calcified coronary is I'm I'm I'm encouraged how frequently that number is reinforced.
When we've had some of these international is training our sales team independently, they're saying 25, 30% that they see in their practice.
Obviously.
30% are not the most severe.
And so when we dropped down to the more severe.
You're probably closer to the 10% to 15% with somewhere between the 10 10 and 15 being.
Debatable, I guess, but but that's consistently with what we hear from our European customers as well as that it's probably 10% to 15% could use some sort of calcium modification.
And and so then its a question of which tool you would use with who were at this juncture, we're not a crossing tool.
The way to say Rotablator is.
But outside of the crossing for the really difficult to cross CTO kind of patients. We think we're we're which is maybe half of the current.
That's correct me population.
Were we think we're we're applicable and the rest so if I if I'm right and it's maybe 15% then that would suggest the 12, 15% or sort of shockwave target.
And.
What percent we will penetrate.
It is is in five years.
We're obviously not we're not even comfortable guiding for next year, [laughter] little and guiding for five years out.
But but the.
Enthusiasm with which the divisive pieces being received in Europe, and the reception of the data and expectation around the approval in the U.S. is.
About a strong as any device side.
Engaged with.
And Keith has some anecdotal experience he was really instrumental in Washington product for us in India. This year before cobot hit.
And Keith maybe you want to give.
Give both.
Epidemiological perspective on the patient population and how much we might be equipped for but also.
Your perception of.
Of what you've seen.
Yes, Thanks, Larry.
Larry I mean, the total addressable market is.
Going up dramatically because obviously the population ages moving to the right. The prevalence of diabetes is going up renal impairment going up and the general appreciation by the county logical and peripheral community.
That counts.
Calcified past these needs treating property because that's occurred with the.
Increasing imaging understanding.
And Olivia.
And so I think we don't see Shockwave idealism exclusive device and that's I think the whole the penetration level with devices will go up but I think the ease of use of the safety and the predictability and the ease of training.
Well.
Will be really important.
The other area of course, which we don't fully understand it the threshold for using IPO nobody gets very comfortable with it.
<unk> balloon ever want you know will they begin to use today and will.
Secondary senses no prime reason.
Use it it's interesting in a in India, which of course is probably more diabetes in many countries and the well then that's the real experts in dealing with calcified disease big relative senses.
Yeah.
They love it and India life in the end of February in Delhi lots of life cases, and I was on a call yesterday were.
Sponsoring an investigator sponsor thousand patient study all come a study in India.
Yes.
And that's just going to be right sizing and that's very exciting.
They just like.
But just trying to work out the algorithm of what device they use web, but they just think it's lost right in that so I think it's very difficult for the numbers on but.
Exciting prospects.
All right. Thanks, so much for taking the questions.
Thanks, Mike.
[laughter]. Thank you. Our next question comes from the line of Adam meet ever with Piper Sandler. Your line is now open.
Hi, good afternoon, thanks for taking the questions congrats on the nice quarter.
To start just one clarification.
Question I think it was in response, Doug to David's question just around.
Puts and takes for Q4 and some of the commentary there I think you said something along the lines and hopefully I heard you correctly here that you didn't want to guarantee that youd be growing in the quarter. Because you wanted to be conservative around COVID-19 dynamics and you know any potential impact that could have on your business I wanted to make sure I understood that comment are you referring to Q3 levels of this.
Year or versus the prior year, just wanted to clarify that thanks, Yeah No we'll.
It's a sequential quarterly growth question.
Everything suggests to us that we thought we'd be certainly entered this quarter expecting some substantial sequential growth quarter to quarter.
And and.
Yes. It will mean, there will be some procedures that will be lost because of covert no doubt has passed we will have to do all of our peers.
And so it's really just a question that that is.
Something we can't answer yet until we see what happens.
Do hospitals start really shutting down an elective procedures or did they find a better way to navigate it now than they did earlier in the year.
And then what what is the effect of that plus patients electing not to get procedures. We are not commenting on year over year growth, which we certainly would expect year over year growth.
Okay, great. Thanks for clarifying that and then just for my follow up Doug I was hoping you could talk about some of the device enhancements that are coming down the pike in coronary and peripheral.
I think you were expecting to launch Alex next year, and then I think you have a couple enhancements to your S. Four m. tied on and see two products. So maybe just talked about how the technology will evolve going forward, what what we should be watching for and how they might potentially impact the business. Thanks. So much.
Sure Yeah. So the.
Alex has sort of split.
Split into two projects.
One is we took the the original Alex which was an eight millimeter cash.
Catheter eight millimeter diameter balloon and we rolled that into an enhanced M product that we haven't provided all the details on the west coast, we're calling them five plus.
But that will have a larger diameter catheter.
Balloon catheter.
And then we have a separate Lx that.
Is he is going to be rolling out not next year. So the eight millimeter will come out next year, but the.
The even larger sizes will be a little bit down the down the track.
And and again details to follow but we were very impressed by.
The the.
The enthusiasm physicians are using our device and larger diameter besser vessels, whether that's.
The common femoral beleodaq.
The the disc.
Mostly order et cetera. So.
A really significant unmet need which is why we think having both an eight millimeter and larger is.
It's going to be.
A real unique opportunity that shockwave, we'll be able to address.
And then as you saw.
In the past couple of years, when we went from 180 pulses to 300 pulses within five.
We'll be we'll be incorporating improvements like that where.
Where we think they are warranted.
And where the durability of the product, whether that's going on five or an S four or see too.
Ken Ken.
Absorbed those kinds of additional pulses and.
Improved serve user satisfaction and.
Customer satisfaction and procedural outcomes.
Economics could you don't need additional devices. So we'll we'll look to both have mccann.
Mechanical improvements of the device as well as take advantage of the software element of our device.
To improve its performance and then.
In incremental to Alex and M plus and other enhancements we have.
Sort of growing but as yet still confidential pipeline behind behind those.
That will.
We'll we'll still do both of those things will have some that will be softer improvements on that will be.
Sort of all new device designs.
Very helpful. Thank you.
Yes.
Thank you. Our next question comes from the line of Bill Plovanic with Canaccord. Your line is now open.
Hey, great. Thanks, Good evening and thanks for taking my questions.
Doug The you mentioned that you started out with the territory manager managers and you're adding the clinical now how many teams do you expect to have as you hit the beginning of the year and then if you do that onto that is well how long do you foresee it to train get a hospital up in Troy.
I mean, so that you can kind of move onto the next one I mean, we were the comments from Viva and TCT about it's like half a efficacious training and then how long do you think it takes to get through the back at each of those facilities and then I have a follow up question on the PMA.
Yes, so that that speed is highly variable and and as we put together our target list.
One of the one of the criterion for being.
Up towards the top of the list is an understanding that this is a this is a hospital that we'll be able to fly through the Vac Committee based on the.
The sort of political clout of the of the cardiology team.
And so some of the sites that we get through first.
Mike might be there in part because they they have that sort.
Sort of internal political capital versus maybe.
Maybe hospital down the street that one might have thought would be first on our list, but that's going to take them a couple of months to get through the Vac Committee. So makes no sense for us to be actively launching a product into a site that can't use the product yet because it's not through the Vac Committee.
Yeah in terms of.
The training you're right, it's it's incredibly simple, but but.
Unlike.
Say, some peripheral groups, where where you view real sometimes have a have one or two major.
Interventional instead of doing a very high percentage of the volume and MPCI you've got.
You've got you often have more operating issue do coronary interventions and and.
So you will often have once you don't do a lot of atherectomy.
They'll want to use shockwaves, so we'll have more.
More people to train on Shockwave than.
Then maybe we do on the on the peripheral side and.
And there's also.
The propensity on the peripheral intervention.
Medical device space, where were case.
Case coverage is done at a much higher rate than.
Then in the Coronaries, we don't we don't want.
Our people to have to camp out in the lab. It doesn't fit this device doesn't require you to be there all the time it's.
Sort of sells itself once it's on the shelf, we see that internationally, we the vast majority of our coronary cases. They go on covered because it's it's.
Its distributors to sell the product, they're not going to sit around and cover cases all day.
And so we think that.
It's very well that a sort of once you train the staff once you train the all the cardiologists on staff.
Who do any volume of any consequence, we.
We ought to be able to move on and still obviously maintain that site, but we don't have to be that or handholding.
Best guess is that a busy.
Can a bit busy lab will be there for three or four maybe five days and then we'll move on.
It's part of that is how can we can we batch everybody together.
So in that at that rate we think.
You're doing a kind of a lab a week.
And and then it's just a matter of weakening Kenya.
Stack up week after week after week fact committees get everybody lined up so that you can you can cover.
Cover and account every single week, we're assuming there was going to be some lag and we're not we're not going to be able to go.
Have they have a new site every single week for each territory manager.
But but maybe it sort of depends on how on how quickly we can get through the vac process, but the demand is there for sure.
In terms of the number of territories. The first question I think as your first question.
We wanted to our bare minimum was to have 100 folks in the field come approval, we're already north of that.
We were already at north of that and that into September and we're we're further ahead than that now.
So if we had circa 50 territories. That's a that's a really good starting point for us and so for those 50 and 50.
We're we're we're.
We're not going to stop iron now so we will look to be north of that.
Okay and then on the thank you that's it I appreciate the detail and then on the P.M.A., yes. It sounds like given the timing you mentioned you're already at your 90 day, which if you haven't received or press release, great Cade, a and MDR at this point M.D. M.D. MD.
M.D.L. at this point that means you're probably an interactive review.
And you know is my assumption correct and if so are you then add to labeling discussions at this point are kind of where are you I mean it it because if you don't get a major deficiencies elaborate about her then it sounds like this could even be a little sooner than a than maybe the six typical six month timeframe.
Good knowledge of the process we a.
A little early for labeling.
I suggest Jeff yes, they should they should call. This the best device ever and they they decided that that wasn't an acceptable level just just getting the so were.
Things are tracking well I there are just so few examples of.
Less than 180 day approvals I mean, it's sort of kinda them on one hand.
And when they are less than a 180 day, it's not like.
The 120 day, it's like 170 so.
Everyday to us is quite valuable will take an early approval with glee, but we're but we're not planning on anything or within 100 meter we're ready, but if it becomes now we're ready, but but even anticipating.
Okay, Great no. Thank you very much thanks for taking my questions yes.
Thank you.
Thank you. This concludes todays question and answer session I would now like to turn the call back to does that show for any further remarks.
Thanks, much and thanks, everyone for your time and attention I'm hopeful that a that this latest cobot surge stays away from everyone, who is listening in and your loved ones.
And that things start to really blossom and returned back to some form of normalcy.
In the very near future. So thanks, very much really appreciate the support and attention.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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