Q3 2021 Shockwave Medical Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Shockwave Medical Inc. Third quarter 2021 earnings Conference call. At this time, all participants are in listen only mode.
Later, we will conduct a question and answer session and if he would like to ask a question during that time simply press star one on your telephone keypad.
If anyone should require assistance during the conference. Please press star zero.
I would now like to turn the conference over to your Speaker today, Debbie Kaster Investor Relations. Please go ahead.
Thank you all for participating in today's call joining me today from Shockwave medical or Doug Godshall, President and Chief Executive Officer, Isaac Soccer, as Chief Commercial Officer, and Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter ended September 32021.
A copy of the press release is available on chocolate its website.
We began I would 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 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
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 approvals.
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.
T was associated with our business. Please.
Refer to the risk factors section of our annual report on Form 10-K on file with SEC.
On Edgar and in our other reports filed periodically with the SEC.
Shockwave disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
Conference call contains time sensitive information and is accurate only as of the live broadcast today November eight 2021, and with that I'll turn the call over to Doug.
Thanks, Debbie and good afternoon, everyone.
Welcome to our third quarter call.
Hum.
Hold on just like we.
We reported $65 2 million in revenue for the third quarter of 2021, representing an increase of 202 hundred 33% from the same period in 2020.
Our CTO product once again led our growth as penetration and utilization continued at a healthy pace. Despite the challenges of Covid.
The Delta variant.
Isaac will provide additional color regarding the various dynamics that impacted the third quarter.
But we were encouraged to see the waning of Covid impacted hospitals in the U S. Hopefully, we're finally past the electric procedure freeze and thaw cycle, which would certainly be a blessing for our customers and their patients.
Factoring in the combination of continued traction of <unk> and steady elective procedure recovery, but still anticipating some impact on procedure volumes from Covid and staffing shortages.
We expect to finish 2021 with revenues in the range of $227 million to $228 million.
This translates into a growth rate of 235% to 236% over 2020.
To provide additional perspective on what we see.
And what we're seeing from the commercial side I'll turn the call over to Isaac and then Dan and I will share more details on the broader business and financial results from the quarter Isaac.
Thanks, Doug.
I will start with general commentary around some of the procedural dynamics, we saw in the quarter. Despite the impact from COVID-19, and pronounced seasonality the team put up good numbers.
The international and U S results were impacted by seasonality as people seem to take long and long overdue vacations.
While COVID-19 hotspots interrupted procedures throughout the quarter, our international business and the U S. Coronary launch did not seem to be materially impacted.
However, our U S peripheral business, where procedures can more safely be differed did experience some negative impact of COVID-19.
Thankfully it was not at levels experienced last year during the Covid waves and the situation has improved appreciably in September and October.
While we do continue to see some disruption to procedures in the U S and internationally due to pockets of Covid and staffing shortages. We hope that this continues to remain isolated and manageable.
So cautiously optimistic that these factors wont be materially disruptive to our overall business in the fourth quarter.
Returning to our third quarter results, our U S. Coronary business continued to exceed our expectations. We are encouraged to see two reorders measured as sales from launched accounts remained strong comprising 78% of total U S. <unk> revenue for the quarter.
As with prior quarters. The initial order quantity remained steady averaging five units per new account.
Given that there are four skus. This means customers are continuing to stock a limited number of units and our reorder income replenish stock upon use this as a healthy dynamic for our customers and Shockwave.
In the quarter, we averaged one three new coronary accounts per territory per month as we continue to launch new accounts. This number will continue to decrease in subsequent quarters.
That said, we forecast that we will be adding new accounts well into 2022 as we remain disciplined in our launch tactics account targeting and focus on peripheral IV outgrowth.
Our team continues to educate customers on the TPP in and tap to help ensure that they secure the best possible economics for the IV all procedures.
It was encouraging to see Covid hospitalization decrease in August and September this corresponded to improving trends in our peripheral business in September we expect to return to quarter on quarter growth for the peripheral business as the team continues to drive new account adoption and deeper penetration into existing accounts.
In the U S. We continue to make progress on increasing the number of accounts that use IV all across all applications during the quarter, 51% of our accounts purchased both coronary and peripheral products, 17% purchased only coronary and 32% purchased only peripheral.
As the business grows we will continue to add new territories at a measured pace, while expecting our sales revenue per territory to increase I'm.
I am pleased with the execution of the U S. Commercial team as they continued to consistently perform at a high level and deliver great results.
Turning to international despite the pronounced seasonality, we were able to post strong results in Q3 and have a strong and have strong momentum as we enter Q4.
We added direct sales forces in the U K and France and expect these teams will bring both increased focus and attention to IBM with existing customers and add new accounts in these countries I am very pleased with the quality of the new team members and they are off to a great start.
During the third quarter, there was modest revenue impact from the distributor to direct transitions Dan will provide details on that later in the call.
We now have over 35 Shockwave members based outside of the U S with direct sales in UK, France, and the Doc countries I am confident that <unk> combined with our distributors throughout the world. We will continue driving robust growth of <unk> in the international markets.
I appreciate the effort from our growing and increasingly global team in the third quarter as they continued to help customers improve patient care back to you Doug Thanks, guys. It along.
Along with the encouraging commercial execution. We've also had a number of additional achievements <unk> achievements and activities across the company.
The fall is always a busy time for conferences and while our live attendance has been down substantially across all specialties as the meeting's worked through their new hybrid model. These events still provide an excellent opportunity to highlight new clinical data.
Our pad III peripheral study was a subject of a veeva 2021 late breaking presentation that looked at the results of the first 752 patients in our observational study arm.
This real world data and reinforce both the consistency of results with IBM and also importantly, the ability for Ivy Hill to significantly reduce stent usage in this very complex patient population.
The presence of a stent can make future interventions more challenging so reduced stent use often described as leave nothing behind.
As a key objective for doctors treating a majority of peripheral lesions.
<unk> ability to modify heavily calcified vessels at very low inflation pressures.
<unk> reduces the sections and preparations which are generally the drivers for adjunctive stenting.
And then just last week, the one year outcomes from our CAD III study were presented at TCT.
These data represent the first one year analysis of coronary Ivy Hill and confirmed the benefit of IV L for leasing preparation prior to coronary stenting.
These data demonstrate that modifying calcified arteries with IV L resulted in a durable safety and durable safety and efficacy.
Also highlighted at TCT was our disrupt CAD pulled sub analysis, which looked at results across multiple IV L trials and showed that <unk> was consistently safe and effective in both men and women.
The third meaningful dataset presented at TCT was a pooled analysis of OTT sub studies that we've conducted.
While most physicians are not use intravascular imaging when performing <unk> OTT doesn't exceptional job of highlighting the impact of Ivy Hill, the impact <unk> has on challenging calcium morphologies.
And how safely and consistently delivers a substantial lumen gain whether it is used in concentric or E centric calcium or in lesions with calcified nodules.
Okay.
And while we continue to follow patients from our existing studies. Our team is also busy generating new data to support the use of IV L.
At Veeva, we also announced our newest trial called <unk>, two which will be a 200 250 patient study focused on the most complex below the knee lesions.
And will take place at 40 sites with long term follow up.
The study will include some of the most challenging patient cohorts that typically are typically excluded from <unk> studies.
There are currently very few large prospective trials studying the durability of intervention in patients with moderate and severe calcium below the knee.
Additionally, while our while our be Teekay cohort in our pad three observational registry included a significant number of interventions with adjunctive therapy. The BT case study will limit adjunctive therapy, which will enable us to examine the impact of IV all alone.
We anticipate beginning enrollment later this quarter.
Yes.
Touching briefly on reimbursement we are excited to see the increase in payment for above the knee peripheral IV L procedures that CMS included in their outpatient prospective payment system or PPS.
Final rule that was published last week.
That's great news came earlier than we expected.
As a result, IVF procedures that are performed above the knee in the outpatient hospital setting will now be assigned the two highest paying APC codes.
And will be paid on parity with atherectomy.
This is a huge win for our customers and we see this early action taken by CMS, just a little over a year before creating the codes as an acknowledgment of the clinical value of Ivy Hill.
Most importantly, this will help improve access to Ivy Hill for Medicare beneficiaries, who stand to benefit from Ivy Hill.
Last week also brought news from a CPT panel that took place in September as a quick refresher CPT codes are the primary mechanism for coding and payment of physician professional fees.
And the process is governed by the EMA.
On the peripheral side the panel made the decision to postpone finalization of the large and complex redesign of the code set associated with lower extremity revascularization or LDR procedures.
We have previously noted that the complexity of the LDR CPT restructuring effort.
And.
Let us to expect that it would need to continue past the September meeting.
This now moves a future CPT panel meeting as we had expected it's likely one of the likely the October meeting next year, which is associated with the 2020 for CPT book.
But the bottom line here is that nothing significant changed here versus our expectations and we are encouraged by what seems to be continued progress.
On the coronary side the CPT panel the CPT panel established a category III add on code for Ivy Hill.
While we have had many updates over the last year for CTO showing progress in coding and payment for hospitals, both inpatient and outpatient.
The addition of this category III code is the first time, we have made progress in establishing coding and payment for physicians the ad.
Add on code will allow physicians and ability to collect additional professional fees for an addition for the first time.
<unk> taken will enable them to collect professional fee when Ivy Hill has performed in addition to a stent procedure.
That's a good thing for customers and we look forward to continuing to work with the medical societies to evolve from the category III add ons to a category one CPT code.
It is important to note that this category III code does not impact hospital or ASC payments that have been awarded for Kirk coronary IV <unk>, such as the <unk> and transitional pass through.
We are fortunate to have been able to sustain our growth. Despite the myriad macro challenges that face so many businesses today.
We've also been very focused on ensuring that we do not suffer some of the supply chain challenges that are becoming so pervasive.
Throughout the quarter, we've been putting the finishing touches on our upgraded manufacturing facility.
In July our new expanded clean room became operational more than doubling our production capacity, which is which is allowing us to transition our prior production areas in clean room to R&D activities and pilot lines.
We continue to have no back orders for 2021, and do not anticipate any for 2022, despite our significant growth rates.
With that I'll turn I'll now turn the call to Dan.
Thank you Doug good afternoon, everyone Shockwave Medical's revenue for the third quarter ended September 32021 was $65 2 million.
233% increase from $19 6 million in the third quarter of 2020.
U S revenue was $52 8 million in the third quarter of 2021.
Growing 374% from $11 1 million in the third quarter of 2020.
The increase included $36 9 million from the coronary product Shockwave situ, which was launched in the U S. In February this year the.
The growth in the U S was also enhanced by continued sales force expansion.
International revenue was $12 4 million in the third quarter of 2021, representing a 47% increase from $8 $5 million in the third quarter of 2020.
The growth in international revenue over the prior year reflects the impact from pandemic recovery as well as increased adoption in existing geographies sequentially International revenue was down however, if adjusted for the UK and France distributor to direct changeover international revenue in the third quarter would have been up 7% versus down five.
As compared to the second quarter 2021.
Our product lines, our peripheral products Shockwave Empire and chocolate S. Four accounted for $17 7 million of total revenue in the third quarter of 2021 compared to $12 3 million in the third quarter of 2020 or 44% increase.
Our coronary product Shockwave situ accounted for $47 $2 million of total revenue in the third quarter of 2021.
The $7 million net third quarter of 2020, representing a 575% increase.
In addition, our sales of generators contributed $3 million in revenue in the third quarter of 2020, which is the same as the third quarter of 2020.
Gross profit for the third quarter of 2021 was $54 2 million compared to $14 3 million for the third quarter of 2020.
Gross margin for the third quarter of 2021 was 83% as compared to 73% in the third quarter of 2020.
Improvement in gross margin was partly driven by product mix, along with continued improvement in manufacturing productivity and process efficiencies.
Total operating expenses for the third quarter of 2021 were $51 4 million, a 90% increase from $27 1 million net third quarter of 2020.
Sales and marketing expenses for the third quarter of 2021 were $28 4 million.
Baird to $13 $6 million in the third quarter of 2020 the.
The increase was primarily driven by sales force expansion in the U S.
R&D expenses for the third quarter of 2021 were $13 7 million compared.
Compared to $7 9 million in the third quarter of 2020 the.
The increase was primarily driven by head count growth.
General and administrative expenses for the third quarter of 2021 were $9 3 million compared to $5 6 million in the third quarter of 2020.
Increase was primarily driven by higher head count to support the growth of the business.
Net income for the third quarter 2021 was $1 9 million.
Compared to a net loss of $12 $9 million in the third quarter of 2020.
Basic net income per share for the period was <unk> <unk> diluted net income per share for the period was <unk>.
We ended the third quarter of 2021 with $183 million in cash cash equivalents and short term investments at.
At this point I'd like to turn the call back to Doug for closing comments.
Thank you all for joining us today I am so proud of our team and so impressed by our customers and investigators for their ability to persevere and domains such high standards for patient care throughout this tumultuous time.
It speaks volumes to them as people and we feel so fortunate to be able to provide them with a technology that is able to meaningfully improve outcomes, which ultimately is why we're all here.
Thank you again for your time today take care and be well.
That will open up for questions.
Thank you at this time I would like to remind everyone in order to ask a question. Please press star one on your telephone keypad again that is star one to ask a question.
We have your first question from Larry Nicholson with Wells Fargo. Your line is open.
Good afternoon. Thanks for taking the question and congratulations on a really nice quarter can you hear me, Okay, Doug yes.
Thanks, Larry.
Hey, Doug I wanted to start with the the lower extremity of the above the knee.
Reimbursement change and how should we think about.
<unk> penetration above the knee.
With the new reimbursement.
I think there are about 800000 above the knee procedures I think you've said about half for calcified, where do you think atherectomy penetration is today it looks like it's about 20% and where do you think ICL penetration can go over time with this.
<unk>, new reimbursement and I had one follow up.
Yes.
So atherectomy is.
Our numbers have a little bit higher than that four four at least hospital based penetration OBL base penetration is obviously significantly higher because of the reimbursement differences in <unk>.
We are.
Certainly.
Nice to at long last takeaway some of the economic friction that has been in place on the on the peripheral side ever since we launched four years ago.
So it won't be harmful, but we have not at this juncture, we haven't haven't sorted out exactly how much of a positive impact.
The improved and hospital payments are for the outpatient procedures.
I think your numbers are about right depending on the vessel bed. Some vessels are like 70% calcified. Some are are 40% calcified, but the periphery is certainly.
A substantially.
Longer best set of vessels and also substantially more calcified set of vessels.
And then the coronary as ours so.
It's nice to be in a position where.
We are we are reimbursed at a level, where we feel like we should have been all along.
That's helpful Doug.
I'm going to ask the 2022 question you gave us guidance for Q4.
Any puts and takes that we should consider.
Obviously, you see where consensus is right now and should we expect some contribution from Japan. Thanks for taking the questions.
So working backwards, Japan what.
What we've indicated is we expect to be approved in the <unk>.
First half sort of end of first quarter, beginning of second quarter somewhere in there before end of June.
And that we would then have to go through the reimbursement application process, which is six to nine months. So we see Japan as a 2020.
Three.
Our revenue story.
And in terms of the <unk>.
The revision to.
While we have not guided for 'twenty 2022 so theres nothing to revise and and we'll be giving 2022 guidance. When we when we turn the calendar and are giving our our Q.
Q4 earnings call.
Alright fair enough. Thanks for taking the questions guys.
We have your next question from Adam Nadir with Piper Sandler Your line is open.
Hey, guys. Thanks for taking the questions and congrats on the nice quarter.
Wanted to start with just the guidance raise and the implied Q4 guidance and just wanted to flesh that out a little bit more in terms of.
What's contemplated from a COVID-19 standpoint.
Hospital on staffing constraint standpoint, it sounds like there is.
Something baked in for all of those items, but just would like to hear you.
Give us a little bit more color there and then how do we think about the trends across the business lines I think if I heard correctly, you expect the peripheral business to grow sequentially in Q4 relative to Q3 did I hear that correctly and then just any.
Thoughts around a potential backlog that may have accumulated in Q3, and then I had a follow up.
Yes.
I'll Tag Tag team with ASIC on this Adam Thanks for the question.
<unk>.
So I feel like this is a six quarter in a row and we said we're not good at forecasting Covid itself. So we will say once again.
We forecast COVID-19 at our own peril, when we tried to do last quarter was due our best guess at what we thought would be a <unk>.
A meaningful.
Impact on.
Electric procedures and Unfortunately, we were right that did come to pass.
Luckily.
We did.
Even better than we anticipated in coronary and that was less affected as Isaac said by by Covid.
Wobble.
Heading into the fourth quarter, we try to do the same thing again, we feel like the fourth quarter will be impacted but less than the third quarter was so consistent with what our projections had been back back during our second quarter call.
And.
And the harder thing well that is hard to gauge, but then you add in the some hospitals are having.
Having shortages other hospitals are not so.
So we anticipate there will be some impact.
And.
It's just hard to know for sure exactly to what degree so we tried to risk adjust our numbers somewhat.
But still obviously.
A significant.
Lift versus the Q3, and then you want to touch on on peripheral.
Sure.
I think.
It is hard to predict as Doug said as we looked at Q3, you guys have heard commentary from other companies you've talked to physicians.
Certainly an impact to electric procedures on peripheral in the quarter.
I think as Youre, turning the calendar at TCT last week.
To some physicians who are from the upper Midwest.
And they are starting to see a little more of an impact on hospitalizations from Covid that physicians in Florida, which had they said it was the worst and once I talk to you said it was.
Worst impact on procedures that they had seen in any phase of the <unk>.
<unk> there in Florida, they've seen a backlog now of coronary cases coming back in and some peripheral cases. So I think we're just going to have this.
Variability is as different waves of COVID-19 spread through the population.
And courtesy of the vaccine rates are going up.
But it's really hard to predict and so I'm just trying to advise Doug said try to do the best we can to serve our customers make sure.
Patients are getting treated and then monitor how things are going.
Yes and on backlog.
Historically, our observation is there's a there's a double backlog theres a backlog on patients getting diagnosed and a backlog of patients getting treated so we've never seen a.
And an overcorrection on the upside of procedures, because you needed to then refill the funnel in the places where you are having the biggest procedure backlog. So some.
Some incremental benefit from a backlog of treatments that we're waiting, but but I've yet we've yet to see a real like all of a sudden you double or having seeing a surge because theres also the oh, yes.
Holes have have resource constraints for how much they can treat which is also exacerbated a bit by the staffing shortage. So.
So it's a.
It's a complicated <unk>, but we're not we wouldn't and I think our numbers don't reflect a.
A surge effect.
Okay understood I really appreciate.
All the color there guys and then just for the follow up.
Maybe one for Dan just.
On the P&L and Opex spending.
Would love to just kind of get a better handle on how we should think about spend in subsequent quarters, you guys turned the corner here and reach profitability this quarter, a nice positive surprise.
I guess the question is how to think about spend going forward and just as it relates to the bottom line should we expect a positive ramping EPS trajectory on a go forward basis or will we have some catch up in spend in 2022. Obviously there is a lot of opportunity ahead of the company. So any color there would be would be helpful. Thank you.
Yes, no no different guidance than from last quarter, where we talked about just continuing to invest in R&D, we've got a lot of great.
The exciting programs coming forward, we've got some clinical activity, so youre going to see a continued ramp in R&D.
We're still investing in sales and marketing not to the extent.
Related to CTO in the U S to launch and to build up but we're still we've got some some adds to make there so you'll still you'll see some increases.
Especially in the probably the first half, but we're also expecting revenue to clearly grow so we're expecting positive trends.
On the top line, we're expecting that.
Squeeze to the bottom line.
We're not going to go crazy on Opex, but we're going to invest in the company.
That's helpful. Thanks, Dan.
We have your next question from Bill <unk> with Canaccord. Your line is open.
Great. Thanks, Good evening, thanks for taking my questions.
First just like to start off with more big picture.
Doug one of the strategies you put in place with coronary was at the hospitals had to stock the product, which kind of ends up becoming a lever point in the future for distribution. Because you can just reps don't have to be in every case. My question is first question is one how is that playing out now that.
This deep into the launch and then two is this having impact any impact on the peripheral business in the way hospitals think about the peripheral product.
Yes.
Our.
Our approach of.
<unk>.
A very skinny initial purchase at the site was was.
And park, a way of ensuring that we had.
So our commitment and buy in from the hospital. So when we were launching we knew they were really going to launch it wasn't just sort of doing a case on consignment or trunk stock.
And and.
The pull through and low sort of service burden relatively speaking a coronary is a testament to the.
Really unique clinical Val.
Value that the product is delivering to the hospital more than it was getting them to buy the that initial small inventory slug.
I think peripheral our observation is that peripheral will for the foreseeable future be a bit more labor intensive.
Theres a.
There's a funny phenomenon, where the same cath lab that does peripheral procedures in coronary procedures reps are not in the coronary procedures very often at all but they are in the peripheral procedures. All the time. So there is this.
I Wouldnt say its dependence, but comfort familiarity habit whatever of.
Peripheral reps and peripheral procedures and so.
As we continue to expand our sales force or our field force and expand the number of clinical specialists. It's a lot of it is about covering peripheral procedures, but also continuing to reinforce the coronary procedures.
I'd say, we're we continue to be encouraged.
That there is.
There are great synergies by being in the peripheral coronary combo.
With the same sales and clinical team.
A lot of the docs, who do coronary as do peripheral.
And a lot of the docs, who do coronary do.
Large bore access for <unk>, if they don't do peripheral so.
There is a tremendous amount of overlap amongst our card cardiologists I'd say the vast majority to some peripheral intervention, where shockwave can be helpful.
And so the bigger impact is not the.
Purchasing of inventory, it's the it's the customer level synergy to physician level synergy.
Versus versus any impact of of an inventory approach.
Got you.
This is Isaac and I'd also add to that.
We have 11 skus in our peripheral portfolio and only four on coronary so it's easier for the customer to stock for their cases.
With purchased inventory.
From a.
Financial outlay perspective.
Second thing is we launched peripheral three or so years ago now in the U S with very little data in very kind of.
It's really new product a new product category.
Fast forward to today with the amount of data, we have and on the peripheral side and the buy in that our customers have with that we're seeing an easier time of getting customers to to on their inventory reduced the amount of consignment increase the amount of owned inventory. They have introduced the <unk> service burden on our on our reps.
And so.
If you look at our business today on the peripheral.
Continues kind of cool.
On quarter the amount of that we do in terms of sold product versus consigned or trunk stock is higher every quarter and were incentivizing our customers to do that.
Okay. Thanks, and then the follow up question just.
As we look at the numbers.
Obviously coronary was the big driver here.
And it's been a tremendous launch peripheral was was down sequentially and I'm, just trying to kind of discern how much of the peripheral being down as a function of COVID-19 versus sales or field force focus.
And then.
I think you gave it yes expect it back up again, but I mean thats the biggest challenge right. If you've got one for selling both in and can you continue with the one for selling both as you think into 'twenty, two and beyond at least where you sit today and Thats. My question. That's the right question Phil.
Looking at the Q3 number in the U S sequentially.
Forget about Covid sequentially Q3 is very seasonal.
Lowest procedure volume of the year in Q3, and what anecdotally, what we heard and saw across the world were long vacations.
Taken by by patients by people again customers and physicians and so I think the seasonality in Q3 was particularly.
Pronounced and Thats I think you've seen that another reports from other companies compound that with the elective procedures slowdown with pockets of Covid, particularly particularly in the south on elective procedures.
The sequential going backwards in Q3 sequentially on the U S. Peripheral business was wholly a function of the COVID-19 impact and the kind of unusually strong seasonality I think from a focus standpoint, our team is doing a great job of maintaining their focus on all three product lines. The two below the knee.
On the coronary.
We schedule the launch and kind of.
Put governors on the coronary launch in order for them to have time to maintain their focus on peripheral. So we think the model is working really well.
And we adapt things within the model in terms of.
Comp and quota and service of FCS is within territories, but we have a high confidence at this point that we'll be able to maintain this single sales force selling peripheral and coronary and get good growth out of both businesses in the future.
Thanks for taking my questions.
We have your next question from Danielle <unk> from Telsey with SBB Leerink. Your line is open.
Yeah, Hi, good afternoon, everyone. Thanks, so much for taking the question.
Thank you.
Hi, Thank you Craig.
Give a little bit more color or context around how you're seeing the coronary product adopted by that I mean.
Atherectomy used areas versus non atherectomy.
Right now its hard because theres COVID-19 and all of that but who are you seeing.
The most aggressive adopters of the coronary device, maybe its cross border would love some more color about what the typical high volume user here it looks like.
Well the highest volume PCI operators will tend to also be those who do atherectomy because you're treating.
The largest percentage of the.
The cases, probably in your in your in your group and Youre also.
Tend to.
Because of your experience, you'll also tend to attract some of the more complex patients which.
Require some sort of calcium modification.
And so certainly when we launched.
February 1st launched February March April I would say, a very high percentage of our.
Initial adopters were.
The complex PCI population just like we did in Europe, you want those folks to embrace the technology, because then others around them, we will see that it works for them.
The business person in their practice and and it's easier to expand now generally when we launch at a center.
If if Dan is the highest.
Our highest volume operator, and I might be the lowest volume operator, I am still doing PCI isn't during the launch we are still going to train you and if you've got a case, we wanted and it's a calcified case, we're going to want you to.
To get experience with IV, all while we're going through the launch process. So another benefit aside from allowing us to.
Two to maintain.
Balanced focus of coronary and peripheral is the way we launched with only two months at the most it does enable you to get very strong penetration at a site to get full exposure to everyone doing PCI. So.
Sort of by definition you are higher volume users are going to your higher volume PCI operators, if they adopt technology will drive more of your volume just because they drive PCI volume.
We are certainly seeing.
Cases done in hospitals that don't have atherectomy cases done in hospitals that don't have surgical backup.
Like I know you had a call and there was question as to whether we'd be doing cases in a state like New Jersey.
Were different some technologies can't be done used in.
Hospitals with no surgical back up but we're doing cases in new Jersey, and hospitals that don't have surgical backup so.
Those those sites will almost always be sites that are not doing well generally non surgical backup sites.
On atherectomy sites.
Not always the case, but often so it's a blend and I don't.
Because of the volume bias towards atherectomy users.
Our our utilization will also probably be bias towards folks who use atherectomy, but.
<unk> is not at the expense of atherectomy generally.
It's just like we saw in Europe, we are often used.
In conjunction with atherectomy or in cases, where atherectomy isn't as applicable.
And not at the expense of atherectomy.
Okay. That's super helpful. Thank you for that and then just you alluded to that call. We had I'm just I'm just curious about what are the data points. We've heard was around the lack of coverage.
Pushback from private payers, which I appreciate that's such a small piece of the total PCI market I mean, I don't know if you have that number but sort of what the appetite is even pursue private pay given that it is smaller but maybe without at some centers.
Lean more towards the other technology.
Versus trying to decide which patient gets what I don't know if you can comment on that.
But that would be helpful.
And I've also got Rob, Rob Fletcher, who is our VP of marketing and market access here.
We.
Yes.
Our our age.
<unk> tends to be heavily skewed towards the.
The Medicare population, our average age in our trials tends to be about 73.
And so we are whereas <unk> on average are maybe $65, 70%, Medicare where we skew higher.
And therefore it is.
It's a small minority of our cases are a minority of our cases that are private or private but maybe rob wants to add a little color on sort of our private experience versus.
Across the board, both I think probably peripheral and coronary yes, yes, so generally.
Youre right to ask the question that.
Coverage can be more of a concern for private payers. These are.
Heterogeneous group of different coverage policies when it comes to new technologies.
I think from what we've seen in our commercial experience to date.
Sure.
While our codes are relatively new and so I can't quote you stats in terms of.
Percentage of private pay versus Medicare it at the moment generally speaking.
We've seen very low percentage of claims denial denials from our both our peripheral and coronary business. So while there may be some coverage policies that are out there that are.
That will.
Sort of suggests that they don't say anything or they may say they don't cover peripheral don't cover coronary are both generally speaking the number of cases or claims where we've had to help customers with denials as Ben has been extremely low compared to the procedural volume that we <unk>.
Perform each quarter. So I think that just speaks to the fact that it isn't it.
It's not been a large issue that we've been experiencing.
Also I'll just point to the fact that we have stepped up.
<unk>.
Hired a field reimbursement team and among their duties they are available to assist customers with clay.
Claims denials or appeals.
As they emerge so again it hasnt been hasnt been a big issue, but we feel.
Confident in the ability where it has happened to help our customers through.
Overturning those.
Okay. Thanks, so much.
Thank you Danielle.
We have your next question from Cecilia furlong with Morgan Stanley. Your line is open.
Great. Thank you for taking the question. So I wanted to ask if you could just comment a bit more but you've seen subsequent TPG implementation just from a kind of willingness.
Were pushed off are held off previously due to economic reasons, just what you've seen from that standpoint.
The past several months and also and what you've seen early days with Entacapone.
Yes so.
I'd say the blend of in tap and transitional pass through is that they have enabled us to continue to.
To open up new accounts.
Certainly in the beginning of transitional pass through we saw.
Several accounts that came onboard that had been.
Either reluctant to go to their Vac committees are unable to get through their vac committees and they were able to get through the process because they could.
We're in a position where they could point to.
Much improved economics for the for the hospital itself.
It's.
It's you hear anecdotes Oh this is great I'm able to use the device now and my my Cath lab manager is not not upset with me anymore.
But given the.
All of the other phenomenon that have created the abnormality of procedure flow COVID-19 seasonality staffing changes et cetera.
It's really hard for us to come through our numbers and draw a direct.
These 30 accounts absolutely use more or 50 accounts are 100 accounts what are used more because.
You had a transitional pass through that kicked in.
We've.
We searched for that debt.
That evidence because we certainly hear.
Customers tell us it.
Sort of life is better post transitional pass through.
But there are just too many like solving a problem that has three different variables is really hard to do so.
So we're.
I think the anecdote I think is probably a fairly safe to conclude which is that.
The presence of TPP, and then tap makes it a lot easier for the physicians and reduces the amount of <unk>.
Pressure on them to use shockwave selectively as they would've had to where those not in place.
Okay understood and then I wanted to ask as well on implants, plus just really what you've seen from the limited launch just wondering as you think forward just the balances being cannibalistic 10, five versus market expensive IV, all how youre looking at that today and thank you.
Yes, its been its been encouraging and asics.
Close to it so I'll, let him jump in again.
So we've we've had limited market release ongoing in some of our international markets as well as the U S. Now.
Physician feedback has been good.
And I think our sales force the sales force that's been around both of those cases is excited about the product.
It being.
How much of it will be cannibalistic and how much will be market expansion.
We will have a larger balloon size in there.
Up to eight millimeters on that product line. It was 7% the largest five balloon today.
That might add some but I think generally it will probably mostly be cannibalistic because the way we see it.
It's sort of a day.
Designed to be very similar to the <unk> product and applications of the <unk> product with an enhanced feature set.
So we make it a little extra business out of it but new cases, but I think I'd expect most of these just cannibalistic.
Thank you for taking my questions.
I'm showing no further questions at this time I would now like to turn the conference back to Mr. Todd <unk>, President and CEO for any closing remarks.
Thanks, very much thanks, everybody for your attention and hopefully.
Things continue to improve on the Covid front. So we can stop trying to predict COVID-19 impact on everyone's business.
In 2022, thanks, everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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