Q1 2021 Shockwave Medical Inc Earnings Call
On the topic of Dan.
Good off the man and welcome to Shockwave first quarter of 2021 earnings Conference call. At this time, all participants are in listen only mode and will be facilitating a question and answer session towards the end of today's call.
As a reminder of this call is being recorded for replay purposes, I would now like turn the call over to Debbie Kaster, Vice President of Investor Relations of Shockwave or a few introductory comments.
Thank you all for participating on today's call joining me today from Shockwave medical aren't that Godshall, President and Chief Executive Officer, I think of Saccharize, Chief Commercial officer, and Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter ended March 31, 2021, and a copy of the press release is available on Shockwave website before we began and 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 provisions of the private Securities Litigation Reform Act of 1990.
Five.
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, including without limitation statements relating to our sales and operating trends business and hiring prospects financial and revenue expectations and future product development and approval of 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 undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our annual report.
On form 10, and form 10-K on file with SEC and available on Edgar and and our other reports filed periodically with the SEC.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections of 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 May 10, 2021, and with that I'll turn the call over to Doug. Thanks Debbie.
And to everyone and thank you for taking the time to join US to review shockwaves results for the first quarter of 2021.
We were pleased to be able to share our preliminary expectations for the quarter of few weeks ago, and we look forward to discussing our final results as well and some more detail about our accomplishments during the quarter.
With the brief recap.
We reported $31 9 million and revenue for the first quarter of 2021, representing an increase of 110% from the same period and 2020.
We received pre market approval for use of IV, <unk> and coronary artery artery disease from the U S food and drug administration, and subsequently sold $6 $6 million of Shockwave of situ devices and the U S. During the quarter, which outpaced our internal projections.
We announced that we had formed a joint venture with Genesis Med Tech group and established Chinese entity, whose management team has a solid track record of commercializing medical devices and mainland China.
And late March we submitted our shown and application to <unk> for commercial approval in Japan.
And more recently, we were pleased to see that CMS has proposed new technology add on payment codes or and tap for inpatient and coronary procedures, where <unk> is used.
On a macro level, we are confident that the solid early performance of <unk> will continue and will enhance the growth of our peripheral peripheral business and the U S.
Our international customers are still navigating the COVID-19 challenges and we expect that the electric procedures outside the U S will remain dampened and this quarter potentially through the third quarter.
While it is still early on this very dynamic launch we believe the traction we are witnessing with <unk> is sustainable and as a result, our expectation is that we will generate between 195 and $205 million and revenue for the full year of 2021.
This represents growth of 188% to 202% from our revenue for the full year of 2020.
Good and hand, the call to Isaac now to provide some additional color on our commercial progress and then Dan and I will provide more detail on the broader business and financial results Patrick.
Thanks, Doug.
Picking up from our most recent commentary we continue to see encouraging adoption of our Shockwave C. Two product and the U S.
While we are still on the very early innings, the pace at which accounts are embracing and using the product has exceeded our expectations.
Our focus will continue to be on maintaining disciplined execution consistent with the strategy we presented on prior calls.
I will dig and a bit now with some launch metrics that we think are important to help frame how things are going we.
We will continue to assess which metrics are most relevant to help develop and understanding of our business and we will likely modify what we share is the launch of matures.
From a cadence perspective, we intend to maintain the limit on how many accounts a territory can launch at two per month for the second quarter and will likely continue to do so for the remainder of 2021.
We believe the this is the best way to ensure that each account receives thorough training on the appropriate use of IVF and our customers are able to use the system independently.
And practice, we are averaging approximately one six accounts per territory per month inclusive of April.
We will also maintain the current limit on initial order quantity for each new account. The minimum of initial order is for units, which is one per each size and the maximum of initial orders eight units, which is two per each size.
We think this is adequate to get account started and we want to avoid overstocking customers or inviting a backlash from administrators, if order sizes are too big and.
And practice, we are averaging just over five units per account for the initial order through April.
The key focus for us is to ensure that our customers and their staff are comfortable using IV L independently the.
The first week of the launch is critical from the standpoint, and this is when the Shockwave team is going deep with the accounts to train them and do ABL cases.
If we do this well the customer should continue doing cases after that first week when the Shockwave team is not always present in the lab.
And I am pleased with the early results in this regard.
In April of approximately 35% of the <unk> revenue was generated by accounts within their first week of CTO use.
This includes the revenue from the initial order and any additional units that were ordered within a week of the initial order.
This means then that 65% of the <unk> revenue and April was from accounts that have moved past. The first week of launch which is when we expect to start seeing independent use of coronary IBM.
Overall, we are pleased with we have seen for Reorders. After the launch is completed and customers seem to be maintaining appropriate par levels to support their volumes, meaning they are carrying enough product to treat their patients, but not so much as the result of an excess inventory.
Of the accounts the completed launch activities in Q1, 88% reorder the product in April.
Yeah.
The organizational strategy for our sales team is predicated on creating an efficient model both on the economics and head count that serves our customers' needs specifically, we service our customers with one sales team whether that customer is a surgeon radiologist or cardiologist.
Our goal is to have a team that is comprised of more field clinical specialists and territory managers and we believe that the ease of use safety profile and IV of <unk> unique position and the market will enable this non traditional sales model to work well for Shockwave and our customers.
We expect that having our teams sell both coronary and peripheral products will help them maximize the opportunity within each account.
For instance, there are accounts, where we are launching the coronary product.
And have not been but have not been able to get peripheral products adopted for lower extremity treatment or large bore access.
We already have multiple instances, where the interventional cardiologist is so impressed with coronary IPL that they introduce our team to their structural heart <unk> vascular surgeon colleague and advocate on our behalf we.
We have also observed and and many accounts, where we have peripheral adoption. It has helped us gain support for launching coronary IV L. Because of the peripheral interventional lists are strong advocates of IBM and its utility.
We were pleased with the growth of the of our peripheral business and the U S. During the first quarter, while the ongoing pandemic impacted some regions of the country, especially early in the quarter. Our team was able to drive significant quarter on quarter growth of our peripheral business.
We continue to see a diverse mix of cases for the <unk> catheter, including symptomatic iliac disease common femoral lesions that are non amenable to surgery facilitation of large bore access and superficial femoral artery treatment.
All areas of this mix are experiencing solid growth and while the SFA application continues to be the plurality of M. Five use it has followed closely by symptomatic iliac and then large bore access.
Our team also continues to make inroads and the adoption of the S. Four catheter for below the knee lesions. While this business is smaller than our above the knee business. It is growing nicely and we see significant opportunity for future growth.
As we look at the product adoption across indications within our accounts the synergy between peripheral and coronary appears to be working.
Through April 26% of our U S accounts have purchased both coronary and peripheral products.
2% have purchased only coronary products and 73% have purchased only peripheral products. Our goal is to have every account purchasing both coronary and peripheral products.
Finally, a few words about our team.
Last week, Doug and I had the privilege of meeting with our U S sales management team.
Many of us and not met face to face given the overlap between when we hired people and the limitations caused by COVID-19.
And we both left the meeting impressed with the quality of our leadership team.
It is a group of seasoned sales management professionals, who will help us continue to improve patient care with IBM and our goal is to create an environment that unlock the tremendous potential of this management team and.
With that I'll turn the call back over to you Doug.
Thanks Isaac.
I'm really impressed by the results of the collective organization accomplished thus far and I want to reiterate how crucial of our team's planning and preparedness has been to the success of our shockwave of seed to launch in the U S.
The proof of it proved invaluable to be able to learn from our international coronary launch and to then translate these learnings to inform what is proving to be a very effective launch strategy.
We would hope that our international experience would translate to the U S and so far so good.
And while Shockwave C. Two and the U S is certainly still on the line late over the past few months there have been other important accomplishments that are worth sharing.
Internationally.
We've also made some great progress to set the table for future growth.
We have been building out our team on the ground and Japan and as mentioned previously we filed our shown and application and the last week of March which keeps us on track for a possible approval and the late first quarter or early second quarter of 2022.
We will then begin the process of securing reimbursement, which should take an additional six to nine months.
Prior to receiving reimbursement, we expect sales to be fairly limited so the real impact of the significant opportunity in Japan will begin and and begin to be felt in 2023.
The data from our CAD four trial in Japan were published in February and circulation Journal and the results were also presented at the annual Japanese circulation Society meeting are Jcs and March.
The stellar results give us a high degree of confidence and both the likelihood of approval and future commercial picks up guidance.
The remaining and Asia.
During the first quarter, we also announced our joint venture with Genesis Med Tech. We are very pleased with the team at Genesis and their proven ability to execute.
Under the terms of the agreement the JV through a wholly owned subsidiary in Japan, and China will market and distribute shockwave manufactured product and the JV will also develop secure approval for and subsequently sell a version of our IBM system, which will be manufactured and mainland China and for which Shockwave will receive a royalty payment.
There are over one quarter, one and one quarter million <unk> and China each year, the largest number of any single country and the numbers are growing north of 10% per year.
Our hope is that the the JV will be selling shockwave manufactured products and China within the next two to three years and of locally designed version within the next four to five years.
And Europe, the move to go direct and France, and the UK is making good progress and we continued building of the teams and we anticipate that the first products will be sold directly by Shockwave and eastern geographies during the third quarter.
As you all know many countries around the world continue to have severe COVID-19 challenges.
And I'm proud of our team in Europe, and our distributor distribution partners for all of their effort during what was a very difficult quarter for them their families and their customers.
And challenging and long lasting as COVID-19 has been here and the U S. Our international team has had to endure a much longer overhang and their lives and businesses.
Touching quickly on clinical and.
And next week as of <unk>.
Busy conference week, starting with the ACC or the American College of Cardiology, where Dr. Robert Riley's presentation of the CAD pooled analysis will be shared on Sunday may 16th.
You may have seen the publication, which was already already posted on the Jack website.
This meta analysis that is the largest patient level study of IV <unk> published to date with 628 patients had 72 sites and 12 countries.
Ease of use safety and efficacy were confirmed across multiple operators and sites with varying experience.
We will also be hosting of Shockwave sponsored symposium at ACC and then right. After the ACC is euro PCR where.
We are excited to be holding two symposia and one on real world data and cases with IBM and the second that discusses both of the mechanism of action and the aforementioned pooled cat analysis.
The exposure at this widely attended the conference will allow us to further enhance shockwave presence internationally and to continue to differentiate <unk> from other calcium modification tools.
And finally.
In late April the centers for Medicare and Medicaid services CMS published the fiscal year 2022 hospital inpatient prospective payment system or Ips.
The proposed rules.
Which recommended the coronary IV all cases, the eligible for incremental payment via a new technology add on payment or <unk>.
And the proposed rule CMS specified the maximum amount of and.
And of untapped four of procedure involving coronary IV L is an additional 3006 hundred $66 to the hospital DRG.
This was encouraging news and it was impressive to see this proposal and less than three months. After <unk> was approved by the FDA.
While the actual reimbursement amount paid per IV, a little vary from hospital to the hospital in case the case.
The important takeaway for our customers is that the use of IV L will likely result in additional payment for inpatient procedures, which should meaningfully reduce any anxiety about our price.
This is a positive development not just for shockwave, but for patients physicians and hospitals as well.
The proposed rule is now open for public comment and is expected to be finalized and in effect by October one 2021.
Obviously to support our accelerating growth, we've had to ramp up our investment and people facilities and processes.
We had 487 employees at the end of the first quarter, which is up 40% from 349 employees at the end of the first quarter of 2020.
Much of the employee growth last year was in our field sales team.
But we have also witnessed a meaningful increase and our R&D regulatory marketing and administrative and support teams over the past six months.
While growth in these groups will likely slow down a bit now the next surge will be and our production area.
We officially moved into a new clean room today and more than doubling our manufacturing floor space, which will create room for additional commercial production capacity as well as room to grow for new product development.
We have five of assembly lines, and the new lab already and the plant is up seven and by the end of the year.
Excellent progress completing all of this work despite the significant logistical challenges posed by COVID-19.
And really perfect timing.
I will now turn the call over to Dan.
Thank you Doug good afternoon, everyone Shockwave Medical's revenue and for the first quarter ended March 31, 2021 was $31 9 million.
110% increase from $15 2 million and same period of 2020.
U S revenue was $21 million and the first quarter of 2021 growing 171% from $7 8 million and the same period of 2020.
The increase included $6 6 million from the coronary product Shockwave, situ, which was launched and the U S and February.
The growth and the U S was also driven by continued sales sales force expansion and increased adoption of our products.
International revenue was $10 9 million and the first quarter of 2021, representing a 46% increase from $7 4 million and the prior year period the.
And the growth in the international revenue over the prior year was primarily driven by increased adoption and existing geographies.
We're now commercially selling IV <unk> and 56 countries outside the U S.
Looking at product lines, our peripheral products, Shockwave, and five and Shockwave and S. Four accounted for $16 $1 million of the total revenue and the first quarter of 2021.
The $9 1 million and the same period of 2020 of 78% increase our coronary product Shockwave and <unk> accounted for $15 $3 million of the total revenue and the first quarter of 2021 compared to $5 8 million and the same period and 2020, representing 165% increase.
In addition, the sales of generators, most of which were international contributed 451000 and revenue in the first quarter of 2021 compared to 349000 and the same period of 2020.
Gross profit for the first quarter of 2021 was $24 million compared.
Compared to $9 5 million for the first quarter of 2020.
Gross margin for the first quarter of 2021 was 75% as compared to 63% and the first quarter of 2020.
The improvement gross margin was partly driven by the launch of Shockwave and <unk> in the U S, which has the highest selling price of our all of our products. In addition, we are seeing continued improvement and manufacturing productivity and process efficiencies, which also contributes to the gross margin expansion.
Total operating expenses for the first quarter of 2021 were $41 5 million of.
Of 45% increase from $28 $5 million in the first quarter of 2020.
Sales and marketing expenses for the first quarter of 2021 were $24 million compared.
Compared to $10 $4 million in the first quarter of 2020. The increase was primarily driven by sales force expansion and the U S R and.
<unk> expenses for the first quarter of 2021 were $10 3 million.
Compared to $11 9 million and the first quarter of 2020. The decrease was primarily driven by the timing of clinical study expenses as most of our major study has completed enrollment and the first half of 2020 journey.
General and administrative expenses for the first quarter of 2021 were $7 2 million compared.
Compared to $6 2 million and the first period of 2020.
The increase was primarily driven by higher head count to support the growth of the business.
Net loss of the first quarter of 2021 was $23 6 million compared to the net loss of $18 $8 million and the same period of 2020.
Including with it included within the net loss was $5 $5 million for the Companys proportionate share of the underlying loss and the joint venture and China net loss per share for the period was <unk> 68.
We ended the first quarter of 2021, with $177 4 million and cash cash equivalents and short term investments.
At this point I would like to turn the call back to Doug closing comments. Thanks.
Thanks, Dan and <unk>.
Thanks, everyone for joining us for our call today of the past 12 months of been more challenging than any of us could have possibly imagined.
I have been humbled by the selfless and selflessness and bravery of our of health care workers, including our customers and I've been impressed by how the Shockwave team pulled together thought through adversities and consistently delivered.
I look forward with excitement to the coming years as we continue our effort to deliver a compelling safe solution for patients with calcified arterial disease.
Stay safe and healthy and thank you again for your time today.
With that I would like to open the call for questions.
Thank you to ask the question you will need the press star one on your telephone to withdraw your question Mr. Powell.
Please stand by while we compile the Q&A last day.
Our first question comes from Larry Nicholson with Wells Fargo. Your line is open.
Good afternoon. Thanks for taking the question and congrats on a really strong start to the year, Doug and.
Look I have to start with the guidance, which obviously came in well above I.
And I think street estimates so.
Doug Let me ask about.
The guidance, how should we think about the cadence of sales true through the year are you assuming the major step up in Q4 due to enhanced coronary reimbursement and the components of the guidance can you share kind of the U S. O U S split that's implied and.
And and coronary and peripheral split implied and.
Any color on.
How youre thinking about the guidance of how the guidance was built would be helpful. Thank you.
Thanks, Larry as you can probably imagine and we spent a reasonable amount of time.
Trying to forecast.
And.
A ramp like like the one of our experience rate right now so and so it is.
And it's there.
And certainly a challenge to it.
We do anticipate a.
And.
The continued steady growth on.
Isaac articulated new accounts new site starts.
Over the course of the year, obviously, the primary driver above the sort of street consensus is the coronary number.
We are anticipating the normal seasonality and may be even a pronounced seasonality on the peripheral front as folks are finally sort of unlocked from COVID-19, we expect both the U S and international.
Peripheral slowdown in the third quarter.
Not that we think it will it will go backwards, but ill just grit grow less.
Robustly as it has and the and.
And the past few quarters.
And then.
A bit of a stronger step up and the fourth quarter because of the addition of of Amtech.
<unk> and <unk>.
And so we are looking at steady.
Up lift.
Cute Q1 to Q2, obviously Q2 to Q3 with the with the caveat that the peripheral will contribute less.
And then and then of stronger step into the fourth quarter.
And we.
We were we.
We can.
Chat later about about the split between peripheral and and.
And corners, but that's we don't want to get into sort of granular.
The guidance on those two sort of the of our two franchises.
That's helpful and one for Dan on the P&L.
Dan how should we think about.
On the Opex spending going forward.
And gross margin, which was really strong at 75% where do you think that can go.
Over time, and how are you thinking about at what point you book point, how much revenue you need to kind of.
Breakeven on an operating margin or EBITDA basis, thanks for taking the questions guys.
Sure Larry.
We're still investing actively and the business, we're expecting to continue to grow sales and marketing sales not at the clip we have been growing but we're still going to invest and we've got some investments in marketing and various marketing programs.
The search and development and Youre going to continue to see an uptick as we invest and our pipeline development and we've got some clinical programs will be coming on and the near to midterm of <unk>.
And I expect some increases there and G&A should be pretty consistent with that.
A few heads as we grow the business and support the business domestically and internationally. So so you'll see some growth and opex.
As we go forward and going to hopefully see more growth and the top line than the.
And then the Opex as far as margin and we're very pleased with our results.
We are bringing on more capacity and Q2. So we will have to absorb some of that additional space and we've got some training as we hire some new people and we are adding some equipment. So we'll have a little bit of a headwind in Q2, but we'll work through that and.
Like we said.
Before we were expecting up and upper seventies to be able to achieve through scale. So I think we've got a clear path to that as we continue to continue to scale and obviously, we're benefiting from the mix as well as U S corn.
Kind of growth.
It helps for sure so we've got.
The favorable sales mix and we've got production improvement. So we're very pleased with what we've been able to do with margin and we've got and I think more and left going forward as far as profitability we've always.
Planned to be profitable and 'twenty two.
We're obviously continuing to invest and the business.
And as well so.
We are we are still sticking with post coronary into 'twenty, two where we'll we should turn the corner on profitability.
So hopefully that's some of that guidance.
Yes, very much thanks for taking the questions. Thanks Lou.
Our next question comes from Bill <unk> with Canaccord. Your line is open.
Great. Thanks for taking my questions just on the.
On the operational you talked about the methodical launch and kind of keeping it the cadence of a couple of per month per Rep. I was just wondering any granularity on.
What youre seeing in terms of those back approvals as you get deeper into the account base kind of past debt early adopter phase if any it looks like by the metrics you provided us maybe your reps are becoming more productive and your but you are selling maybe four units of little less than you.
The starter kit, but just any color around I think that and your thoughts on that one breath to service any any additional input you've picked up.
Yeah.
And I'll tag team with ASIC on this.
On a on a macro level I think our team is executing.
Executing really effectively.
But you're not wrong to identify that theres going to be variability and and how quickly you can get through vac approval processes.
We were fortunate to have early adopters, who were able to get things done and a couple of days after approval or a couple of weeks after approval.
And as you start to wander into the land of the idms and like it. It's it will not be as quick but we've also had had more time to now put the work into it and.
And our upsell of our also sort of learning the skills of how to sell this product and effectively.
Launch and and services and I'll, let Patrick walk through the sort of particulars on.
And on how we're continuing to manage this closely.
Sure.
So I think getting at the the question of is this.
The strategy of having one rep service.
Kind of all three products and in all three customer basis that use these products.
I think we're very encouraged frankly by the by how Thats going and within the U S and the early coronary launch as we've talked about leading up to the launch we've seen that work well also and our.
International geographies.
So it's certainly.
Something that we feel strongly about that that should be something we can do with this product and we think our team has been.
We've been very fortunate to have a lot of strong sales professionals join us and.
They are very capable.
And doing this and it's just such a.
The alternative is so on appeal and where.
<unk>.
Rep standing and the Cath lab talking to of the interventional cardiologist and that person says hey.
Talk about large bore access procedure I got one coming up tomorrow and the Rep would say well let me go get my colleague.
About that or the interventional cardiologist says you know I'm going to do a below the knee procedure and debt.
And the Rep would have to say well, let me go get my colleague and talk to you about the <unk> product and then so I just think it's.
From a customer standpoint, that's not an appealing way to deal with the company.
From a rep standpoint.
We're encouraged by the strength of our team their ability to.
Be trained on all of these all of these applications and.
And stay trained up on them and.
And really service the customer and a way that I think customers appreciate it.
Great. Thank you and if I could have one follow up for Dan is just can you help us understand the share and the net loss of the equity method investment to kind of how we should think about debt through the next couple of quarters and through the year.
Sure so.
We've got a couple of things going on and we set up the the joint venture followed the equity method and so we've got an equity investment of $12 $3 million, we couldnt take the revenue for the licensing so they contributed cash contributor license and the <unk>.
Know how to build the product.
And they put in and $15 million. So we valued our share at $12 3 million because were <unk> 45 per cent of the joint venture. So we book debt on our books, so kind of charge.
Charged to the equity investment.
And if we would've delivered on the IP and that can make the product we would have taken the the revenue which is license revenue, but we're still working through that process. So we've deferred debt revenue net of come in at some point and the future when we've transferred onto the IP and the know how to do that at the same time on the joint venture side.
The accounting was they had the help too.
Yes, they have to expense the the license that debt debt with a <unk>.
Share with us So we took our share.
And through the equity method method of about $5 5 million of that $12 $3 million. It makes sense it's comp.
Complicated, but it's pretty straightforward and the 10-Q will be out here pretty soon and can walk you through that but bottom line. It was.
Non cash charge.
Non operating loss so on the future of through the equity method will pick up our 45% of our share of the expenses as it goes forward, but we're still in early days, there's a lot of work to do.
So the impact should be pretty minimal for the near term and then as we get more information, we'll share that and provide some more insight and guidance, but and set up now it's non cash and <unk>.
Going forward, it should be pretty straightforward and pretty clean and the 10-Q should financial out of the questions.
Great. Thanks for taking my questions.
Our next question comes from Bob Hopkins with Bank of America. Your line is open.
Oh, great. Thanks for taking the question can you hear me okay.
Absolutely.
Great.
So cash.
The guidance.
Pretty strong numbers and you guys are generally pretty conservative so.
It speaks very loudly I assumed this guidance of $200 million per the year.
Probably assumes you your fourth quarter is of little over 60 million and just wondering if that's directionally.
Directionally correct and I'm also.
Try and understand if you think that the stocking dynamic this year will be similar to the next year.
Just given the hyper growth.
And of opening accounts.
And just curious if you can comment on those two things.
Yes.
Yes, so we.
As <unk> articulated we we often don't let accounts by as many as they think they should buy it at the original launch because we really really don't want to have a large upfront.
Yes, COVID-19 stocking order as we've discussed previously.
So averaging five ish units per start.
The enables us to get in and do cases.
Augment their initial purchase with the trunk stock as they work through their first week.
And some are satisfied with having having.
Having just 468 units on the shelf and.
And given that we.
We really don't want over utilization of the device. We talk actively convince people try something else first make sure it fails.
Because we realized if somebody starts doing 2030, Shockwave cases of months Theyre going to here for the administration and we're going to hear from administration and things will build will go backwards.
And so our our management of the evaluation of our management of of the account Rolling post launch and our upfront purchases all geared towards sustainability and.
Greater utilization frankly.
And as time goes on vs early aggressive utilization.
And and what we would anticipate is that your.
So.
And if we're averaging call it one of the half.
Starts per month per per sales person.
We envision a modest increase and the number of territories as we're as we're seeing some some geographies that would benefit we believe from additional territories by the end of the year.
You'll you'll see that number of one five per month start to decline somewhat.
Because youll have.
And think we'll have saturated the total number of accounts, but there are just fewer and fewer to pursue.
So maybe you are exiting the year closer to one and a quarter or something like that and then by the end of next year, maybe it's one.
But there are.
And just about every cath lab wants us on the shelf.
We're not going to spend a lot of time on the Cath labs, the $2 50 cases of year, but in all likelihood they're going to still want to buy the product and put it on their shelf.
And you'll just get less pull through because by definition. They just have a gross volume.
In terms of your in terms of your question on.
On the fourth quarter.
We are certainly fully expecting and tap to be instituted and October given that the proposed rule almost always translates into a final rule.
And while.
We've been pleasantly surprised by the utilization rate.
At our initial centers.
And we're certainly aware that there is a some some level of discomfort and anxiety around this new device and price and the fact that there isn't the incremental reimbursement so.
We think that plus the the.
The.
The growing number of sites that will have the device installed would imply that youre, probably not wrong to think that the fourth quarter. It will be north of 60.
Okay, and that's certainly what we're expecting.
That's really helpful. And then one follow up I'm, just curious now that a couple of more weeks of past.
And how you see the device being used and then what's the.
What's the on the coronary side and the United States Whats. The typical case look like and the percentage of time, maybe the it's being used alone versus being used with some other technology to help with access before.
And the PCI and extending cases done and Ernest.
Yes, I'll take that.
Good question I think it is early and we don't have perfect data on on that I think the.
But my general view and talking to customers and looking at the data. We do have that are collected from our reps is generally it's being used.
After.
Book.
Oftentimes after a pre deal where the pre deal sales.
Are you of the balloon doesn't open.
And then commonly Shockwave will be used as the next tool and then the last tool and that case before the staff.
We're getting probably a disproportionate amount of use and the left vein.
As left main PCI as a percentage of left and PCI I think youre of the percent of our mix of the methane is is higher.
And we get up and lead the next.
The next use case.
We get a lot of Ostial lesions, Bob right Osteo left left main ostiole circs.
And from our standpoint and in conjunction with atherectomy.
Atherectomy is the tool you need if you can't get a balloon across Elysian and.
I think it's early to say.
Kind of and the U S, but again going back to I think the European experience, where there's a lot of road ablation use.
It is a.
The strong minority of those road ablation cases have shockwave afterwards, it might be of the order of 10% to 20% and the centers, who do a lot of road ablation and I honestly I don't I don't expect it to be much different and the U S. But we will see.
Okay, Great. That's all my questions. Thanks, very much guys thankfully.
Yes.
Our next question comes from Adam modal quite the former Youre line is open.
Hey, guys. Good afternoon, and thanks for taking the questions and congrats on the start to the year.
Two quick ones for me on coronary and then one on peripheral also on the coronary side you guys shared a lot of metrics that were helpful.
But would you be able to just level set us on the number of the U S peripheral accounts that you're in you've.
<unk> been and historically I think you mentioned that 26 per cent of the account base is.
And now use both peripheral and coronary. So that's question one and then question two on coronary is.
Obviously things are off to a fast start and you talked about and.
New clean room, and opening night, so just level of confidence that you'll be able to adequately supply the market. It sounds like you have confidence there, but just wanted to double check that and then I had one follow up thanks.
Yes, so we.
And I'm not going on.
Let me explain how we look at accounts because of its.
It's not as simple as how many people have ever quarter peripheral we if somebody is not reorder of device.
And peripheral device and say six months, we would say they are no longer a customer and we've got to go back in and resell them.
So there are now Luckily, it's not a large number but.
But the total number of accounts that have the ordered peripheral is not the total number of accounts that we would call customers per.
Referral customers are a subset of the total who has who have ever ordered peripheral device.
And so they sort of disappear and we.
And we instruct our team to go back and resell them, if we've noticed theres not been utilization and a period of time.
So we're north of 500 peripheral accounts, we've always said the universe is about 800 that we really care about that universe has actually expanded some of it because of our large bore access where they may not be huge peripheral accounts, but they do a nice amount of Teva.
So that universe is probably pushing more like 900 peripheral accounts and.
And we still have a.
A decent percentage of those that we are not yet in.
Coronary.
On a challenge with coronary is you have lots of labs, particularly in some geographies like Chicago. There are there are way too. Many PCI sites per capita versus more concentrated areas like New York.
But there are more like 200 to 1400 coronary sites, depending on where you where you sort of snap the line in terms of of what qualifies as PCI. If it's less than 50 PCI is maybe you don't even want to call it and account but.
On the universe could be up to about 14 other PCI centers.
And so the Triangulating your we're not close to the 800 peripheral accounts that we would call accounts at this juncture and more than 500, so somewhere in the middle of there.
And the.
The great thing is almost all of those not all but almost all of those peripheral accounts are also generally the bigger PCI sites. So there is not.
Back to <unk> commentary about efficiency.
60, plus percent of our the physicians, who use our device clinically on the peripheral side, our cardiologists and almost all of them also do PCI. So there is.
And extraordinary overlap of really.
Efficient.
A very valuable overlap and efficient sufficiency potential and.
And the main reason why we have been vigilant and our belief that we have to have a single sales force because.
It is very customer unfriendly to make them have multiple reps when they can just roll from one procedure to another and selfishly from our side.
It's both it's both of them have been in the field of a lot.
More than more than I, but probably done five five.
Right.
Our sales team and.
And the access that we get because of our coronary device has been tremendous for our peripheral program, because particularly with COVID-19, where some geographies like la really restrict utilization of our rep can just walk in and now in park per week and catch up with all of the peripheral folks that they werent getting access to before so.
It's better for the customer and there is strong evidence that it's materially better for our business to have a single sales channel.
Great and sorry, Doug just anything on from a supply standpoint, and then I had one follow up.
Luckily our of our vice President of operations, Mike made the thought that.
Sales and sales and marketing marketing team was way too low on their forecast. So he was just crushing it on capacity and refused to believe our own internal forecast and now that were.
Meaningfully ahead of our own internal forecast I'm glad Mike was paranoid.
We're in good shape.
Good day here and then just sort of follow up I don't think I heard.
And update on peripheral reimbursement. So just was wondering if there's anything new from that side, whether it's re rating of the existing CMS co tire or any news on the.
And the pursuit of deep the the permanent CPT code and the EMA process. Thanks, so much for taking the questions.
Yep.
No news on EMA and Im.
If you have news please share it but we anticipate we'll probably hear rumors when other people start hearing rumors because they've really sort of hunker down and the societies have.
We the net the next.
CPT panel meeting is coming up soon and we know that the.
And peripheral codes are not on the panel agenda.
And so the next panel after that is the first week in October we.
We would not be surprised if it is on that agenda.
It's a little hard to forecast, whether it whether we should say it is likely or not.
Since no one's.
Checking with us to say hey.
Do you want us to put on the agenda or not.
We know we know the societies are happy with the reimbursement that they have today and so they are perfectly okay. If the sort of dragged their feet of little bit, but they've been dragging their feet for a couple of years now. So we expect it will be the the next meeting or the of meeting thereafter that it will it'll end up on the agenda. Since we know they are under some pressure from Ami and CMS to get it done.
Non.
In terms of our eight codes the for below the knee and the four above the knee.
And we've certainly continued a fairly active running dialogue with CMS, but it's.
It's sort of up to them, whether theyre going to re rate or not certainly we've.
We believe when they as they are tracking the data and particularly for the for above the knee codes that they have had longer more time to track the data on and they have for the below the knee codes they created.
I think when they see the costs it will be pretty evident that they should re rate and raise the the.
Levels by one one APC level for the for the Shockwave codes.
But just because of the helpful. Just because they show it doesn't mean they will book.
But we think the data will support it.
Got it thanks debt.
Thank you is on line to ask the question. Please press star one at this time and our next question comes from the photographer line with Morgan Stanley. Your line is open.
Great. Thanks for taking our questions Doug I wanted to start with just how youre balancing PTK and really the the targeting of CLI focus physicians versus Cushing corn of today.
Uh huh.
Yes, so were.
Yes.
We've made sure that we.
Created a commission structure such that if you.
And if Dan and I, both sell the same amount dollar wise and I only sell of coronary.
But I slip on my S four number or miss by and five number.
If the.
Dan if he hits as S four number and as and five number and in situ number even though we sell the same dollar amount of Dan is going to get paid more because he hit his quota on the tail on each of those buckets.
So.
As <unk> explained to them like you got to fill of all three buckets, if you want to get paid.
I'm not going to go broke but Dan is going to do better financially because we've structured it such that people.
Perhaps know they've got to hit their number across the board.
And so arguably maybe you could sell a little more coronary right now, but we think debt that's <unk>.
Harmful to the business long term if we become.
A coronary only business because we think there is tremendous upside on our peripheral franchise.
And you pointed out of S. Four.
Huge untapped potential below the knee.
And we had the sort of stilted and launch because we launched and then COVID-19 and we are we are now.
Chronically, we were really refining our sales strategies on us for cash.
And current with launching <unk> two and.
And having that access into the labs is is actually helpful time to be able to refine refine that and and.
And we envision.
Maintaining that sort of fill all three buckets commission strategy indefinitely, because it seems to be working.
And I just got on with you add more of the and I think that's well said, Doug I also think that.
A big focus as we launch coronary is.
And really land the coronary and launch which is why we're restricting the number of accounts.
The territory can launch per month.
But that also gives them time intentionally gives them time to TD.
And to call on the vascular surgeon and.
On the hospital and talk about.
The lower extremity and <unk>.
Of the iliac disease or the below the knee disease, and we need to make sure that they have enough time and enough focus to work with vascular surgeons as well.
So in addition to the comp plan and it's really.
Trying to make sure that their time is allianz and they have time to allocate.
Beyond just coronary and beyond just the interventional cardiologist.
Great. Thank you and if I could follow up just on your own the U S performance is really what youre seeing.
On T. J just on the geographic basis in terms of recovery really what you're contemplating some of recovery standpoint, as well as good of our presence in France, and U K and your guidance.
And we will tag team on this one again.
We had a.
Good to very good start and the first quarter and India and and.
And the unless you're in.
And of cave somewhere you know that India is the mess.
Which doesn't mean the rest of the world is the message just more representative of the.
One of the beauties of our business and of non COVID-19 world as the a variety of geographies were and now with 56 countries, but it but.
When Germany is great middle of last year, and then Germany suffers it's really hard when you have the sort of rolling suffering that hits certain geographies, particularly profoundly.
Even if the other like if the UK is recovering well, Germany is holding it down or India's holding it down et cetera.
But it also has the diversity is also prevented it from going backwards. It has just been.
Pretty flat really for the.
From September through through March, but Luckily because of the diversity of the doesn't it has not gone gone backwards in the US maybe wanted to speak to the go forward share. Yes, I think so frankly, I think Q1 was.
Did not recover as much as we had hoped as we're kind of exiting exiting 2020.
And you've seen the news they are slower on the vaccine uptake.
Think looking at it after through April and currently I think.
Especially on the continent, the team starting to feel better about.
Getting getting folks vaccinated and more of a return closer return to normal than they have been.
My guess is there of about a quarter behind the U S and terms of the shape of the recovery the.
The U K is doing pretty well and then if we look at going direct where we flipped.
The U K and France, that'll be that'll occur kind of throughout the third quarter.
Because there is a transition period to different distributors to different dates so.
So yes, we would expect that to go throughout the third quarter and as we look at.
And our forecasting the rest of the year I think.
Q2 should be better than Q1 from of COVID-19 perspective, Q3, seasonal but it should be better than Q1 from of COVID-19 perspective.
Q4, hopefully it looks as much like the normal as we've seen in Europe, and the last two years and.
And then we should start stacking in.
Deeper penetration.
Within the U K, but not of price uplift because we added sales agent model, there and then and France, both deeper penetration and a price uplift as we exit Q3 and that will start ramping through Q4, but from a materiality standpoint, probably doesn't move the needle too much this year.
Okay. Thank you.
Thanks Julien.
Thank you and I'll come and so on a couple of questions. At this time I'd like to turn the call back over to debt capsule for closing remark.
Okay. Thanks, operator, and thank you everyone for your time and attention and.
And support over and over the years, where looking forward the.
Continued.
The reports back from our customers regarding their the benefits there and they're seeing with C. Two and five and S. Four and and we'll be speaking with many of you at upcoming conferences. So have a great great rest of your evening.
Good day.
Thank you for participating on this.
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