Q4 2020 Shockwave Medical Inc Earnings Call
Okay.
Good afternoon, and welcome to Shockwave for fourth quarter and year end 2020 earnings conference call. At this time, all participants are in a listen only mode.
You will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Debbie Kaster, Vice President of Investor relation of check leave for a few introductory comments.
Thank you all for participating in today's call joining me today from Shockwave Medical are Doug Godshall, President and Chief Executive Officer.
Zacharias, Chief commercial officer, and Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter and year end debt at December 31st 2020.
A copy of the press release is available on chocolate for website before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements all forward looking statements.
For any trends.
And hiring prospects.
And revenue expectations and future product development and approval are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties, including the impact of the 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 any undue reliance on these statements for a list and description of the risks and uncertainties associated with our business.
Refer to the risk factor section of our annual report on form 10-K on file with the SEC and available on Edgar and in our other reports filed periodically with the SEC.
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 life broadcast today February 17th 2021 and with that.
Now I'll turn the call over to Doug.
Thank you Debbie good.
Good afternoon, everyone and thank you for taking the time to join US to review shockwaves results for the fourth quarter and full year of 2020.
For the past year was for many significant challenges for Shockwave and all of us and despite the challenges put in front of us by the global pandemic.
Obviously, the most significant recent achievement was the was the receipt of PMA approval for <unk>, our coronary device and we will speak to that in more detail, but before we do it is worthwhile recounting some of the teams recent accomplishments.
We reported $22 7 million in revenue for the fourth quarter and $67 8 million for the full year of 2020.
Representing increases of 59% and 58% respectively from the same periods in 2019.
Both the U S and international franchises grew at over 50% for the year, which reflects the global appeal of IBM.
In October at TCT connect.
Our accounts through U S. Coronary IDE study data were presented as a late breaking trial confirmed the safety and effectiveness endpoints for the trial were met.
In November the primary endpoint of a randomized pad III study was also presented as a late breaking trial this time with Veeva.
The investigators demonstrating that Intravascular lithotripsy is superior to angioplasty and severely calcified peripheral artery disease.
Earlier this month data from our CAD for pivotal study in Japan were published confirming safety in effect to an efficacy and a complex patient population.
In early December.
CMS announced the creation of for new codes, but established specific payment for Intravascular lithotripsy procedure procedures performed in an outpatient setting in arteries below the knee as well as a new codes for IVF performed in ambulatory surgery centers.
We grew our overall team by nearly 60% over the course of 2020 with the most substantial growth occurring in our U S field organization, which is which now numbers over a 125 individuals.
And we've made meaningful progress on our R&D programs, which led to an acceleration of patent filings and we ended the year with over 100 issued patents.
Yeah.
I think it is going to do a deeper dive into our commercial efforts, but before handing the call off I want to provide a brief update on the COVID-19 situation as it relates to Shockwave and.
And the trends, we are witnessing which are largely consistent with what others have reported.
U S peripheral and international coronary procedures tapered off through the fourth quarter as total COVID-19 restrictions were put in place and some patients elected to defer their treatment to avoid entering hospitals.
Our business remains stable through the quarter and into January despite the different procedures on a macro level, which we found encouraging as it indicates that we captured a higher share of the cases that are still being done.
Thankfully most signs indicate that we are coming out of the worst phase of the current virus Serge.
So we anticipate that elective procedures will recover steadily over coming weeks as ICU is continuing to free up capacity.
That said it.
It remains extremely hard to predict the trajectory and impact of the virus given the additional variables with vaccines and new variants.
To provide some additional context on our commercial operations in situ I'm happy to hand, the call to Isaac.
Thanks, Doug.
We have been preparing for the U S coronary launch for the better part of a year the.
The entire U S sales organization is now out there executing on our launch plan.
As we've discussed before our goal as a company is to foster independent use of IBM, whether that uses coronary or peripheral.
What we mean by this is that customers can achieve great outcomes with IBM, even when a shockwave breath is not in the room.
This model is a win win for customers and Shockwave.
We have been successful doing this in the countries in which we have launched IV out internationally and with our peripheral products in the U S.
Our coronary launch tactics in the U S are aligned with the same strategy.
Now I'd like to share with you five key actions that have helped the team prepare for a successful launch for.
We began training our sales force over six months ago.
The training program developed by our marketing team is extremely comprehensive and includes modules on anatomy calcified disease advance PCI tools and techniques coronary ideal best practices launch tactics and pricing strategy.
The content is delivered online, which has made it very accessible and easy for the team to circle back and refresh the sales periodically.
Our training focuses on teaching the team not just went to use IBM, but also when not to use IBM, we want to be responsible stewards, when bringing us new technology for the market.
We are fortunate to have many of the academy investigators and our international customers participated for trading program.
Physicians pizza team, how and when to use IV.
ABL appropriately from the perspective of an experienced <unk> operator.
Results from the disrupt CAD III study will be a tailwind as we launch this product, particularly since it makes it clear to customers that IPO safe and effective even in the most challenging calcified cases.
Second we are a data driven approach that our territory managers used to prioritize that our current targets.
We incorporate several factors, including PCI volume atherectomy volume IV experience, Audi enter GPO affiliation and back process and timing.
Each territory manager is now prepared to prioritize their activity at the target accounts in that area.
While the normal hospital access pathways have been impacted to varying degrees by Covid, we anticipate that most of our target accounts will be able to partner with us to get through the vac approvals quickly and commit to the time needed to properly launch <unk> in the hospital.
Third we are fortunate to be able to leverage the experience from our three years of international sales to train our U S team when the most successful way to launch an account.
In short a successful launch requires a mutual commitment between Shockwave Andy accounts to ensure that once launched our customers can appropriately use IV L independently.
Prior to introducing <unk> to center, our territory managers to work with the account for I didn't identify patients who are good candidates for IBM we.
We will provide digital training tools that physicians and staff can use to educate themselves prior to launch.
The one to two weeks that we are launching a new center, we will provide in person didactic training to operators and their staff with.
With proper preparation, we expect to have multiple opportunities to treat appropriate patients during the in service period.
This will help ensure that we train as many physicians and Cath lab staff as possible. So they can successfully and independently continue using coronary IVF.
Especially in this COVID-19 environment, we know that customers appreciate the ability to work independently from sales rep support.
Well in our account losses, I'm confident that in the coming years IV that will be broadly adopted and viewed as a necessary tool for achieving optimal PCI outcomes.
For a few words about pricing.
As we have done in international markets, we will sell for you too at a premium price relative to other calcium modification devices. It is a novel differentiated product safely improves PCI outcomes is easy to use and expand the population of patients that cardiologist can treat.
Further the device price is a component of an overall IV L. PCI procedure costs, which CMS evaluates when determining both add on and long term payment levels. We.
We have set the situ price at a level that we believe will optimize the future reimbursement of IBM.
For near term reimbursement, we have already submitted an application for a new tech add on payment for and tap to CMS.
Awarded this will provide incremental payment for IV <unk> in the inpatient setting.
Now that we have received our approval we will soon to be applying for the transitional pass through for TPG David.
If awarded this will provide incremental payment for what Ivy Hill is used in the hospital outpatient setting.
We hope to have both the encap and TVT payments in place within the year.
Fifth and finally for our C to launch to be successful our team must maintain and grow the peripheral business in 2021, our sales leaders have worked hard to ensure that our territories are appropriately sized and now we have enough field clinical specialists to support both coronary and peripheral accounts.
Our peripheral business tends to be more represented in the coronary business. So we have costar teams to manage their effort and time accordingly.
The field team has spent the last 18 months, helping customers become more independent with a peripheral IV I'll use.
We are advantaged in that most peripheral accounts will be early targets for our coronary launch in many of our peripheral customers. Our interventional cardiologists, who are already using IV alpha for peripheral and tabby access.
This accounting customer synergy will help us maintain a strong peripheral business, while we execute on our coronary launch.
Switching gears now to our international business moving the process of building a direct sales team in France and the UK.
We will transition the business in those countries from our distributors in the middle of 2021.
We are very pleased with the results our distributors achieved in France, and the UK. In fact, it is those results that led us to conclude that we can drive further penetration at better margins with a focus Shockwave sales force.
We hired sales leadership for both countries in the fourth quarter and it began onboarding territory managers in both countries for this quarter.
In Japan, we are in the process of building a local team that will be prepared to launch the coronary product in 2022.
Our decision to build the Japan business with a leadership team with a local leadership team is justified by the size of the market and the myriad benefits of having a direct team in Japan, including communication physician engagement and focus.
The strength of the recently published CAD for data further encourages us about the potential for CTO in Japan.
It continues to be a busy and exciting time for our organization I'm very pleased by the effort dedication and accomplishment accomplishments of our talented and growing commercial team.
We are all pumped up to get on with the seat to launch here in the U S.
And continue extending the shockwave team in international market.
So tangible and it's a pleasure to be a part of this team with that I will turn the call back over to Doug.
Thanks Isaac.
I'll now touch on a few other operational updates.
In addition to the early approval of <unk> in the U S. We continue to make good progress on international regulatory activities.
We're on schedule with our Japan efforts first modules slated for submission to <unk> by the early second quarter.
We are also making good progress with our notified body to obtain device certification under the new MTR regulations.
We successfully passed our first quality system audit under MBR and were recommended for certification based on those results.
Tracking to a new more rigorous standards is critical since they are slated to become mandatory dismay.
Our team and investigators have been quite prolific in the generation of clinical papers with almost 160 ICL publications on over 'twenty 100 patients to date.
This number will continue to expand as we published data from studies such as the recent cut for publication in the soon to be published pin pad III randomized data.
Let me provide some additional detail regarding regarding peripheral reimbursement since it is always a topic of interest.
As a reminder, last July we received for peripheral codes for from CMS for hospital based outpatient procedures.
This was a great first step.
However, because above the knee and below the knee procedures were lumped together into the same for codes.
CMS would not have been able to attract cost separately in those vessel beds.
We worked with CMS last fall and we're pleased by the Swift action and changing the outpatient rule in December with the addition of for new codes for IV <unk> and below the knee lesions.
These codes now pay for IPL and <unk> lesions at a higher rate than ATK lesions, which is consistent with the rest of the lower extremity basket.
Ultimately our hope is that the cost data that CMS is collecting will lead lead them to uplift both above the knee and below the knee payments levels for IBM.
The.
<unk> penetration, we have seen an hour in hospital peripheral procedures EBIT in the face of broader procedural slowdowns due to COVID-19.
It gives us confidence that CMS will be able to gather cost data on IV I'll quickly.
The annual rules issued in December also included concluded eight new codes for IV Lmu's ambulatory surgery center or ASC site of service, which we're pleased to see.
They're not a lot of pad interventions performed in Asp's presently, but the addition of these codes serves as validation that CMS is paying attention.
Securing reimbursement when you start from scratch it takes time, but we and our customers are encouraged by the steady progress we've made over the past year.
Finally, there is the lower the broader lower extremity code set that covers both hospitals and obl's as well as physician fees.
The medical societies work directly with <unk> CPT panel and we have no new information to report on the lower extremity basket.
The agenda for the next CPT editorial panel will be posted on March 12, and we will all be able to see if a new proposal has been submitted for the for this lower extremity code set.
As these many components of our business progress, we continue to strengthen our capabilities and capacity to that end.
The R&D team has moved into a much larger lab in a new building and we expect the upgrade and expansion of our manufacturing facilities will will be will be completed within the next few months.
The meaningful efficiency gains we experienced over the course of 2020 that put us in a comfortable inventory position for the launch of <unk> and obviously resulted in an encouraging step up in gross margin over the second half of last year.
These productivity improvements will continue to accrue to our benefit as we move into a new clean room, although there will certainly be some ebbs and flows as we bring in a bolus of new equipment and a surge of additional operators in coming months.
I will now turn the call to Dan.
Thank you Doug good afternoon, everyone Shockwave Medical's revenue for the fourth quarter ended December 31, 2020 was $22 7 million for.
For 59% increase from $14 $3 million in the same period of 2019 U.
U S revenue was $12 $7 million in the fourth quarter of 2020 growing 66% from $7 $6 million in the same period of 2019.
The increase was driven by continued sales force expansion into new territories and increased adoption of our products.
International revenue was $10 million in the fourth quarter of 2020, representing a 51% increase from $6 7 million in the prior year period for.
The growth in international revenue is primarily driven by increased adoption in existing geographies.
We're now commercially selling igl in 55 countries outside the U S.
Looking at product lines, our peripheral products <unk> and S for accounted for $14 $1 million of the total revenue in the fourth quarter of 2020.
Compared to $8 $7 million in the same period of 2019, 62% increase.
Coronary product <unk> accounted for $8 $2 million the total revenue in the fourth quarter of 2020.
Compared to $5 $3 million in the same period of 2019.
Representing a 54% increase.
<unk> revenue is currently international.
In addition, the sales of generators most of which were international contributed 466000 in revenue in the fourth quarter of 2020 compared to $317000 missing period of 2019.
Gross profit for the fourth quarter, 2020 was $16 2 million compared to $8 $8 million for the fourth quarter of 2019.
Gross margin for the fourth quarter of 2020 was 72% as compared to 61% in the fourth quarter of 2019.
Contributors to gross margin expansion included continued improvement in manufacturing productivity and process efficiencies.
Total operating expenses for the fourth quarter of 2020, with $32 1 million or <unk>.
33% increase from $24 $1 million in the fourth quarter of 2019.
Sales and marketing expenses for the fourth quarter of 2020 were $16 $4 million.
Compared to $9 6 million in the fourth quarter of 2019.
The increase was primarily driven by sales force expansion in the U S.
R&D expenses for the fourth quarter of 2021 $9 million.
Compared to $10 1 million in the fourth quarter of 2019.
The decrease was driven by lower clinical expenses as most of our major studies have completed enrollment in the first half of 2020.
General and administrative expenses for the fourth quarter of 2020 were $6 6 million.
Compared to $4 $5 million in the fourth quarter of 2019 the.
The increase was primarily driven by higher head count to support the growth of the business.
Net loss for the fourth quarter of 2020 was $515 9 million compared to a net loss of $14 $7 million in the same period in 2019.
Net loss per share for the period was 46.
We ended 2020 with $202 $4 million in cash cash equivalents and short term investments.
Finally, I'd like to briefly recap our full year 2020 top line results.
Total Shockwave revenue for the full year of 2020 was $67 $8 million, an increase of 15% compared to full year 2019 revenue of $42 9 million Rev.
Revenue per day for the U S for the full year 2020 was $37 1 million, representing a 64% increase over 2019 revenue of $22 $7 million.
International revenue was $30 $7 million for the full year 2020, compared to $22 million in 2019, representing a 52% increase.
With the continued uncertainties of Covid and the vaccine rollout globally and their combined impact on both COVID-19 spread and procedure trends were not able to provide meaningful financial guidance. At this time, we continue to monitor both the broad global trends as well as those of our business and look forward to providing you with guidance at the appropriate time.
At this point I'd like to turn the call back to Doug for closing comments.
Thanks, Dan.
First I'd like to express our support and concern for our friends colleagues and customers and their patients who are struggling without heat and electricity in various parts of the country.
We wish you well and hopefully things in.
In return to the pre cold snap to normal so to the extent that debt.
Debt itself was normal since we all know that too.
2020 and into 2021 has been a <unk>.
12 months that none of us will will ever forget it and yet it's hard to describe how fortunate I feel to have such a talented team surrounding me that never once lost sight of what drives us and creates value.
Serving our customers and their patients.
2021 is going to be paid for.
Predictably unpredictable for a period of time, but I am certain that shocked the shockwave team will do all we can to deliver best in class service and technology for the treatment of patients with cardiovascular calcification.
And with that I would like to open the call for questions.
Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone. If a question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Your first question is from the line of David Lewis Morgan Stanley Your line.
Line is open.
Well. Thank you for the question good afternoon, congrats on the quarter and the CTO approval team very very impressive just.
Maybe one here on <unk> and then a quick follow up I guess, either for Doug or Nick I, just wondered if you could comment on some assumptions for the detail around the <unk> launch was was excellent.
So one you were kind of assuming kind of a 5000 dollar U S price point.
I Wonder if you could kind of update us on that in consensus numbers for 'twenty, one sort of half 2000 $25 million for U S coronary IDE.
Wonder if you could react to that and then either for you just thinking about that.
The target lesion population just said you kind of think about your marketing plans heading into the U S. Here, what's the right patient cohort to percent of PCI lesions that you think is the appropriate cohort for <unk> and then just a quick follow up.
Yeah. So.
Terms of the specific price I think for for modeling it would probably be.
Appropriate to leave us something around 4700.
Selling price that's that's around the range of what we've been quoting to customers here over the best.
28 hours or whatever it's been.
Good day.
And.
I think for for the model that would work.
It's also a number that works well both in terms of reflecting the value of the technology.
And.
And.
By Happenstance also helps both near term reimbursement and long term our land in the right APC. So.
That's the number we have coalesced around.
And I will I'll, let Isaac.
Pick up the launch.
Specific questions.
Sure.
So hey, David How're, you doing net.
I think the way we are going to approach customers in the U S. It is.
<unk> seven or I'd say that what we've done in international markets and that is.
How have our reps.
Articulate the value proposition of coronary ABL.
And really as you start as we start to enter the market.
There are real.
We'll work with customers on identifying patients and lesions that are not well treated by existing technologies and I think existing technologies do a lot of things well.
And what we try to focus on as we as we come into each account is.
Where do they have problems, even with the existing technologies and how can we help satisfy those unmet needs and that's really the trading debt.
We bring to this is how we talk about.
Yes.
Have you talked about the product with Vac committees and getting into kind of where we think penetration might end up.
In the U S.
I would say.
I can put other guests right now, which would certainly be wrong I think what we're focused on is like I said really landon good technology appropriately so customers understand how to use it and then work on getting payment from CMS that can help support continue yes.
And I know you've been very helpful.
And you also asked about the year.
Obviously, there's so many uncertainties around.
Procedure trajectory.
We're of the belief that debt.
Sure.
Second third fourth week of January is where the where the bottom of the trough.
In terms of impact on ICU and the like and hopefully we were we're right in that we will have a steady recovery.
Procedures and obviously the most recent downdraft was not as severe as last March and April when when there was such fear.
A complete shutdown of elective, we obviously arent seeing that.
But it does make it a little bit challenging to just say, okay. We have we have.
Extremely high level of confidence that with debt by June it's going to be.
100 ex percent of.
What would be deemed as normal so that doesn't make me guiding difficult, which also makes sense or in your credit your question a bit challenging.
Net here.
Here's what we.
Initial feedback that we that we will be able to launch the two and that there will be sites that we'll be able to work through the vac process and bring us onboard.
And so we arent seeing.
Anything at this juncture in the early early response that would say our our our launch expectations are going to be materially adversely affected by COVID-19 that does not appear to be the case.
And so where we are.
Yes.
Our goal is obviously to be very thorough and effective in how we launched as I described.
And not allow chasing cases are chasing.
Revenue in the third week of February or for the week of February.
Two to derail us from what we think is a is a much more effective long term strategy of converting and selling accounts.
It's a very plan full effective manner.
And so for that comes to pass what we what we arent seeing as anything that that says to us.
At least on the coronary side and our expectation on procedure recovery side debt tablet.
That would have us be b, particularly uncomfortable with.
Good day expectations around around coronary right now.
Okay. That's super helpful. Given the environment I'll just ask one more quick one here just on PTK I know not the focus of this call but.
How are you feeling about the traction and PTK kind of exiting 2020 heading into 'twenty. One thanks, so much and congrats again.
Thanks.
And as you, obviously feel feel free to chime in the.
We are we continue to be encouraged by the balanced growth of our peripheral business.
As for business is growing our RF business.
Business is growing.
The unique ability of <unk> to address.
Regions, whether it's an iliac common femoral or or typical lesion.
Where that where there's heavy calcification and other things either fail or the operator knows day off won't work to begin with.
Has has enabled us to cobble together a.
Obviously, you have been encouraging.
Business and clinical business approach and.
And so where we're never satisfied by any by any means but we continue to be encouraged by the.
The steady growth attraction, both both above the knee and below the knee.
Next.
Yeah.
Thank you. Your next question comes from the line of Bob Hopkins from Bank of America. Your line is open.
Oh, great. Thank you and good afternoon.
First question.
I'll answer as a share kind of a market question and then ask for Shockwave question, So for Doug or for Isaac or both.
A general market question.
The decline in obviously COVID-19 related hospitalizations that we've seen over the last couple of weeks.
When you're thinking about just what youre seeing out there in terms of.
Procedure volumes are you starting to see a pick up in the last couple of weeks in case volume generally in other words are we kind of hit the bottom and are starting to climb back up or are we still sort of wallowing at the lows just wanted to get your perspective on broader trends in procedures first.
Yes.
Sure.
Can I just talked about this earlier today.
We are for.
We're moderately encouraged here in February.
Which is the first the first glimmer of encouragement and I'd say.
That that we felt in several weeks.
It doesn't feel like a head fake it does feel like things are starting to return.
The CIT. The challenge is obviously, we don't have we don't have a macro seeing all procedures, we see the ones that we participate in.
And at least in the U S.
Cautiously encouraged I guess.
And maybe you want to chime in on international.
Okay.
Yes, sure I think.
The way, it's unlike in Q2 win win win.
When the virus first emerged.
What it appeared to happen throughout Q4 and into.
Early this year.
Is kind of almost a whack a mole where.
Some areas or regions would be back moving and then you'd see a flare up and.
Things would tighten up or <unk>.
This would close down for.
An area or in a couple of hospitals and that was just happening throughout the last I think for five months.
What we're seeing now seems.
Seems better, but it's pretty early Bob it's hard to tell.
I'm not a bad at predicting what this virus is going to do and and how people are going to react just.
So I think it's early but.
I would I'm more encouraged than I was a month ago I'd say.
And I think it just.
We'll continue to do the best we can with the procedures, we got and what is nice is doesn't seem we're going to likely get a wholesale shutdowns of electives across big parts of our region.
Okay. That's helpful. I Yeah. It was really a question on just like the here and now predicting I realize is difficult, but it feels like from a lot of data points that it would make logical sense that procedure volumes broadly are starting to get a little bit better, especially in the United States, but just wanted to confirm it yes, yes.
Okay.
And then the other question I know, it's going to be a kind of an interesting year in terms of data points on reimbursement. So just.
For the record I was wondering if you can give us a sense for specifics on timing for <unk>.
When do you expect on GPT, New Tech add on payment and just maybe set expectations for for what we might see on March 12.
So their March 12, we we have no idea.
Whether the whether the lower extremity basket will be resubmitted for the for the May meeting or if they will hold and submit for the October meeting.
For the for the medical societies.
The current state is attractive and the future state is uncertain and so.
Not that they are stalling, but it's not like they're rushing to change the change the current codes as fast as they possibly can so whether it's going to be on the agenda for for the next meeting of the meeting after that.
Is it is not known to us and we probably will find out when everybody else finds out because I think day the societies.
Solicit all the feedback that.
They need from different companies and I think Theyre now hunkered down and.
Yeah.
<unk> it all have to join hands and jumped together.
So that's the the longer term level, one CPT code process.
Near term.
On the peripheral side.
Yes.
<unk>.
We do not expect to see.
A change of.
APC level for our peripheral goes now that we have made of them.
Before the annual rulemaking in October.
That's sort of the more comfortable time for CMS to make changes.
There's certainly no.
There is no certainty certainly no certainty that we will get uplifted.
For the CMS.
Our objective for the REIT.
Views the day to that they'll receive I think it'll be pretty obvious that we should be in the higher paying APC.
Both for above and below the knee.
So so we'll we'll see it as soon as that could that could happen would be October October has also.
When we would anticipate.
That's a new tech add on payment for in patient coronary procedures would be.
Would go into effect.
Given our breakthrough designation.
It's not a guarantee but it's we think it's more likely than not that we would we would satisfy the criteria for for an untapped for coronary.
And then the last piece is the transitional pass through which we've obviously been obviously been prepping to apply for and had to wait until we got approved which thankfully we now are.
We'll be filing that in the not too distant future.
There is a I would say.
Not remote but slim chance that that gets.
Approved in the first cycle, which would be July.
That also assumes a more sort of more likely that they would bundle that into an October timeframe. So.
If if we were fortunate.
On the coronary side, we'd get both inpatient and outpatient traditional payments for end tab for inpatient and TPG for outpatient.
At the October timeframe.
Great very helpful. Thanks, guys.
Yes.
Your next question comes from the line of Larry <unk> of Wells Fargo. Your line is open.
Good afternoon, guys. Thanks for taking the question and congratulations on the quarter and the approval of.
Doug one coronary.
Doug two on coronary.
Just first I'm interested in the account overlap between peripheral accounts in your targeted coronary accounts.
Any additional color or quantification, you can provide and how that can help the coronary launch and I had I had one follow up.
You want to take that execute weighted.
Net.
Sure Okay.
Other.
We are there is quite a bit of overlap.
Well you can put together just a list of target accounts in each territory and then looked at those accounts for our coronary perspective and look at those accounts on who's doing peripheral business with us.
I think the volume.
The better part of this year will a lot of our earning we wash accounts will be accounts, where there is.
Yes.
Established peripheral business interventional cardiologists, who are doing some of that pillar for our business.
And they have they are higher volume complex PCI operators as well.
Thank you.
And Doug I know, there's a lot of enthusiasm for.
For for the coronary.
Procedure for Shockwave in the U S.
But I'm curious how much of a barrier for the one pushback that we've seen and heard about is pricing.
How much of a Barry do you think that'll be before and after you get the new tech add on.
And hopefully get the new tech add on and transitional pass through payment.
Sure you saw the TCT M D article yesterday, which talked about doctors using IBM, mainly in large events.
For reaction.
Thanks for taking the questions and I'll tag team this one as well.
And when we launched internationally.
Mike.
I don't think I could find any customer that was thrilled that we were selling at a premium to.
To atherectomy.
And yet.
Our launch both internationally and the U S is to is to provide an important new tool for for <unk>.
Patient populations that were other devices.
Aren't able to to do a good enough job in adequately address the disease and we will take the same approach here we're not.
We're not trying to.
Take share from the sort of smallish atherectomy pools, we think theres a much larger population that isn't getting adequate calcium modification.
And and and once our international customers.
Had the initial reaction to our price and I'm sure. They all wish we would lower price, but it really is.
Other than in.
In some select countries it does not really provided.
Proved to be a significant barrier to adoption in and we don't expect to we'll hear either.
He added.
Advantage. We have here is there's a not only is the price per.
Propylene for the technology, but.
There's a very clear.
Comprehensible.
The.
Reason why this price actually will accrue to the benefit of the of the hospitals and ultimately the patients and that.
It enables us to qualify for for the add on payments and ultimately you should help qualifies for a level one CPT code as we as we go to work towards the.
The longer term.
<unk> and so while there is likely to be some initial friction.
I think the.
My perception is the level of enthusiasm for the system.
And.
The appreciation in the conversations we've been having.
Depreciation that they've seen this work before.
When the Atherectomy code came into being there was also some.
Sort of friction on the price of atherectomy and yet it worked it enabled.
CMS to come up with a code that.
Rewarded.
Use of debt device in.
<unk> created a good economic <unk>.
Support system for atherectomy use and when we're looking to go to go down a similar road.
Many of the customers we've spoken to serve are very familiar with our story and understand what we're doing.
And right now the.
We're not seeing a lot of evidence that it's going to going to be a major barrier to utilization maybe some some decreased used early but.
In the long run it will pay off.
And I'd just add to that Larry.
The key for US on this is first.
Having a rationale that debt.
What about why we're pricing the way, we are and we share that with you.
Next to having our reps understand that rationale.
And we've got a lot of work.
On that front, and then first step into that being able to talk to their customers about it and administrators about it and I think.
If we do that well and couple that with what I think is.
Patients with <unk>, which is warranted given COVID-19 and the environment given the pricing for lack of payment as we rollout debt.
Customers will come along with this and we will remain patient and overtime for other business.
Thanks, guys for taking the questions and congrats again.
Thanks.
Your next question comes from the lineup Adam Nadir of Piper Sandler Your line is open.
Hey, guys good afternoon, and congrats on a nice finish to the year.
The first question is probably for.
For Dugger, Isaac this came up a bit in the prepared remarks, and the Q&A, but can you give us just a little bit more insight around the different vessel beds, ATK PTK coronary and how those fair during the quarter and what the trajectory of those segments look like throughout Q4, just any color there would be appreciated and then I had a follow up.
Yes, so so.
Our both our our peripheral segment as I mentioned earlier, our peripheral products or both books are both growing.
And contributing nicely to the growth debt.
At comparable growth rates now.
Many businesses is the larger business. So it is contributing more.
For dollar growth.
So then the below the knee segment.
And yet we made very good strides with.
With some of the key below the knee critical limb ischemia operators.
Those who do.
Below the knee work tend to concentrate a lot of other activity on below the knee working and those who don't do much of below the knee work.
Or are more generalists in peripheral space.
While they while they are below the knee business and that matters to us that's not where the procedure volume is concentrated so.
We've had a real concerted effort over the past.
A quarter or so too.
To make.
Greater inroads into the CLI community and that seems to be to be bearing fruit as they evaluate and start to incorporate to test for into their into their treatment algorithms.
So they're there.
We were.
Our above the knee is for business is stronger because of the existence of our below the knee business.
This person they seemed very complementary.
Just like we anticipate that the.
Integration of <unk> is actually going to have going to have a halo effect for for our overall peripheral business.
And wherever we have already seen it in some of our conversations and we as we talk.
Coronary with folks who aren't using.
Talk to using and five four for tableau prep for.
Opens the door for us to have a conversation like why are you doing alternative access when you could be using shockwave to open up the <unk>.
Our our express intention is to take advantage of the fact that we have a single sales force, who can leverage the relationship with cardiologists, who do some peripheral or might do structural heart or the like there is so much synergistic crossover with coronary and.
In our peripheral business that we think it's going to be real.
Real advantage given the use the use case of our of our system.
Betsy two will complement S for it for a test for an <unk> five as opposed to.
Cannibalized.
The selling time for those products.
Thanks for the color.
No. That's helpful. Thanks, Doug and then I'll just I'll ask one other pipeline.
It's been a little while since we've gotten an update on the tableau program for Iridex stenosis.
I know, it's very early there, but its a sizable opportunity for the company at.
The right technology can be developed so just any update on that program that you can share at this point in time, and then separately you've started to talk a little bit about just exploration of new indications for IPL.
Just wondering if theres anything you can share there as well thanks so much.
Sure, Yes, so where we remain.
Optimistic about our prospects too.
Develop a therapy for treating aortic stenosis.
We continue to make strides with what we hope will be the next device that goes into the clinic, but but it's.
It is such a different.
Environments unit of use Shockwave and when you've got for <unk>.
Flat leaflets with calcium built on within them versus putting a.
Our IV <unk> inside of an artery and so we've.
Learned a lot over the years and as we described it last year.
Tableau was sort of in.
<unk> been heavily in and research mode and I'd say, we made good progress on researching what it is we need to do.
Perhaps a bit differently to make it more intuitive more predictable.
When when treating aortic stenosis and R. R.
Plan is later this year or early next year or two to have.
Our broader pipeline disc.
A discussion not just.
Advances in the peripheral and.
Our coronary.
Device activity, but also areas such as table and so so I'd say stay tuned.
Either later this year early next year, we look to have a pipeline of broader bought a broader more detailed pipeline conversation.
Sounds good thank you.
Your next question comes from the line of Bill Levine, Inc.
Clark Your line is open.
Great. Thanks, good evening.
Congratulations on the approval and the first question is for for Doug and Isaac is relative to the launch.
Launched two I'm just curious the warnings you gained internationally and kind of what are those key learnings and how has it influenced the launch of <unk>.
And then my second question will be just some of the transition to international and the impact on the finances.
Okay.
So <unk> basically flip back and forth to Europe every other week launching <unk>.
Symptoms.
Yeah.
<unk>.
Similar to what I laid out we really tried to.
Learn from what went well and our international experience and what didn't go well.
And incorporate that.
And to enter the U S training and U S launch.
And a lot of that learning frankly was delivered.
Training was delivered to the sales force by customers who have seen.
Since the beginning of our launch for the coronary product and Europe worked with us.
And helped us help us learn together.
Whereas at IBM appropriate working at working at work where other than cannot.
When does it not appropriate and so we really know a lot more about.
How the technology works.
And where it works when we did when we launched in Europe.
That's really kind of what's driven the foundation of a lot of the training we have in the U S.
But essentially.
It's going to be launched the same way and that is.
Talking to customers about the unmet needs they have with their current technology their specific areas of unmet needs.
Most customers, who treat complex PCI have.
Ah patients.
Net debt or.
Fit in those specific categories.
And that's where we start.
That really our experience helps.
To help the customer understand where IBM can can help them in their practice them up for patients and then day in the community starts to grow from there, but that's always our starting point when we go into the accounts.
And then on the Vac process.
I don't know.
As you go through how many of the accounts actually need to go through Vac for coronary and then given that you already have peripheral when most of the initial accounts like is this whats the timing of that process is that a week is it a month is it.
How should we think about.
I understand the commentary of its about two weeks in <unk>.
On board an account, but how long does it take to get through that first gate, which is the vac.
It's really highly variable.
<unk>.
And so I think what we'll see is.
Arden.
Territory managers go in and start to start working with accounts, there's going to be some of their targeted accounts that can move through the process quickly.
Some that are more like two to four weeks something that might take longer and we will just start stacking up into their into their launch planning.
When those accounts start coming in so they can start scheduling more in service one day two week.
Last week with the accounts so it's in a way that's very ability helps because.
If everyone got through a vacuum a week, we'd be inundated with people wanting to launch.
But it will naturally kind of space itself out.
Okay and then thank you for that and then my other question is you mentioned on international.
A couple of markets that you were going direct and how should we think about the impact in Q1 as you make that transition on the business as this material.
Is it you've already worked those inventory down so we haven't seen it in the numbers how should we think about that.
Yes, so in the first quarter, you won't see an impact because of the transition will be mid year.
And.
And we've we've.
<unk> gotten to a point, where it should be a fairly smooth transition.
And.
At least in Japan. It will have no effect, because we are going direct when we launch next year in.
In the U K.
We see the benefit primarily being.
Revenue growth.
Penetration of what we think is a real market for peripheral in the UK.
And and.
And yet less of a less of an ASP lift because of the model we have in the UK as a total sales agent model versus a Christmas distributor model.
And then in France, we.
Have a smaller business in the UK, which is one of the reasons for building direct is our distributor at a good a good did a very good job of validating that the market is Israel, both coronary primarily coronary, but also peripheral and yet.
A full bag that was twofold to really put in the effort.
That we think the market warrants and therefore, we have both.
Our unit volume increase meaningful potential in France, as well as ASP, because we don't have the transfer price for.
So it's sort of a mixture of benefits in the countries, where we're going direct.
And at the end of the day.
The commonality is we think the markets are.
In those countries and we will be assessing other countries as well.
As is more substantial than than maybe the distributors able to to realize given given that they are there.
They are less focused by definition then.
Then a direct presence will have.
Great.
Sure.
But for US sorry, just one clarifying question or a comment on the inventory as we start as you transition in mid year.
We have the team.
The team in Europe is working closely already with.
The distribution partners to plan a smooth transition so so that there's not.
Excess inventory that people can't sell that.
Purchased et cetera, So we expect it to be a very smooth seamless.
Transition that shouldn't impact.
Balance sheet inventory.
Okay. Thank you and then <unk>.
And guidance I know, it's really difficult given COVID-19 and kind of the ebb and flows of this but if I could ask the question differently as you look at the first week pre coronary in the peripheral business.
Yes.
If if that annualized out and I understand there's a lot of variables here I mean.
In terms of comparison to fourth quarter.
Are you up or down.
I'm, just trying to directionally kind of get a feel for where Q1 may be going with that trough and bounce because we don't know how deep the trough is and how big the balances, but if we get some sort of normalcy to.
May be a point in time it's helpful.
Yes.
<unk>.
So in terms of our on our understanding of procedure volume month to months.
The underlying base of procedures.
Felt seen I don't know what the right way for us seemed lower in January than it did in November December.
But as I described our.
Our sort of daily drumbeat of sales was was not.
It was not dissimilar month to month.
Theres, obviously, the numbers aren't identical, but theyre not to similar which is what what made us which gave us the impression that.
If the procedures are down but your your daily cadence is similar that would suggest youre getting a high percentage of the cases that are getting done.
In terms of the bounce back.
Sure.
I certainly.
It's what we're all of the different letters.
I don't I wouldn't give it a V shape recovery, but nor was it nor was the trough is low.
As it was back back in the second quarter.
So where we are as you can tell from both ASIC and I we are.
We are ultra.
Ultra careful not to get ahead of the.
The curve balls that the buyers keeps throwing at our customers and then by extension.
Their procedure volumes so were we.
We feel like it's going to be a a pace.
Climb out, but it's going to be a slow.
The flow of scent from from the trough of January mid January.
Okay. Thanks for taking my questions.
There are no further questions at this time I'd like to turn the call back over to the Speaker, Doug Shaw for closing remarks.
Hey.
Thank you operator, and thank you everybody for your time and attention and hopefully 2021 is going to be a.
A superior year to 2020 in terms of.
Yes.
The average daily living wheel, we all do.
And hopefully the.
Vaccines I'll take take hold and we are all in the same place together again in the not too distant future. So with that thank you very much.
Have a good rest of the quarter.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a wonderful day you may all disconnect.
Okay.
[music].
Brazil expenses.
Total revenue.
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