Q4 2020 Surmodics Inc Earnings Call
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Good day welcome to the Surmodics fourth quarter fiscal 2012 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Jim here.
Senior Vice President of Finance and Chief Financial Officer. Please go ahead Sir.
Thank you Corey good afternoon, and welcome to Surmodics fiscal 2024th quarter earnings call before we begin I would like to remind you that during this call. We will make forward looking statements. These forward looking statements are covered under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and includes.
Mitch regarding surmodics future financial and operating results or other statements that are not historical facts. Please.
Please be advised that actual results could differ materially from those stated or implied by our forward looking statements, resulting from certain risks and uncertainties, including those described in our SEC filings Surmodics disclaims any duty to update or revise our forward looking statements as a result of new information future events developments or.
Otherwise.
I will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's news release contains reconciliation tables to get resolved. This conference call is being webcast and is accessible through the Investor Relations section of the Surmodics website, where the audio recording of the webcast will also be archived for future.
A reference.
Press release disclosing our quarterly results was issued this afternoon and is available on our website at Surmodics Dotcom I will now turn the call over to Gary Maharashtra, Gary. Thank.
Thank you Sam good afternoon, and thank you for joining US we hope you and your loved ones, a healthy and safe.
I'm pleased with our performance in fiscal 2020, we achieved all of valleys treating strategic objectives, we set out to accomplish even while facing multiple environmental challenges due to the cold in 19 pandemic.
In addition, or full year financial performance was excellent. Despite the Golden 19 really didn't drop in procedures on a medical device revenue and that has to be had headwinds of the expiration of our generation for quoting patterns.
Importantly, we ensure that adequate allocation of capital into a long term growth and value creation.
Total fiscal year revenue was 94.9 million as compared with 100.1 million in the prior year medical device total fiscal year revenue declined 9% to 71.4 million as compared with the prior fiscal year, while in vitro diagnostics revenue increased 8% to 23.5 million.
As compared with the prior fiscal year.
These accomplishments would not have been possible without our amazing team at Surmodics. Our team has rallied together to overcome the challenges posed by this pandemic and demonstrated resilience through these difficult times.
This fiscal year success is a product of our team's dedication to patients customers and can't give us.
Last fiscal year, we had three primary areas of focus the first was to ensure the continued success of surveil.
The second was to continue to advance our product pipeline.
And the food was to drive the legacy offerings in our medical device and in vitro diagnostic businesses.
We made tremendous progress and a little bit of these goals field, which I'll briefly highlight study.
Starting with Civeo received CE Mark certification for our surveil drug coated balloon move.
Moving us forward in our mission to pioneer offerings and improve the treatment of peripheral artery disease.
We made meaningful progress it transcends clinical study follow up despite the difficulties of patients returning for the follow up visits as a result of schools in 19.
We successfully initiated our first in human study for Sundance, So diluted the drug coated balloon notwithstanding a three month duly euticals in 19.
We successfully completed the first in human clinical study of events or to Venus fistula drug coated balloon.
Earlier. This year, we also received CE marks indication fall at Telemark coronary support Microcatheter.
We achieved significant advancements in our product pipeline attaining fight Dinky Clarence fall, a sublime well one for radio balloon catheters, though and as a capstone to the year received five think Clarence fall pounds thrombus retrieval system.
These are remarkable achievements for a company of any size endovascular space within the last 12 months as.
As we look ahead to fiscal 21, I'm confident in our teams ability to execute on our strategy.
Excited about what we have on tap for fiscal 21.
Especially to potential to set us up for achieving consistent double digit revenue growth in fiscal 2002 and beyond.
The objectives for fiscal 21 off first to continue building traction with Servier marching towards PMDA approval, beginning with our final submission to the FDA.
Second to accelerate the advancement of our robust product pipeline through product development regulatory clearances clinical evaluation and feedback.
Third to optimize cash flow from all in vitro diagnostics and medical device coatings offerings to support our strategic growth initiatives.
I'll start with our first initiative.
Ill go to Athena FDA approval of service.
We are focusing our efforts on completing our fourth and final LPMI module submission to the ft in Q2 to fulfill the pmiers claimants for approval of the Vale.
This module incorporates the primary endpoint clinical report on other product related technical data.
To that end, we have successfully conducted 12 month follow up visits with more than 70% of the patients in the pivotal transplant trial. We have also been engaged in active dialogue with the FDA to address any missing data that we encountered due to the impact scope at 19 on this process.
We have successfully gained alignment with the FDA on the best course of action to take with this subset of patients and have made the necessary adjustments to the protocols in.
In addition, we have been in discussions with FDA on the amount of long true vital status data that will be needed for the peony.
Vital science information is whether the subject is alive deceased unknown.
These data are an emerging requirement for new P. acnes vascular devices that use paclitaxel.
Order to ascertain long term safety and appear to be a direct result of ongoing discussions surrounding past axle containing vascular devices.
Which is active drug in the surveil drug coated balloon.
We have been encouraged by our discussions with the FTC on this and expect to have clarity on additional requirements by Q2.
The us substantial financial outcomes from these efforts that are further clarify.
As we have previously acknowledged to $45 million of remaining milestones under our commercialization agreement with Abbott.
The first component of this is a $15 million milestone based on the successful completion of the clinical study report after transcend pivotal trial, demonstrating safety and clinical noninferiority with the control device.
While we will not know the answer to these questions until the clinical and statistical analysis of data has been completed which we expect in Q2.
This milestone will be an important achievement for us on the path to premarket approval by the FDA.
The remaining $30 million would be achieved upon approval offices, they will buy the FD underpinning.
Our goal is to scale FTC approval as early as possible. However, we are unable to predict the precise timing because of the need for vital status data as I previously discussed.
Switching to our second objective expanding our product portfolio.
Our product innovations aimed to improve patient outcomes and quality of life, while reducing healthcare costs. As a reminder, that we have three main platforms within our pipeline.
Bruce as vascular drug delivery by a drug coated balloon underscored by surveillance, we just discussed as well as events, our fistula BCD and Sundance our below the knee.
The second platform is our thrombectomy platform focused on removing thrombus in multiple vascular beds, including arterial and venous and pulmonary embolism.
The food is in the treatment of vascular disease volume radial artery access, which has the potential to redefine patient care.
Let's start with our DCB programs into two Sundance serve almost equal to boot for below the knee disease.
We continue to make progress of patient enrollment in our first in human trial swing with more than one third of the patients already enrolled we are targeting completion of enrollment by the second half of fiscal 2001.
Sundance has the potential to improve the treatment to flock to real blockage below the knee, which can lead to amputation and debt.
With respect to the best drug coated balloon as we previously announced we successfully completed data collection and I'll first in human study.
As a recap these results provided tidal safety data vests and directional data on its effectiveness importantly, freedom pre vazculep. Some revascularization at six months was greater than 90%.
These results will be presented as part of the presentation by one of our principal investigators Dr. Andrew Holden at the Viva meeting later this week, we are quite pleased with the first in human trial results and we will be discussing more specific plans for that in subsequent earnings calls.
Next turning to our radio platform.
With FDA clearances to take forward Sublime Regional guide sheets and open for regional Blue cap, though.
Our focus continues to be on getting these products into clinical use in Q2 with our field team of clinical specialists.
Our team is also continuing to make progress in filing fighting key submission FDA clearance for all one eight peripheral balloon capsule to treat more proximal vessels behind and above the knee fire radio access in Q2.
As a reminder, both of these balloon catheters will help patients who are suffering from peripheral artery disease into low vascular tissue.
We have several other products in the pipeline and we will share as we complete the concept development of these.
Moving to our non drug delivery pipeline and pounds.
As we discussed earlier, we successfully achieved five to include clearance for this device.
Our teams continue to work diligently on the Validations and manufacturing builds to stop evaluations of this system in the clinic to remove costs in the peripheral arteries.
Given the critical nature of this product and thus far in this of the Validations required we expect product for clinical use to be available to Watson end fiscal year we.
We are also scoping the programs for the next targeted vascular beds for thrombus revenue, including deeply in Trumbull assist and pulmonary embolism.
Finally, turning to our in vitro diagnostics and medical device businesses.
I'd business is expected to continue to outperform the immediate acetate market growth of 3%, while generating excellent operating margins. We are pleased to support several customer related efforts for COVID-19 research and Surajit tests with our chemical components.
While medical device coatings revenue continues to face headwinds this year due to the expiration of our fourth generation hydrophilic coating patents, we believe that despite the uncertainty related to the pandemic the strengths of our coating technologies and diversified customer base position us well to operate through the.
Unpredictable times.
While fiscal 21 has several facets of external uncertainty, including COVID-19, and the worldwide economic and geopolitical stresses out.
Our goals of click.
And we have the talent the capabilities and the financial resources to successfully execute our fiscal 21 objectives.
From a strategic point of view fiscal 2021, ultimately is about setting the stage for revenue growth from our product investments in development clinical research manufacturing and commercial readiness I'm excited about this year and our ongoing commitment to the long term strategic transformation of sales.
I believe that these are the right moves and that the success derived from them will position surmodics for strong long term growth and shareholder value creation.
I'll now turn the call over to 10 to provide more details on our fourth quarter fiscal 2020 results, including some perspective.
Cool bid 19 is having on our company's results as well as some thoughts on how we are thinking what's it in fiscal 21 revenue impacts and operating expenses Tim.
Thank you Gary during today's call I will provide an overview of our fourth quarter operating performance. While we are not providing fiscal 2021 financial guidance. At this time I will provide comments and how we are thinking about operating expenses and the revenue impacts associated with our fourth generation hydrophilic coating patent expiration.
And our surveil drug coated balloon distribution and development agreement with Abbott vascular.
Fourth quarter revenue was 22.5 million as compared with $30.8 million in the prior year.
Both business segments on a year over year declined in the quarter is a several headwinds including the prior year impact of the achievement of a surveil milestone the expiration of our Genfour coating patent and COVID-19.
I'll start with the impacts it pulled that 19 to our business during the fourth quarter first.
First.
Our fourth quarter medical device coating royalties include approximately 2 million associated with a true up from our third quarter royalty revenue as the actual royalties reported by our customers during April through June period exceeded our estimate.
As a reminder, us GAAP requires that we recognize quarterly royalty revenue based upon an estimate of our quarter our customers sales during the period.
Prior to the pandemic. These estimates have been relatively predictable.
Actual royalty payments received from our customers Q3 sales suggest that the cobot impact in our Q3 royalty revenue was approximately 10% below pre 12 at levels, which was much more favorable than a 30% decline that we had estimated.
Resulting in a favorable true up to our fourth quarter royalty revenue.
Partially offsetting the royalty revenue true up is an estimated 10% decline below pre covenant levels or approximately 500000 and royalty revenue associated with procedure declined due to the pandemic and Q4.
Second we continue to see impacts to our medical device product and R&D revenue with demand reduced for a balloon catheters and coating service offerings based in part on customers that are managing their inventory levels and response to agree to reduce procedure volumes.
Third our in vitro diagnostics business saw revenue decline from the prior year period by approximately 600000.
Lower sales of our distributed antigen products accounted for the majority of the decline. Although we have also seen declines in our chemical component offerings as customers are working through inventory levels that had been in previous sales increased to minimize potential supply chain disruptions due to call. It.
Since the call that 19 pandemic began we have experienced a modest increase in sales of our chemical components and micro array DNA slides to support COVID-19 related research and testing.
Today, we have several customers utilizing our are enabling technologies and they recently commercialized serology test.
Although cobot continues to have a net unfavorable impact in our business. We have been pleased to see the resilience of both our medical device and in vitro diagnostics business during a highly uncertain year.
Moving to our financial results for the quarter revenue for the fourth quarter fiscal 2020 declined 27% to 22.5 million as compared with $30.8 million in the fourth quarter of 2019.
Let me remind you that last year's fourth quarter benefited from the achievement of the $10 million surveil transcend steady enrollment completion milestone of which $5.1 million was recognized in the year ago period.
Looking at our two business units medical device revenue declined 31% to $17.2 million and in vitro diagnostics revenue declined 10% to $5.4 million in the fourth quarter as compared with the prior year quarter.
Our fourth quarter royalty and license fee revenue totaled $9.9 million down $6.9 million or 41% from the prior year period, primarily as a result of revenue recognized in the fourth quarter fiscal 2019 from the achievement of the surveil full enrollment milestone.
Our surveil distribution and development agreement with added vascular generated revenue of 1.6 million in the fourth quarter, a decline of 6 million compared to the year ago period.
Gross revenue declined to $8.3 million in the fourth quarter as compared with $9.2 million in the prior year quarter.
The expiration of our fourth generation hydrophilic coating patents created an expected headwind of approximately $2 million compared to the prior year quarter.
For the full year the impact of this patent expiration was approximately $5.5 million, which was which was in line with expectations.
In addition to the fourth generation hydrophilic coating patent expiration fourth quarter revenue was impacted by lower procedure volumes as a result insolvent.
As I discussed earlier this was more than offset by the favorable impact in the fourth quarter royalty revenue from stronger than estimated third quarter reported royalties by customers.
Product revenue of 10.6 million in the fourth quarter was essentially flat when compared to prior year revenue.
In our medical device business product revenue was up 8% to 5.4 million with growth in legacy Ireland medical device revenue offsetting a modest decline in reagent sales.
And vitro diagnostic product revenue declined 9% to 5.2 million continued growth in our micro array DNA slide products was more than offset by decline in antigen product sales due to order timing as well as overall softness in orders as customers are working off recent inventory builds related to call that.
R&D services revenue 2.1 million was down $1.2 million as compared with the prior year period, our coating services customers have reduced demand in response to the pandemic and the timing of customer R&D projects has also been impacted.
The medical device business reported an operating loss of $1.9 million in the fourth quarter compared to operating income of $3.7 million in the year ago period, which.
Benefited from the previously mentioned revenue recognized.
On the fiscal 2019 surveil fall enrollment milestone.
Medical device operating results were also impacted by call. It 19, and the Gen. Four patent expiration as royalty and R&D revenue decline compared to the prior year period.
Partially offsetting the decline in revenue was at $2.4 million decline in operating costs and expenses, which included the effect of eight and 890000.
Onetime charge R&D in the prior year from acquired in process research and development.
I think the revenue of $5.4 million in the fourth quarter was down 600000, or 10% compared to the prior year quarter.
As mentioned previously we saw continued demand for our micro array DNA sign products offset by a decline in engine products sales and softness in orders from certain customers, who are managing inventory levels that had been built as a response to the pandemic.
Have any operating margins remain relatively stable at 46% as compared with 47% in the prior year quarter.
Product gross margins were down in the quarter at 63% as compared with 66% in the prior year.
Product gross margins reflect negative impacts from both product mix and leverage and volume from the cobot related decline in medical device reagent sales.
R&D expense, including cost of clinical and regulatory activities was 57% of revenue for the fourth quarter as compared with 47% in the year ago period.
R&D expense was $12.8 million for the fourth quarter down, 12% or 1.7 million as compared with a year ago period.
In the fourth quarter transcend clinical study costs decline, partially offset by increased product development investments and costs associated with manufacturing readiness activities for our sublime radio access platform.
SGN expense in the fourth quarter of fiscal 2020 was $7.3 million or 32% of revenue.
Compared to 23% of revenue in the prior year period.
SGN expenses were essentially flat with a year ago period.
Now turning to income taxes, we recorded income tax expense of 870000 in the fourth quarter as compared with income tax expense of 560000 in the prior year period.
Both periods reflect the impact of taxable income for the full year in the us nontax benefitted amortization and operating losses in Ireland.
On a GAAP basis diluted loss per share was 22 cents in the fourth quarter as.
As compared with earnings of 26 cents in the prior year quarter.
On a non-GAAP basis diluted EPS was a loss of 18 cents in the fourth quarter versus earnings of 37 cents in the prior year quarter.
Moving to the balance sheet, we continue to have strong cash position and no debt in the fourth quarter. We began what 60.6 million of cash and short term investments and generated $1.3 million of cash from operating activities. During the quarter, we paid $1 million for capital expenditures as of September Thirtyth 2020, we had cash.
Cash and short term investments totaling $61.1 million.
Our current cash and investment balances provide adequate capacity to support our strategic growth initiatives.
Turning now to fiscal 2021 as noted in our press release issued this afternoon due to the continued uncertainty created by the pandemic. We're not currently providing fiscal 2021 guidance. However, I will provide some comments related to our royalty and license fee revenue.
As well as our operating expenses that may be beneficial to understanding our operating performance.
We have the potential to receive a $15 million milestone payment during fiscal 2021 related to the successful achievement of the transcend written clinical report milestone under.
Under the terms of our surveil distribution and development agreement with habitats healer.
The potential revenue associated with this milestone could range between 11.3 and $11.6 million.
Furthermore, full year fiscal 2021 license fee and milestone revenue associated with the surveil agreement, including the written clinical report milestone could range between 16 and $17 million.
During fiscal 2020.
We generated $28.6 million in royalty revenue.
We estimate that the expiration of our fourth generation hydrophilic coating patents.
Reduced our fiscal 2020 royalty revenue by approximately $5.5 million compared to fiscal 2019.
In addition, we estimate that coated further reduced our fiscal 2020 royalty revenue by approximately $2 million.
During fiscal 2021, we estimate that the expiration of our fourth generation hydrophilic coating patents will further reduce our royalty revenue by approximately $3 million.
We see no further gen four patent expiration headwinds beyond fiscal 2021.
As Gary mentioned in fiscal 2021, we expect to complete our submission to the FDA for the approval of our surveil drug coated balloon.
Complete enrollment in our Sundance below the knee sirolimus drug coated balloon first in human trial.
And initiate clinical evaluations for our recently cleared sublime radio access in pounds thrombus retrieval system products.
As a result, we expect fiscal 2021 R&D expense to be similar to our Q3 and Q4 fiscal 2020 levels.
Were approximately $13 million per quarter.
To continue to support our strategy, we expect to grow ESG in the low double digits during fiscal 2021 to increase it talent and capabilities necessary to support product development activities.
And accelerate the development and management of our existing product platforms, including receiving physician feedback and performing clinical evaluations.
Operator. This concludes our prepared remarks, we would now like to open the call to questions.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
If you are using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach our equipment.
Please press star one to ask your question.
Momentarily to allow everyone an opportunity to signal for questions.
Our first question from Brooks Oneil with Lake Street capital markets.
Good afternoon, guys I have a few questions I guess the first one.
My sense is be a six recently got approval for Paclitaxel quoted balloon catheter for peripheral arteries can you give us any feel for or how you believe surveil might compare with the characteristics of their new product.
Uh huh.
I can't speculate too much about it but we do know the technology fairly well even prior to the acquisition of this technology by Boston scientific.
I think the.
On the outside looking in.
What's interesting is that the data was presented a year ago. I think is November the fits the vivo meeting that 12 month data from the pivotal study.
And so you know.
Almost to the day one year later bailed secure their approval. So we are quite happy to see.
Then get this approval because.
The paclitaxel containing devices going through.
The ft and now clearly there are some additional requirements. So it it bodes well for US the day secured it although.
It did take and again I can't speculate what it was but it did appear to teak close the year from the time that presented the 12 month data publicly.
On the other hand, I would say the the data looks in range with the of the drug coated balloons. In fact, I know there is a.
The physician side sponsored investigator sponsored study head to head with Medtronic. So it clearly does look in line with what we've seen.
I would say to what we look at is not necessarily the Kaplan Meier 365, we try to look at when all the patients have been.
I have been assessed followed by a repeat and see 365 really any patient who has not come in for the duplex is counted as payment.
Are you really have to wait for all of them and I think Boston has reported that data as well and that's that's the data we look at.
Okay.
Given what you just said about the BS Exabytes would you expect it to take a year to get through a da first avail.
You know it's hard we of course, we would like it as quickly as possible because its a commercialization revenue that's a critical thought.
But as I said Brooks the FDA has informed us that.
You know the spectacular issues that they have they kind on the hook now fall a long true mortality data as an agency looking out for public health. So they all looking for data sets for Pmeight that that we're not aware that was ever a component.
Securing approval, it's really to the one yet.
Safety and efficacy data now they would like to see some longer term data and so that really no opinion is what sets the critical path to get the approval depending on the amount.
And which cohort of time is a two year and three yet data in that whole more but it has three data how many patients do you need to get past that dissatisfied agencies requirements no recall three it sounds like a scary long time, but.
We already have patients at three a month because the patients enrolled over a period of time. So I believe the first patients in.
The surveil transcend study are now beginning to hit.
Hit that three year endpoint. So it doesn't mean, we have to wait three years. It just means we have to look at the three year data from initial cohorts of patients through what we believe so I don't have an answer your questions because I really can't predict if it would take.
Less or more than the year, except to say, we will do everything we can.
To clearly be deaf these requirements, but to.
Expedite any additional data sets they need.
Right.
That's helpful. I really appreciate it im curious.
If there's any.
Timeframe that you anticipate.
Anyone sharing.
Data on that success or lack thereof of surveil into trade then trial I mean are we going to see any data from that trial anytime soon.
Well couple of things as you know, we and I know I said, we followed up 70% of patients.
What I really mean it does so patients within window with oil completed data set we have followed up close to 90% of the patient. So just make that clear that means the full 12 month clinical follow up some of them with the duplex some of them without but what we.
The first agreement we have to have with the agency, what's the how to treat the missing data and and how to statistical analysis of the missing data and I'm happy to say, we have alignment with the agency on that in the future will be getting alignment to the long term mortality data. So what we did is.
We did fall I do want to use this would it's otherwise, but we have to sort of stragglers that come in if you lock the database too soon.
You missed data of patients, who probably be a 14 month and it is important data.
As an example safety for patient missed the 12 month window.
And they have pizza at 14 month, that's eaten Cecil County, So what our team did is we made sure we got as much of that data that was relevant as possible and the locking up the data bases. The next critical point, which I am confident will happen before.
At the end of the calendar year and what that means is the older case report forms everything has been all the data the though the database as being checked inquiry is completed and the principal and investigators of all signed off on all the Crs for each site.
Subsequent to that you run the statistical analysis right right. The clinical study reports and such and our colleagues at Abbott will be helping us with that reviewing that and such but as far as public release of the data it's not prudent.
To release this data publicly until the FD hazard, that's how we look at.
And so the first public release of that data will be subsequent in our opinion.
It will be after the agency has the data in hand, and so we are looking at clearly most of these meetings all of them are very achievable for the virtual meetings in the first and second quarter of calendar 2021, with the emphasis on being early as better for all of us we'd like to get the data out.
As quickly as possible, but sure that the critical thing is that the need to have a clinical study report for us.
For us first.
Right and then one last one and I appreciate all the color.
If I remember trends than the basic milestone its clinical equivalent would be at both product I think and I would.
I also think I remember that you were trying to get enough patients enrolled so that you might demonstrate superiority.
And can you share any.
Thoughts or questions on that.
The primary efficacy endpoint is clinical noninferiority.
The impact device.
If there is sufficient power to.
To conduct and demonstrate clinical superiority that will be done, but thats the secondary outcome.
Okay, I guess I'll just ask one more and this is a little speculation, but I'm curious so if you're fortunate enough to receive the balance of the milestone payments from Abbott I think you said 45 billion.
Probably over the next year or something how might you think about using that money you obviously have.
A lot of cash on the balance sheet now and you're managing your spending prudently and all of that how do you think about that.
Yes Brooks. Thank you for the question.
I think Gary and I.
Our thinking about the milestone payments clearly, we expect that we will see the balance of the 45 million.
In terms of any any significant changes with regard to the organization and capital allocation, we really don't have a whole lot to share with you today I think what you can expect is.
The color that I provided in terms of operating expenses is probably the way I want you to think about.
The near term future and perhaps maybe even moving a bit into 2022, but.
If anything should change will be the first to let folks know, but that's that's kind of what we're working toward right now is making sure we're advancing the three platforms.
That being said I.
I think Gary and I will be talking more as he mentioned in his prepared remarks what.
With regard to what we might be looking to do with a best our paclitaxel drug coated balloon use for generalist Avi graphs.
Depending on what May happen, there that clearly wouldn't require a pivotal study and that wouldn't be reflected in the operating expense color that I provided for 2021 and beyond so until we have a better understanding of what we might do with a vast there may be a need we see the need for allocating.
Capital to invest because we think there could be a good shareholder return associated with that level of investment, but we still still need to do some work there.
Okay, great. Thank you very much for all the color.
Youre welcome.
Thank you well take our next question from Mike Matt.
Needham and company.
Yeah, Hey, Gary and Tim. This is Dave is tax non for to for Mike. Thanks for taking the question.
And I'm hopping between calls so I'm, sorry, if I'm repeating anything.
But first he.
During the quarter you got the pound.
Approval. So just can you can you talk about how you're thinking about the market size and have you had any conversations with any any strategics about distribution.
You know its pre mature on those strategic conversation, yet, especially as we are quite excited on arterial thrombectomy in terms of from all sides. I mean, just lots of discussions about.
DVT and PE, especially since I know you went public.
In the summer.
But the.
Tubular side is as important.
And it's really fall critical issues when a patient is on the table and you can't get a plot out.
Blocking the little and so although we'll talk a little bit more to market size because it also depend on the future.
Commercialization plan. So that's what I will say is.
The devices will share more of this in future calls.
Vice is quite unique to what's out there requires no capital equipment. So is it a bulk as defined by a lot of devices that require capital equipment requires suction required blood loss, we see this as operating beyond the market sizes of those because.
It's quite simple to use it because we believe we move also organized thrombus, not just fresh thrombus and with minimal blood loss and again without having a need for capital equipment and really easy to use and operators and we think it has a significant impact.
On the market that being said the result has been as well we have a lot to do to it. So it's a it's a complete therapeutic units and we want to make sure that the validations of manufacturing readiness.
And our own time to evaluate clinical use of the device before we get too far into any discussions.
If.
What we believe is true the clinical use of the device will be incredibly easy and.
Fairly significant impact and competitively in the market. So we would like to take the time to prove that out before going much further David I'll just offer a little color I understand that cloud removal in the arterial system peripheral arterial system and bought a 100000 cases in the U.S. performed annually.
How it's been framed up for me at least is on a global perspective, it looks like the arterial clat removal space is about a $400 million market opportunity today.
Okay. That's helpful and then I mean it seems.
Like concerns over Paclitaxel devices are just easing. So maybe can you update on or update us on how you're thinking about that debate and at TCT CCT. The Voyager trial should know mortality the difference between the drug coated devices the non coated.
So any thoughts on how meaningful that is from a utilization perspective.
Thank you.
Yes, we will happy to see that data and I and I'm trying to remember now I guess it was well.
Propensity matched it is comparable to the current data set.
You know it it really is up at least in the U.S. to the SV and there is an industry.
Aberration that works quite actively.
With the USSD and with physicians.
And I haven't.
I'll put it this way the movement has been positive but I haven't.
Been made aware of any significant shift by the ft yet.
Clearly the beat is coming down, but I do believe fall practicing physicians. It continues to demonstrate the safety of the entire rate and just therapy. So we're quite happy to see that and eventually that will I believe help the market creep back to where it should have been but.
You know as this hazard ratio comes down.
I believe its low limits of the confidence interval becomes less than one. This is my personal opinion, you really didnt have to say the probability of this being a non issue as gone up dramatically. So I will.
We will wait for less than that we'll wait to see how the FDA, specifically response and Gary I might offer a few.
Comments for David and for others as well I know.
With regard to the FDA and kinda, they're thinking with regard to the Paclitaxel matter. There has been I think an interview with the FDA that was published in the September Endovascular today, where they have to answer several questions with regard to the current status and it might be helpful for folks maybe to take a look.
That.
I think the other comment I'll make is I know part of the cobot pandemic. It looked like we were seeing some.
Improvement in terms of U.S. utilization based upon Diaman S health data.
We will still need to take a look at that here for Q3, I'm not sure that you'll get a lot out of the Q2 data because of the pandemic, but it looks like we're starting to see increased utilization for the use of Paclitaxel coda devices to treat the SS SSH. So.
I would I would encourage people to take a look at that article and here and the article what the FDA is directly commenting on the matter.
Okay. That's helpful and just a quick follow up on on the same topic, so if and when the FDA does shift do you expect them to provide an update on their recommendations are kind of.
And what what form would their shift take.
Well really to the shift takes place in terms of the leveling off the devices and when to use them and went to consider not using them. So I.
I don't actually notice, but I would I would imagine it would be then a change on easing off the label restrictions on this category of devices right know physicians are being encouraged to use alternative devices, except if they believe a patient is a high risk of reach the notices.
If that Liebl is ease off would assist.
Physician as men allow to use this for patients according to the clinical judgment.
That will be a big thing because that's how it was before.
You know when you talk to clinicians.
The high risk of reason is the supply is pretty much a majority of patients, but it still has that limiting factor for them.
Great. Thank you.
Thanks.
And as a reminder, if you would like to ask a question. Please press star one on your telephone keypad now.
And at this time there are no further questions in queue I would like to turn the call back over to management for closing remarks.
Well. Thank you we want to close by expressing my appreciation to our employees for their incredible dedication and commitment this past fiscal year through unprecedented circumstances sales.
Sales, if everyone would be well thank you.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
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