Q4 2020 AtriCure Inc Earnings Call
Good afternoon, and walk the Atrix, the worst fourth quarter and full year 2020 earnings Conference call. My name is Kevin and I'll be your coordinator for the call today.
At this time all participants are in a listen only mode. We will be facilitating the 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 Lynn Lewis from the Gilmartin group for a few introductory comments.
Thank you.
Now you Should've received the copy of the earnings press release of you have not received the copy. Please call 5137554136, the halfway email to you before we begin today, let me remind you that the Companys remarks include forward looking statements.
Looking statements are subject to numerous risks and uncertainties many of which are beyond <unk> control, including risks and uncertainties described from time to time and age of cure of SEC filing.
These statements include but are not limited to financial guidance expectations regarding the timing of FDA review expectations regarding the Fda's response, whether it will approve converge the potential converge launch timing the potential market opportunity for converge and the adoption of the converge procedure.
Age of kids results may differ materially from those projected age of your undertakes no obligation to publicly update any forward looking statements. Additionally, we refer to non-GAAP financial measures, specifically revenue reported on a constant currency basis, adjusted EBITDA and adjusted loss per share a reconciliation of these non-GAAP financial measures.
The most directly comparable GAAP measures is included in our press release, which is available on our website with that I'd like to turn the call over to Mike Carrel, President and Chief Executive Officer, Mike.
Thanks, a lot of good afternoon, everyone and thank you for joining US we hope that you are remaining safe and healthy.
As you look back on 2020 of our begin by recognizing the dedication of our team of age of care and the resilience and durability of our business.
In spite of the dynamics of challenging nature of the past year, we made meaningful progress in all areas of our business and.
In 2021, we will continue building for the future with many key catalysts on the horizon.
Total revenues for the fourth quarter were $58 million, representing a 5% sequential revenue growth over the third quarter.
Following solid growth from the early part of the quarter as Covid cases of hospitalizations increased after the holidays, we experienced volatility both in the U S and in Europe.
This led to reduced cardiac procedure volumes at the end of 2020 and put pressure on our volumes as a result.
These trends continued into January and some areas began to worsen driven by return to quarantines and diversion of medical resources to kill the patient.
With that said we.
We are starting to see some strong positive trends and experience the uptick in volume as hospital constraints the side.
While we expect this upward trend to continue we believe the cardiac surgery volumes were slightly below full capacity and that we will experience some variability for the first half of the year.
Now turning to some of our accomplishments through the year beginning with converge.
Last year, we made our final submission to the FDA seeking the label for the treatment of patients with long standing persistent afib.
This brings us closer to completing the regulatory process, which will allow us to market the hybrid convergent therapy, providing a compelling treatment option in a large and vastly underpenetrated patient population.
On our last call we discussed the differentiated clinical trial results of long standing persistent afib patients and the converge trial.
Since then the clinical results for long standing persistent patient group were presented last month at the 26th annual Afib Symposium.
The analysis demonstrated clear superiority in the hybrid convergent arm compared to the endocardial catheter ablation of arm with 29% absolute difference in effectiveness at 12 month period.
While this alone is a significant improvement over catheter ablation.
The data even more convincing at 18 months.
We're for long standing persistent patients return of 35% absolute difference ineffectiveness.
We are incredibly encouraged by these results and firmly believe the hybrid convergent procedure has a more pronounced consistent and durable effects for long standing persistent afib patients than any other clinically available standalone treatment alternatives today.
Well I know the exact timing of panel <unk> approval is top of mind for all investors, we cannot give that today.
However, we are making excellent progress on the regulatory front and the PMA process with the FDA as both.
Then both productive and collaborate.
We look forward to providing an update on this milestone soon.
The anticipated approval of converged marks the culmination of many years of tireless work by so many each of your employees and physicians in pursuit of of therapy for this underserved patient population.
I'm incredibly proud of the partnerships throughout our company, which brought us to this point.
We have a clear and extensive opportunity in front of us and in preparation for the anticipated approval of converge. We have built a dedicated sales team and developed training programs of infrastructure to support the launch of this therapy.
Currently our U S sales and trading team consists of more than 200 individuals in the field, including 35 dedicated reps and clinical specialists and our EP focused hybrid sales team and over 30 professionals supporting nationwide training and education courses.
Look forward to a future where we champion of the hybrid convergent therapy to become the standard of care for the millions of patients with long standing persistent afib.
We also took significant steps on of mace or other landmark clinical trial the.
The Amaze study is a 600 patient randomized controlled trial designed to show superiority of catheter plus artillery L. A a exclusion system versus catheter ablation alone.
We have submitted three of five modules of the PMA to the FDA.
And made excellent progress on patient follow ups.
To put this into perspective, the 127 patients.
Completed final primary endpoint visits during 2020, and we now have only 11 patients to complete follow up there.
This is a testament to our clinical trials and the amaze investigators and study teams who strongly believe in this therapy.
We expect the complete patient follow up the April after which we will conduct an analysis of the data we are targeting our PMA submission of the amaze trial for the second half of this year and expect to release trial data following that submission.
As a reminder, the lariat system is the first stage of your solution directly in the hands of Electrophysiologist.
And we believe the amaze clinical trial will show this therapy much like the hybrid convergent procedure is complementary not competitive the catheter ablation.
By adding the lariat system to their toolkit EPS will be able to offer a solution, which both mechanically and electrically isolate to the appendage without leaving anything in the bloodstream.
This complementary technology, not only diversifies our portfolio.
But it is also an opportunity to further leverage our existing commercial channel and the EP market that has been built up in anticipation of the converge approval.
Adding to the many achievements of 2020, we made strides towards five day clearance of our new encompass clamp. In addition to our open ablation platform, where we are the market leader in cardiac surgery procedures for the treatment of Afib.
The encompass clamp provides a simpler and faster approach for bleeding the heart in open procedures and we expect this device to appeal the high volume Cabot surgeons.
As a result, we expect this new class of deepen our penetration in the cardiac surgery market.
Our five 10-K submission to the FDA is currently under review and we anticipate clearance later this year followed by concentrated commercial launch of certain key centers and broad commercial launch shortly thereafter.
Finally, while our strongest free of revenue growth was interrupted due to COVID-19. There were two products price here and the <unk> Flex V, which both grew over 2019.
Starting with cryo sphere of our innovative dedicated device from managing postoperative pain and thoracic patients are.
Our unique cryo ice technology uses a differentiated freezing method to block nerves from transmitting pain signals for several months the.
The cross the of probe continues to resonate in the market. Following its launch in the first half of 2019 with a positive trend of consistent sequential quarterly sales growth.
We ended 2020 with the cross referral accounting for approximately 5% of our total revenue.
We recently expanded our five 10-K label for crowded or blocked therapies to include the treatment of adolescent patients of at <unk>.
12 years of Robert.
Adolescent patients undergoing invasive surgery of the chest wall can experienced severe pain and have limited options from pain management after surgery.
This label expansion provides an opportunity to help these younger patients manage post recovery of pain.
We have heard inspiring stories about patients young and old who are going home from the hospital with absolutely no pain and are excited to further build our presence in the pain management field with the cryo nerve block therapy.
This therapy should continue to drive accelerated revenue growth in the coming years.
The age of the Flex V was first launched in early 2018 and was a novel addition to our <unk> franchise.
Despite the impact of the pandemic the flex V clip delivered year over year growth in 2020 versus 2019, indicating strong and steady adoption by physicians since launch.
We have also seen the increased use of our minimally invasive <unk> of devices and hybrid convergent procedures, a trend, which we expect to boost revenue growth with the expansion of mist therapy over the next decade.
The crossfire probe and the Easter flip flex the are both shining examples of the ingenuity and efforts of our product development team and the innovative spirit on which <unk> was founded.
Now looking ahead, we are incredibly encouraged by the many catalysts on the horizon, which we believe will further accelerate our revenue growth in 2022 from our historical rates of growth. We remain laser focused on the many activities underway to drive our market expansion, including converge amaze cryo nerve block and encompass.
Al mentioned in this discussion.
I'm proud of the part of the team at such a pivotal moment in age of care and we are strongly positioned and poised for the future.
With that I will now turn the call over to Andrew <unk>, Our Chief financial officer to discuss more detailed results and our guidance for 2021.
Thanks, Mike.
Fourth quarter 2020 worldwide revenue of $57 $7 million declined 6% on a GAAP basis, and 7% on a constant currency basis, when compared to the fourth quarter of 2019.
U S revenue was $47.4 million of 4% decrease from the fourth quarter of 2019, reflecting the deferral of procedures using our minimally invasive ablation products.
International revenue was $10 $3 million down, 12% on the GAAP basis, and down 16% on a constant currency basis as compared to the fourth quarter of 2019, we experienced more pressure in our international revenue with conditions in Europe styling, and a tough comp to the fourth quarter of 2019.
On a sequential basis, we experienced growth of approximately 5% and our worldwide revenue from the third to fourth quarter.
As Mike mentioned earlier, the sequential increase results from procedure volume stabilizing at the onset of the quarter followed by increased variability in December in the U S and in Europe based on the resurgence of COVID-19 cases.
Touching briefly on a few key metrics for the fourth quarter gross margin was 73, 5% up 50 basis points from the fourth quarter of 2019, largely driven by growth geographic revenue mix we.
We had positive adjusted EBITDA of $1 $7 million compared to an adjusted EBITDA loss of $5 $4 million for the fourth quarter of 2019.
This improvement to the bottom line reflects route.
The results reflect lower variable compensation travel and training costs.
We're impacted by Covid and we experienced a decrease in clinical trial spend related to amaze activity each year.
Our loss per share was 42 cents for both the fourth quarter 2020 in 2019.
While the adjusted loss per share each period was 18 and 37 cents respectively.
Fourth quarter 2020, net loss and the resulting loss per share includes a one time charge of approximately $6 million related to a legal settlement.
Given the extraordinary nature of this expense is excluded from both our adjusted EBITDA and adjusted loss per share metrics.
Yes.
To recap our 2020 fiscal year worldwide revenue was $206 $5 million a decrease of 11% on both the GAAP and constant currency basis. This decline reflects the significant contraction in cardiac surgery and elective procedures worldwide as a result of the pandemic.
U S sales decreased 9% to $169 $2 million, while international sales decreased 17% to $37.3 million.
Gross margin, which was impacted in 2020 by a period of reduced production activity as well as the absorption of the full year of center Heart operations was 72, 3% in 2020 compared to 73, 8% in 2019.
Now turning to full year operating expenses for comparability I will exclude center heart acquisition costs incurred in 2019.
The legal settlement.
According to the fourth quarter of 2020, and the recurring effects of noncash adjustments to the contingent consideration liability from my comments.
Total operating expenses decreased $16 $5 million or 8% from $204 $4 million in 2019 to $187 $9 million in 2020.
The decline results, mainly from reduced variable compensation and travel costs, along with discretionary spend per trade shows and physician training of.
Set slightly by an increase in stock based compensation.
We do believe most of the areas, where we experienced cost savings were impacted by the pandemic and expect spend to be restored to historical levels at the top line improves and travel training and events activities increase.
Full year 2020, adjusted EBITDA loss was $6 $3 million as compared to $6 $7 million in 2019.
Our loss per share was $1 14, and 2020 and 94 cents in 2019 and the adjusted loss per share was $1 110, and $1 seven respectively.
We are proud of the efforts across our company to manage the bottom line to the instability of the past year, while we repeatedly adjusted our operating plans in 2020, we never strayed from our employee and patient first focus and share.
There were no job of pay cuts of furloughs we of.
Adjusted our manufacturing operations to enable our team to continue production of inventory and a safe socially distant manner and ended the year with a strong inventory position.
Outside of our facilities field based employees supported customer needs virtually or in person where possible.
Maintained investments in several critical projects and later in 2020 resumed strategic investments with the expansion of our team and other initiatives such as our mobile lab training and preparation for the many growth opportunities ahead.
Last year also strengthened our balance sheet with $189 million of net proceeds from our financing in may.
We ended the year with $258 million in cash and investments.
And finally, turning to our outlook for 2021.
We expect to achieve roughly $250 million in revenue for the year.
While we would normally provide a range of expected revenue results given the continued dynamic environment with COVID-19, there are several unknowns that could meaningfully drive our revenue upward or downward from this level based on macro trends.
With our current outlook, we expect stronger performance in the second half of the year as the pandemic subsides.
We are continuing to experience procedural volume generally operating in the range of 80% to 90% of normal and expect this metric to improve steadily through the year, resulting in sequential quarterly revenue growth.
The remainder of 2021.
While we do not expect to provide quarterly guidance on an ongoing basis, given the timing of this call with nearly two thirds of the fourth first quarter behind us and quickly changing dynamics due to the pandemic. We also want to offer guidance for the first quarter, we expect first quarter revenue to be in the range of $55 million to $57 million.
Down slightly from the fourth quarter 2020, but up year over year.
At the force forecasted first quarter revenue range of $55 million to $57 million, we expect an adjusted EBITDA loss of $5 million to $6 million for the first quarter.
This adjusted EBITDA loss translates to an adjusted loss per share of approximately 36 to 39 cents.
We typically experienced heavier losses in the first half of the year and anticipate adjusted EBITDA to be of loss of approximately $10 million for the full year 2021.
With improvements to the top line throughout 'twenty 'twenty, one we should realize the corresponding and meaningful improvement in quarterly adjusted EBITDA.
Adjusted loss per share for 2021 and is expected to be approximately $1 15.
As we thoughtfully manage our business for long term success, we continue to make investments in numerous strategic initiatives in support of our catalyst rich future.
At this point I will turn the call back to Mike for closing comments.
Thank you Angie while this past year will undoubtedly a challenge at the one we are optimistic and confident about our road ahead of the pathway to accelerating revenue growth.
To that end, we are fueling our investments for our future and our focus on executing the many catalysts for growth that we discussed today. Thank you for joining us today and with that we'll turn it over to the operator for questions.
Ladies and gentlemen, if you of a question or a comment at this time. Please press Star then the one key on your Touchtone telephone. If your question has been asked what do you assume of yourself from the queue. Please press the pound key we also of the west that you limit yourself to one question of one follow up any fear of any additional questions feel free to get back in the queue.
The first question comes from Robbie Marcus with Jpmorgan.
Hi, This is actually lowly on for Robbie Thanks for taking the question. So to start could you share a little bit more details on how your conversations with the FDA regarding converge have been progressing them. You know I think we were expecting to hear something with regards.
Two timing of of panel or whether a panel would even be needed by now so is it still realistic to expect the panel or approval without one in the first half of the year.
So any color you could add on timing would be really helpful and does guidance assume any benefit from converge.
Yeah sure of is it fair question.
We do understand.
The interest in the timing of everything as we've talked about before with many of you in a little bit on this call. There really are the two decision points of the panel of no panel we're.
We're not in the position again give you any more to each of them. What we gave on the call today.
We do know that it's the catalyst we're excited about the conversations that we're having.
They've been very productive with the FDA and as such as I've said, we view these as very positive and collaborative discussions and we'll look forward looking forward to updating everybody from the very near future.
As we look at our guidance for the year of actually is much more impacted by Covid COVID-19 really of the big one.
As elective procedures have they have to come back and so we did start to see some strong growth or come back in the February timeframe. After a very weak January that I believe most companies were experiencing as things are beginning to come we do anticipate that that is going to continue.
And so hopefully we'll continue to see kind of Covid subside and we'll be able to kind of move forward from that standpoint that has a much greater impact than timing or anything associated with converged at this time of the revenue from 2021.
Great. Thank you and just a quick follow up can you talk us through what the guidance outlook assumes in terms of the cadence of the recovery both throughout both on the top line and down the P&L.
Are you, assuming any sort of material impact beyond the first quarter is it through the first half of the year any color you could give there would be helpful. Thank you yeah, we believe that the.
The the pandemic will continue to be with us through the first quarter and into the second quarter and even into the back half of the year to some degree, but we think of the back half of the year will be much stronger we're already starting to see signs of light today, but it's not going to be a bounce back all of the sudden overnight, it's going to be an incremental growth kind of as the year progresses. Therefore, the back half of the year, we have to speaking much.
Stronger than the first half of the year, given what we're seeing today and as a starting to see things open up.
Yes.
Thank you. Our next question comes from Mike Matson with Needham <unk> Company.
Yeah, Thanks for taking my questions.
I guess I'll start with convergence so.
You mentioned that you have but I think you said 35 hybrid reps now focused on that those products of that procedure. So.
How many of those were hired in 2000 22021.
So how many of those of recent hires and then how should we think about the the launch of conversion how quickly. The sales can can ramp is it something that can be material. This year or is it really going to be more in 2022.
Yeah. So the.
It was about 10 people or so that were hired over the course of say over the last 12 months give or take maybe a little bit less of that we're going to continue to add to that team. Some of that team came over from the leery of team as well when they were already very familiar with the EP world and kind of gave us a great insight into the relationships that are sort of in.
And then we've kind of cross trained everybody from that standpoint, so one of really good and solid position.
We will continue to grow the number of reps for the year for sure. The biggest impact on the issue is really about Covid I mean, COVID-19 is really going to be the bigger one not relative to converge converge. We do anticipate debt once we get that approval its going to take time to begin the kind of build that market. We're ready we've got everything prepared force but.
We are also need to go build out the market and so we've got to get the new sites up and running we've got to create the awareness of its their train the surgeons. It will have a great impact from 2022 as I mentioned in my comments, we do anticipate youll be seeing accelerated revenue growth over our historical our historic double digit revenue growth that you've seen in the past.
Okay. Thanks, and then.
Just the the guidance on Ebitdas of little little more negative than I would've expected are you.
Is there of investments or something that you are making to prepare for conversion or Larry at launch or the other things happening the.
Net are causing that too.
Should be a little more negative this year, just given the kind of path you were on at least prior to Covid.
And then last year, if you look at my last year number at the beginning of last year. When we gave our numbers. We said we would lose about $10 million on about 260 million of revenue, obviously COVID-19 hit US. We're now saying it's about the same loss that we had anticipated from last year. So the investments are actually very similar that we sort of last year as we are going to begin to accelerate into this new market.
The investments that we've got to make the rollout on converge on getting ready for me is we've got a very strong balance sheet to be able to handle it.
And really there's just kind of money around the edges from that standpoint, obviously this year, we're going to have the full year of commissions and the full year of bonus.
Anticipate that we're going to be doing much better from that standpoint that was a lot of the savings from last year that we had and so obviously as we kind of get ourselves back on to that growth trajectory and really get ourselves ready to accelerate in 2022, theres some level of investment, but again, it's around the edges of that are incredibly strong balance sheet of $258 million of cash.
And so we feel like this is a loss of we can obviously handle while were making those major investments in our team and to be ready for the catalyst coming down the pipeline over the next several years.
Okay, great. Thank you.
Our next question comes from Matthew O'brien with Piper Sandler.
Hi afternoon. Thanks for taking the question, Mike just to be clear.
The guidance that you have laid out today. It doesn't include any kind of incremental benefit from the conversion.
Approval of this year I know you're already selling.
And of that channel, but there is no incremental revenue. This year and then along those lines can you just give a little bit more color as far as.
The discussions with FDA is at the moment the long standing persistent debt the rest.
The more questions about is there anything that would be really favorably.
The forward that they're they're incrementally more concerned about anything along those lines.
Our overall guidance I didn't say that it didn't include any incremental what I said was that our numbers include what we believe to be the impact for the year I mean, so and Covid has got a much stronger impact than incremental revenue growth associated with an approval COVID-19, what's going to happen. It's all baked into the number right now and what we anticipate.
The happened with converge is all sitting in the number that you see today, it's at 200 around $250 million.
So thats kind of within what we've got today, we feel again like that's a very good solid strong number for the year coming off of last year and that we're a great position overall, youre, saying its 21% growth of the year over year basis.
And in terms of the conversation with the FDA.
I mean, as I mentioned, it's really kind of going down one of two fabs the.
The 2000, obviously panel no panel, we are having very positive and collaborative discussions with the FDA and hopefully we will be able to update everybody very soon.
Okay. Okay.
All right I won't push any further then.
Then Mike as far as the volume that you're assuming again coming back. This year I know last quarter, you had talked about I think in the 70% to 80% of again.
That range of are you expecting a little bit better than that this year as far as the volumes day for the rest of the business.
Would just love to hear any sort of underlying commentary on the eclipse and what youre seeing as far as new.
The new account adds et cetera.
Yeah. So we anticipate from what we're seeing is about 80% to 90% of cardiac surgery volumes are kind of happening and obviously, we got hit a little bit when there is a resurgence of that came back that youre at the lower end of that range, we're now getting back up and.
We're working through the <unk> from our standpoint, I don't think we'll get to a 100% by the end of the year, but I'd be simple make incremental improvement as the year goes on.
Things are opening up for sure we're starting to see that I don't see it being a hockey stick, but it will impact all aspects of our business. That's the biggest impact on this year is to continue to see incremental improvement.
In the hospitals to treat these cardiac surgery patients.
Okay, and sorry, just to be clear on that day, so essentially I'm just moving average in theory, you're saying that look to 50 of.
Basically at about 90% of what you can do over the course of the year. So.
Adjusted out in the moment to normalize the time, it would be meaningfully higher than that in debt there.
What im saying im not equating to the $2 50, I think youre doing the math that you're probably going to put yourself into a quandary around that what I'm, saying is debt.
The cardiac surgery and cardiac surgery volumes at the hospitals today are between 80, and 90% and they're incrementally improve the nature of it will probably closer to the kind of 80% or so during one of the search came back and they are beginning to kind of come back a little bit for sure and you're moving to the that's the end of cardiac surgery volume that is the.
Sure.
And so if you try to do that math on what is the out of that kind of back into an equation and remember we've got multiple types of businesses. It gives you a sense for beginning to kind of moving in the hospitals getting more busy.
And so hopefully that gives you some context, obviously, if things get back to both of them to get back to a 100%.
That would be upside to our revenue that would be upside growth for us as the business for sure.
Okay. Thank you.
Our next question comes from Rick Wise with Stifel.
Hey, guys. This is actually Dan on for Rick.
Thanks for taking the question.
Just one kind of follow up on the Covid trends youre seeing in the quarter so far.
If you could give any more color just on five business, what you're seeing just from modeling kind of <unk> and then also any geographical differences that you're seeing between the O U S and O U S.
Impact <unk> recovery.
Yeah, I mean without kind of I mean.
In general what you what you see as the the cardiac surgery part of the actual open chest valve cabbage debt portion of our business.
Of that portion of kind of has the the least volatility but it also has the least kind of upside for growth as we kind of rebound out of things and so I'd say, that's kind of giving you one context of that elective procedures are coming back they were the ones that got hit the hardest back during the initial COVID-19 the slowly, but surely come back a little bit but they also got hit the hardest.
During this period of time as well because of the elective portion of it and that would be kind of the mis portion of our business clip.
Clips and cryo nerve block continued to be very strong player force and we anticipate that to be the case as we move throughout the year.
Got it thank you.
Then just one on the of Compass Quant.
Just trying to get a sense.
Once approved how quickly we may see the positive impact and growth in the open business I think in prior quarters, you've said that you already have relationships with a lot of these higher volume cabbage accounts and sales teams are in place. So if it's the case that they're kind of looking for an easier to use.
You know faster tool like this it seems to me like it could be pretty quick uptake. So just kind of any color around that.
Yes. The way we've described the encompass clamp is it's really more about once we get to a normalized volume and that's critical because obviously, we got to get to a more normalized volume of Covid. Once you get to that we do anticipate that the encompass clamp enables us to continue to grow at the solid growth rates that we've achieved before kind of in that mid to high single digits.
It had been kind of our core open business and what are the quarters that we've been in the low double digits, but in general it allows us to continue that growth rate and penetrate into the market because those of these are the surgeons that were not doing any cases before so we're basically opening up that market. We think that's what that will do force is that will enable us to continue that growth the growth accelerators force are going to be.
I mean that is the encompass is foundational to us as the business for sure, but that's not the fast growth aspect of our business the faster growth aspects are going to be the clip the cryo nerve block and then the minimally invasive therapies that we have and then eventually obviously when Larry gets approved many years from now but that will also be another accelerant to the growth rate as well.
Got it makes sense. Thank you.
Our next question comes from a repeat of bolt with BTG.
Hi, Thank you for taking the questions. This evening.
I have one possibly for Angie on the sales build and some of the SG&A certainly seemed to step up of it in the in Q4 and I am.
I'm guessing that had to do with some of the preparations for converge, but just wanted to.
Get some thoughts on perhaps the cadence of how to think about the SG&A line.
And some of the bonuses and commissions and things get built in throughout the year and whether you would look to expand further at the end of the year in preparation for Larry as well.
Sure. Thanks, Maury I think the way to think about SG&A costs looking into 2021, we typically see an uptick at the beginning of the year. That's when we reset plans and you're marching to new orders or other kind of timing items, such as trade shows where they are heavier in the first half of the year and abate a little bit in the second half of the year.
In terms of investments, we expect to continue to make investments throughout the year in preparation for for the converge launch the encompass launching some of the other catalyst longer term, so I'd say kind of declining over the over the course of the year, but look to historical levels when youre thinking about spend overall.
Okay. That's really helpful. I appreciate it.
Then just one on convert the I'm certainly not going to try to ask more of an F. D. A but I did want to ask them, what you're seeing from current users in terms of the impact of that and symposium data and I'm sure. Some of them were aware of some of that.
Large benefits of 35 absolute benefit there if you're seeing that show up in procedures at this point that benefit and then.
Maybe more importantly, you mentioned new sites that would be targeted deep can you give us an idea of how many new sites, we might see with the the.
The rollout of converge.
Yes, the the age of symposium data is relatively new its the first time that was presented and kind of peer reviewed scientific session.
So that was it just happened several weeks ago.
I wouldn't say, it's affecting our volumes yet, but there's definitely a lot of chatter and discussion of amongst and within the EP community about the significant benefits for the long standing persistent patient Dr. Delores here was the one we presented the data.
Obviously compelling and your debt Youre getting a lot more conversations for sure of it didn't happen before both with surgeons and with the electrophysiology of community. So I'd say, it's kind of generated.
Some discussion along that group, but that's really about it at this point in time that necessary procedural volumes.
And remind me can you guys. The second question of Kimrey.
New sites are beyond kind of what you're saying.
You would hope the target number yes.
So what we did so every one of our reps have targeted new sites within the area. We've also targeted those of our existing sites that they know that they can expand so once we get the approval, we'll be able to kind of go after the market from that standpoint, we'll be able to add them on.
A very kind of methodical way as we kind of get them trained and up and running so you can imagine that they've prioritized sites within each one of the different territories.
So that they can get them right. They can kind of build best in class. We can learn from those sites to get up and running first and then we can kind of accelerate from there. That's why we keep talking about the we believe that 2022. We book that's almost we start we will enable and start to see some accelerated growth for sure and then that will continue for many years. The great thing about this is the we've got lots of sites.
To go after we're going to prioritize and get them right. If I'm doing the procedure right make sure that they're safe and effective with their patients and seeing good results and then kind of begin to move on to other than the additional sites at that time.
Alright, thank you so much.
Our next question comes from Suraj Kalia with Oppenheimer.
Good afternoon, everyone and Mike can you hear me alright.
Yes, thanks for the perfect Hey, Mike So I know a lot of questions have been asked I just want to go on to converge Mike Forgive me did I hear you wrong. When you said there was a 35% absolute delta between the two arms of 18 months.
That is correct it was.
Basically approximately.
The convergent arm it was approximately 61% success at 18 months and in the catheter only arm was around 26%.
So the convergent arm and forgive me for belaboring. The send the reason I asked Mike is I've never seen of 35% Delta that's a big deal. It is clinically so help me understand the the treatment arm went from let's say 68% of 61%.
Within the span of six months right from 12 months to 18 months.
What youre, saying is the Endo arm went from let's say around 50%.
227 something per cent.
Six of them.
Interesting.
And that's why we talk about the durability of the procedure I mean, that's what we've seen that's one of the compelling pieces to it.
And remember the catheter is kind of the catheter and the conversion of our complementary we really kind of play to each of the stretch when they work together, it's about it's about the two procedures, where the two devices really working well together to get the better result.
Right Mike.
The position to make any assessments about long standing persistent AF and more recently the per.
Assistant F within the context of the 35% absolute Delta.
I'm not sure I understand the question so as you can say.
So.
The data that we presented to the FDA and obviously that was discussed.
At the Afib symposium so.
That's that is the long standing persistent.
Got it.
Okay.
And Mike in terms of.
The initial centers and maybe I'm just asking the same question of different flavor and ill hop back in queue.
For converge I know you talked about the reps, but how many of your existing centers.
Would you consider as low hanging fruit whatever metric you want to use centers cases.
Whatever you know just trying to understand I know you're putting feet on the ground.
What do you think is the low hanging fruit in your existing client base. Thank you for taking my questions.
The low hanging from existing client base is huge because in most of our existing client base you only have one EEP or maybe a small group of cardiologists of referring.
And so its because they believed in this the started going down that path now that we've got very compelling data once we get that approval and we're able to kind of actually market to that which we cannot do today. It allows us to expand it expand to the referral network expansion of the EPS within the community and so we do feel like there.
I don't know on the low hanging fruits the wrong word per se, but we do think that there is a significant expansion opportunity within the existing base of already has a trained surgeon and for sure. We prioritize those sites that we already know are good sites and had already of at least one of your champion in that group. So we are definitely going after that we will do.
After that for sure.
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Thank you. Your next question comes from Rebecca Wang with SVP Leerink.
Hi, This is actually the guys have score of Danielle I'm talking.
I just wanted to shift gears, a little bit to that we had because I think that is a important data catalysts coming up later this year.
To begin with.
How should we think about myriad.
The business, especially as they come to mind share or competitive.
Whereas the minimally invasive 8-K club business would that be kind of the life.
And more importantly, what what.
What should we look for from the.
Amazing pilot data as it relates to efficacy and safety that will be maintenance flow to SBA approval or adoption. Thank you.
Yeah. So.
Thanks for the questions Rebecca so as it relates to the Clippers flurry of it the way we approach the market as we believe it's complementary because it allows us to talk to a.
Physician community of the EPS.
And give them options for their patients and whatever is in the best interest for their patients. We let them assess it now we're giving them we will be able to give them malaria, which is a less invasive percutaneous approach or you've got the clip the bulk of work exceptionally well at closing of the appendage. They both are at the cardio and have the advantage of both Mccann.
And electrical isolation and so those are benefits of both of the devices. It really comes down to how do they want to use it and it allows us to have that conversation.
The pricing is different where it gets more money per procedure. So we would benefit from that but that's not how we're going to sell it.
We're going to sell it as an option and give them the choice based on what's going to be best for their institution for their for their patients as it relates the data for Larry.
So I know a question Thats on top of mind from many people.
The data that we're looking for the trial was designed to be a superiority trial.
Not giving exact numbers because it obviously fluctuate pump the net benefit that would be provided to that particular trial. So we're looking at it as a superiority trial. That's what we're looking for we believe that will be clinically and relevant for kind of our FDA submission and so that's going to be the thing you don't want to look for much like what you would converge.
Where we talked about superiority was critical to get achieve it with converge. That's what we're hoping to achieve with this as well its a 600 patient trial and so you can kind of get a sense in the randomized two one cash.
Thank you.
Yes.
And I'm not showing any further questions at this time I'd like to turn the call back over to Mike Carrel.
Great well.
Again, everyone. Thank you for joining us Tonight and your interest in <unk> as I mentioned before we're really excited about the progress that we've made with the FDA and where we're going right now and the future of the catalysts in front of US both with converge amaze encompassed in cryo nerve block and the many clips that we've got on the market. We've got an exciting future not just for this.
Year, but for the next decade. Thank you again for your interest and we look forward to talking to you soon.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.