Q1 2022 Shockwave Medical Inc Earnings Call
Okay.
Yeah.
Good afternoon, and welcome to Shockwave first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode.
We will be facilitating a question and answer session towards the end of today's call as.
As a reminder, this call is being recorded for replay purposes, I would now like to turn the call over to Debbie Kaster, Vice President of Investor Relations at Shockwave for introductory comments.
Yeah.
Thank you all for participating in today's call joining me today from Shockwave medical or Doug Godshall, President and Chief Executive Officer, Isaac Zacharias, Chief Commercial Officer, and Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter ended March 31 2022.
A copy of the press release is available on chocolate the website.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor 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. All forward looking statements, including without limitation statements relating to our sales and operating trends business and hiring prospects financial unraveling to revenue expectations and future product developments and approvals are based upon our current estimates and various.
Assumption.
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-K on file with the SEC and available on Edgar and in our other reports filed periodically with the SEC.
Shockwave disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information and is accurate accurate only as of the live broadcast today May 19 2022.
With that I'll turn the call over to Doug.
Thanks, Debbie good afternoon, everyone and thank you for taking the time to join US to review shockwaves results for the first quarter of 2022.
While the quarter started out slowly with a fairly significant COVID-19 surge Democrat and now it seems like a distant memory as procedures recovered steadily since January.
Our team has remained focused which has enabled us to sustain our high level of performance as evidenced by our first quarter revenues of $93 6 million.
A 194% increase from the first quarter of 2021.
At a high level.
S coronary continues to account for the majority of our growth.
Both our international business and our U S. Peripheral franchise continued to be strong contributors to growth.
Later in the call Isaac will provide additional details regarding market dynamics, but first I would like to discuss some key recent accomplishments and drivers of our business.
Starting with peripheral.
There's been increasing attention patriarch peripheral business of late and we are encouraged that the significant upside potential of this franchise is being better appreciated.
Last month, we announced the transition from a limited to a full launch of <unk> plus product.
And the customer response continues to be very positive.
As a quick reminder of the <unk>, plus which will replace our legacy <unk> product overtime as three major improvements size reach and speed.
By now offering a larger eight millimeter version.
Doctors are noting that they feel better equipped to treat a significant portion of the iliac arteries, where our seven millimeter device felt a bit undersized to them.
The longer catheter shafts gives our customers the length they need to reach lesions above the knee via radar radial access from the risks, which are old shaft length could not quite a comedy.
And lastly by doubling the speed of the pulses from one to two per cent to per second.
The procedure takes half the time and no one wants to go back to the old version once they've done one case with M. Five fast.
Size reach and speed are all resonating strongly during the early days of the launch.
And confirms that our team is doing an excellent job of identifying the needs of our customers and incorporating them efficiently into our new product development efforts.
The Big news on the International front is the recent approval of coronary IV L in Japan.
There are over 250000, PCI has performed in Japan, each year and physicians their perform intervascular imaging, particularly ibis, almost all their cases as standard practice, which enables them to identify calcium more accurately than relying on X ray.
By comparison less than 10% of U S cases use intramuscular imaging.
As we have seen in every geography, our safety profile resonates strongly with the Japanese cardiologist and remarkably our CAD four study in Japan had even lower event rates in the very low rates, we have seen in previous studies.
So the combination of their use of Intravascular imaging to better identify calcium and are consistently low adverse event rates are two of the many reasons why we anticipate that Japan will be amongst our strongest markets.
Our leadership team in Japan is quite strong and they are now in the process of building out our sales organization to ensure that we are poised and ready as soon as we receive reimbursement.
Which we believe should come by the end of this year.
In order to help the clinical community appreciate the benefits of IV L. We continued to mine. These substantial datasets, we've created through the rigorous trials we've conducted.
We were pleased to have two publications in the inaugural issue of the journal of the society for cardiovascular angiography and interventions or.
Sure Jay Sky.
Which just launched in January .
Featured in this issue, where our CAD three one year results as well as our CAD pooled outcomes by gender.
The gender studies have been particularly interesting and insightful as they have helped us to highlight the safety and effectiveness of Ivy Hill on frail patients with smaller vessels as are generally found in female coronary patients.
These data showed that Ivy Hill was equally safe and effective in men and womens unlike previous previous studies of atherectomy devices.
In February CAD, three IV outcomes were presented at CRT and shortly thereafter in March the CAD four one year outcomes were presented at the Japanese circulation society by Dr. <unk>.
Who was the Pi of Cat four.
We anticipate a continued healthy cadence of data being presented and published as our studies continue to prove the acute and long term benefits of our technology.
Finally, a few words on the macroeconomic and global environment.
We believe the next several quarters will be more stable for our customers than the Covid whipsaw.
They have lived through over the past two years and our continued acceleration as evidenced by the strong Q1 performance suggests that we are that we will likely deliver results in a higher range than our prior guidance.
We now anticipate delivering topline revenues in the range of $435 million to $455 million for the full year of 2022.
Representing growth of 83% to 92%.
From 2021.
As our company has matured we have increasingly made it a priority to be active in sharing our good fortune with those who are not as fortunate.
Our philanthropic priority has recently shifted to supporting the people of the Ukraine as best we can.
In addition to other Ukraine specific donations of our team in Europe has partnered with our distributor in Poland and.
And established a relationship with the hotel near the Ukrainian border, whereby Shockwave is helping to fund the hotel as a temporary housing facility for Ukrainian refugees almost.
Crucially women and their children.
I've been so impressed by the outpouring of support from our employees across the globe to help personally and financially support this clause.
The Shockwave team is not just extraordinary and the ability to pull together and deliver results.
But it is extraordinary in the sense of purpose and community demonstrated by the individual team members.
With that I will turn the call over to Isaac to provide more color on the commercial front, then Dan will share more details on the broader business and financial results Isaac.
Thank you Doug.
As Doug mentioned earlier, the year started out with some lingering challenges due to COVID-19 across the globe.
There was a nice rebound in the second half of the first quarter that has continued into Q2.
Our team finished the quarter strong with solid results across the board from U S coronary U S peripheral and our international business.
Our U S sales team continues to execute at a high level.
Regarding the broader environment, we certainly saw an impact to procedures, especially peripheral cases, but it was largely contained to January our U S Hospital based peripheral business recovered well after the January slump.
Our customers are continuing to treat their heavily calcified quadrant and critical limb ischemia patients and experience a return of healthy procedure volumes.
Further they are increasingly choosing <unk> as their tool of choice for their patients.
These monthly dynamics seem consistent with what most of the companies in our space have reported a soft January followed by a strong February and March in fact in February we had the highest U S average daily sales in our history for both the coronary and peripheral products. Fortunately. This record was the passed in March.
During the quarter, 62% of our U S accounts purchased both coronary and peripheral products, 21% purchased only coronary and 17% purchased only peripheral we.
We are pleased to see the continued increase in the proportion of our accounts purchasing both coronary and peripheral products are.
Our data show that peripheral IV L uses higher end accounts that also use coronary IV L than it is in accounts that only use peripheral IV L. The same is true of coronary use in accounts that also use peripheral IV L compared to those who do not use peripheral IV L.
It is our goal to have all of our customers using both coronary and peripheral IV M.
During the first quarter Reorders represented 92% of the situ revenue in the U S, indicating that the use of IV L continues to grow with existing customers.
We expect this reorder metric to grow at the number of available new accounts diminishes. We have now launched C. Two and over three quarters of our target accounts most of which are comprised of high volume facilities that perform over 750 <unk> per year.
Throughout the rest of this year, we will focus on launching the remaining target accounts to be clear. These centers have not yet been launched said differently. They are not accounts that abused Ivy Hill and stopped using the products. These unmatched accounts will continue to be a tailwind for our coronary business throughout the year.
Meanwhile, the focusing of our launched accounts will be ongoing customer education and training to help ensure that the entire group of physicians and staff are comfortable with IV L.
This will help drive further penetration in those accounts.
Our U S peripheral business saw strong quarter on quarter growth of 10% and was supported by the increased reimbursement for outpatient above the knee peripheral IV all procedures that went into effect on January one.
While it is hard to quantify the impact of our increased reimbursement, which is now equivalent to the atherectomy reimbursement payment uplift certainly removes the economic barrier for our customers and will allow them to use IV L whenever clinically appropriate.
As Doug mentioned earlier, we transitioned to a full commercial launch of Empire in April our launch strategy with Empire plus is similar to what you saw with <unk>. We are working in a very controlled deliberate manner to roll this product out to the field again the results in the quarter give us confidence that our hospital customers have returned to treating calcified P. E D at level at levels similar to the pre pandemic period.
On the international side, we also delivered record growth again, our new teams in the U K and France drove excellent growth to lead these results.
Coronary IV L represents the bulk of our international business. However, we continue to increase our focus and efforts on driving peripheral IV L adoption.
The international peripheral market dynamics are different in the U S.
In the U S.
Mainly in the peripheral atherectomy use outside the U S is uncommon so our team spend their time building a new segment of peripheral calcium modification in those countries.
We have traditionally done well in Germany, and Italy, and more recently, our new teams in France, and the UK have made significant progress building a peripheral IV business.
The launch of M. Five plus will serve as a further catalyst for our international business.
Symptomatic peripheral disease and for large bore access.
We've also increased our marketing efforts for peripheral IV <unk> in Europe and are establishing more programs to teach customers about the mechanism and benefits of I B L.
As an example, the team recently performed a workshop with surgeons to demonstrate the impact of I D. L and are heavily calcified cadaver model.
Because physicians were able to see and feel the impact of idea on these calcified peripheral arteries.
A remarkable demonstration of how significantly IV or changes to compliance, but heavily calcified artery and the surgeons were able to feel the change with their own hands. We expect these efforts will increase our customer base and usage of IV out overtime.
Turning to Asia. We are excited about the recent approval of <unk> in Japan, We plan to launch the product in Q4 after receiving reimbursement in the interim we will perform cases on a limited basis in key centers to help ensure that that we are prepared for the full launch we've approached the launch in Japan in the same method as we have done in other countries with a focus on training and education on appropriate use.
We expect the launch in Japan to be slower than in the U S. Primarily because of the relatively smaller size of our team in Japan, and the lack of existing IV business in those accounts.
And finally, the IV business in India continues to perform very well as they have emerged from the pandemic.
In a short time, they have already enrolled more than 100 patients and what will be a 1000 patient patient registry. These.
These data along with the data being collected and post market registry as in other countries, including Spain, Italy, France, and the Netherlands.
Significant additions to the compendium of IV all data.
With that I will turn the call to Dan to review the financials.
Thank you Isaac and good afternoon, everyone Shockwave Medical's revenue for the first quarter ended March 31, 2022 was $93 $6 million.
<unk> hundred 94% increase from $31 $9 million in the first quarter of 2021.
U S revenue was $78 5 million in the first quarter of 2022, growing 273% and $21 million in the first quarter of 2021.
The increase included $51 $3 million from the coronary product Shockwave C. Two which was launched in the U S. In February of 2021 the.
The growth in the U S was also enhanced by continued sales force expansion.
International revenue was $15 $1 million in the first quarter of 2022.
Presenting at 39% increase from $10 $9 million in the first quarter of 2021.
The increase in international revenue over the prior year reflects continued growth in customer demand and expansion of our direct sales force in Europe .
Looking at product lines, our peripheral products sharply them, five Shockwave Empire, plus and shop with us for accounted for $22 $9 million of the total revenue in the first quarter 2022, compared to $16 1 million in the first quarter of 2021 or 42% increase.
Our coronary product shoppers seem to kind.
For $7 5 million in total revenue in the first quarter of 2022 compared to $16 $3 million in the first quarter of 2021, representing a 9% increase in.
In addition, the sales of generators.
$4 million in revenue in the first quarter of 2022.
The $5 million from the first quarter of 2021.
Gross profit for the first quarter of 2022 was $80 7 million compared to $24 million in the first quarter Diebold in 'twenty one.
Gross margin for the first quarter of 2022 was 86% as compared to 75% from first quarter of 2021.
Improvement in gross margin was primarily driven by product mix as well as continued improvements in productivity and process efficiencies.
Total operating expenses for the first quarter of 2020 to $65 4 million or 50.
8% increase from $41 5 million in the first quarter of 2021.
Sales and marketing expenses for the first quarter of 2022 were $36 million.
Compared to $24 million in the first quarter of 2021.
Increase was primarily driven by sales force expansion.
R&D expenses for the first quarter 2022 was $17 million compared to $10 $3 million in the first quarter of 2021. The increase was primarily driven by head count growth.
General and administrative expenses for the first quarter of 2022 were $12 4 million compared to $7 $2 million in the first quarter of 2021.
The increase was primarily driven by higher head count to support the growth of the business.
And then income for the first quarter of 2022 was $14 5 million compared to a net loss of $23 $6 million in the first quarter 2021.
Basic net income per share for the period was 41.
Diluted net income per share for the period was 39 cents.
We ended the first quarter of 2022 with $201 $1 million in cash cash equivalents and short term investments.
At this point I'd like to turn the call back to Doug for closing comments.
Thank you Dan.
There is no shortage of progress and exciting news at Shockwave, we're making great strides towards providing patients access to both peripheral and coronary IPO.
We have an impressive body of acute and now increasingly long term evidence supporting the safety and effectiveness of our products.
And we have established infrastructure and capabilities across the group globe to support a large and growing customer base.
We look forward to sharing more successes throughout this year driven by continued execution and innovation.
Thank you all for joining us today and for your support.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster.
Okay.
And our first question comes from Adam Nader.
I apologize our first question comes from Bill <unk> from Canaccord.
Yeah.
Great. Thanks, Phil Thanks.
Thanks, Good evening can you hear me okay.
Hey, Bill.
Okay.
Yeah.
Wow.
I'm just trying to add to.
Some pretty big numbers, and just make sure I'm clear.
So U S. Coronary was 51.3 is that correct.
Okay.
Sub components that you took.
And.
U S coronary.
50.
What's he saying each 50 1377 times.
I just want to make sure I don't know 50.
57.9, yes.
Okay that makes a little more sense, okay, I'm just just checking.
Okay.
So a couple of questions here first congratulations on another solid quarter, especially given January was tough.
I was wondering just.
Coupled with things is.
Isaac commentary there was comment regarding the target accounts youre in three quarters can you remind us the number of target accounts did.
You have and as you continue to expand kind of I think.
How should we think about that going forward and then as we think about the guidance. It was a pretty big jumping guidance kind of just directionally. If you have any color on that thanks.
Good morning, Doug why did you take the guide yes, so so.
As we as we sort of look at the run rate of the business and continued acceleration of both well really three drivers of U S. Coronary U S peripheral and then broadly the international business.
Taking into account that to your point.
January into early February was a little soft ish.
And what we and as we don't anticipate really ongoing.
Any ongoing COVID-19.
Drafts.
We see all three contributing very nicely to growth over the course of the year and.
And so jumped at having a jumping off point of of close to $94 million, which was.
Meaningfully ahead of where we were we.
We and the street initially thought were going to be for the quarter.
Struck us that that $2 32 to 34 35 to $4 55.
The rate range, given the trajectory of the business.
Yeah, and then on the account side, we have probably a 100 or so target accounts and on top of that there is a number of accounts that we've launched that kind of satellite hospitals to a targeted accounts are you open up a big account and then they want.
As to launch into there.
Three or four hospitals that they use.
Our partners in the area.
So that's a.
And I think the key for US Bill is we're getting great reorders from our large customers and we've still got.
A chunk of a decent chunk of accounts that we plan on launching throughout this year to drive new customer growth.
And we anticipate will be in virtually every cath lab.
Overtime, so north of 1500 total it is just to sort of where do you draw. The line for who's the target versus who is sort of opportunistic and that's sort of the.
An account size cutoff.
Got you and then the one thing I didn't hear anything on and they'll jump into queue is just C to plus in Europe , I know you're going through the MTR pathway any update on that and thanks for taking my questions.
I would say the MTR process needs an update because it's.
It's torture.
For any company, that's going through it but but we think we're nearing the tail end and anticipate we'll be first with a limited launch and then a broader launch rolling out in Europe in the back half of this year, we have not.
We've not determined what our put our timing is going to be for U S launch, we want to get some experience in Europe before we.
Before we launch into the U S approval process.
Great. Thank you.
Yes.
And thank you.
And our next question comes from Adam Nader from Piper Sandler Your line is now open.
Hi, good afternoon, thanks for taking the questions and congrats on the great quarter to start the year.
Wanted to dig in a little bit more on the peripheral business did I hear correctly sequential growth, 10% quarter over quarter.
Just wanted to clarify that remark and then just any finer point that you can put on <unk>.
ATK versus ATK.
Yeah, so the 10% with a U S sequential growth quarter on quarter.
For all peripheral.
And color on the ATK B T K.
We see a.
It's generally been pretty well proportioned since we've gotten out of the gates with the <unk> product line, which is the product that is mostly used below the knee.
And so as we see growth the proportion of growth between if you look at the total.
Peripheral number in the U S. The proportion of above the knee below the knee has been relatively stable over the last.
Four to six quarters than it was last quarter as well.
And it'll be interesting to see.
The added shaft length of the <unk> plus will actually enable that device to be used when you go sort of up and over that youll be able to use it in below the knee cases, so the smaller sizes identified plus we anticipate will be used in that sort of <unk>.
<unk> vessels below the knee.
It has a longer treatment zone in a faster and faster treatment times, we anticipate.
And they're going to be watching to see if it's if we see some sort of complementary and five plus thus for below the knee strategies.
Got it that's helpful color guys and if I can sneak in actually two more one follow up on peripheral.
Can I ask about the the ATK reimbursement change.
That when into effect your parity to atherectomy Jan one 2022.
It sounds like that's having a nice impact Isaac I think you've talked about removing economic barriers, but just wanted to I.
I guess here a little bit more about the kind of the observations in the field that you're seeing from customers is that changing customer behavior.
And then I had one follow up thanks.
Sure Yeah, I think it is.
We've talked about this in the past as it relates to TPG.
And the and tap on the coronary side the customers customer behavior takes a little while the change because it's you need to both kind of get the administration, who cares about.
The.
The revenue that the hospital has associated with procedures aligned with generally with the Cath lab manager and they tend to focus on the expense of procedures not not necessarily the revenue. So our team is just kind of an ongoing education with the physicians Cath lab managers and the administration on what this chi.
<unk> means in terms of revenue and as those conversations happen and then generally you go into a hospital.
The rapid been and there are a couple of weeks ago talking to them about it.
One of sunk in yet.
<unk> it.
I don't have sunk in yet to one of those constituents that Oh, there is actually a payment change.
For the Shockwave procedure. This year. So I think my observation is.
This is going to be an ongoing educational effort by the team by our field reimbursement team in the field team it to themselves.
With those those constituents and over time, we'll continue to see.
The alignment between the revenue side of that of the hospital and the cost out of the hospital, saying, Okay. We no longer need to really try to put a break on the physicians for using shockwave. They can they can use this now whenever they think it's appropriate but I think it's going to be a bill.
Okay. That's that's helpful and just for the last one and thanks again for taking the questions here.
Not sure if it's for Doug or Dan but.
I know the focus is on driving top line growth Q1 results.
Strong healthy guidance raise gross margin.
Continue to improve Opex spend has been well controlled so the question is just around kind of future leverage and models going forward.
How do we think about about that just any color there would be much appreciate it. Thanks again.
We can put a tag team on this.
Fortunately our hour.
Our thesis going into the coronary launch was that.
We would have one of the more Leverages Bowl.
Our field teams given that we believe we'd be able to sell both coronary and peripheral through the same channel and and that it would actually be complementary versus the experienced many companies fed where they can't.
They can't effectively call on both peripheral and coronary customers I think.
So far so good a year into the launch that we're we're encouraged that our team is is operating in an extremely high level and in terms of providing a high level of service to <unk>.
Both peripheral and coronary customers many of whom are overlapping on the.
Cardiology side obviously.
And we don't.
We don't think that's going to be going backwards, we think that will only get better frankly over time as we complete the launch into our target accounts of coronary and then worked what kind of penetration model for both coronary and peripheral.
We will be building out some of the supporting infrastructure.
So we're right stroke team is getting strong and getting stronger our finance team is strong and getting stronger so some of the.
Areas that that you view.
They're not as obvious to the outside World, we're sort of art, which are critical backbones of the company to support this can put the sales and.
The sales efforts.
Those might not be quite as leveraged right now, but as the sales ramp through this year, you'll get to you youll see sort of the topline far outpacing some of that.
G&A.
The expansion in denim.
Set everything you were going to say sorry, Hello.
I think it's a good summary.
Like Doug said I mean.
We expect more leverage out of the business towards the back half of the year for sure.
And sales and marketing and G&A and R&D work and to continue to invest.
And we're investing in infrastructure as well, but we still see some some upside on leverage this year.
We're very satisfied with the direction we're going.
Great. Thanks, so much.
Yes.
Thank you and.
And our next question comes from Larry <unk> with Wells Fargo. Your line is now open.
Good afternoon, and thanks for taking the question and congrats on the nice quarter guys.
Okay, just maybe to follow up on Adam's question, because profitability has become a little bit more of a.
Topic recently, so basically Dan it sounds like the message is you're gonna be above 16% operating margin for 2022, given that you were 16% this quarter or do you expect.
More leverage in the second half and that mid thirties, Doug operating margin goal that you have.
<unk> talked about.
When do you think you can get there maybe just you know.
Talk a little bit more beyond 2022, and I had just.
Just a couple of follow ups.
Yes agree with the first part Larry we've always had probably longer range at full scale upper Twenty's lower thirties, I mean, where can we want to continue to invest in the business, but we see a path.
Two.
Kind of best in class for sure.
Okay.
And we aspire to.
Fire to that.
Not to.
Commit to a specific number.
<unk>.
But yeah I mean, it's where are we feel very fortunate that we've that we're able to to kind of walk and chew gum.
Increase.
Improving profitability in sustaining a high growth rate, which which I know is.
A tricky balance, but but so far we haven't had to make tradeoffs on the growth side in order to drive profitability.
Okay. Yeah, clearly you guys are in a unique position.
So Doug bass.
To the topline Japan reimbursement is it possible that you get it by how much visibility do you have on that from a timing standpoint could you get it by October where you would get revenue this year and why the slower growth.
In the U S given.
The IV is used the higher awareness.
And reimbursement.
B.
Reimburse from day one.
Did want to ask about China after that.
Sure so.
I guess going the way, we expect Japan to have reimbursement put in place by the end of September So that's the current <unk>.
Current expectation, it's a fairly.
Steady process of it there's not a lot of guesswork associated with this our understanding is end of September we should get that we don't yet know.
What that reimbursement about will be.
And regarding the launch and I think the relative speed of the launch compared to the U S.
You're exactly right on that on the tailwind there is really high high degree of imaging, which helps identify the calcium our intravascular imaging to help identify the calcium it's nice to have reimbursement out of the gate, but just in terms of account coverage area with the sales team, we do not have nearly the team.
On the ground that we had in the U S and we were in <unk>.
One hundreds and hundreds of thousands of PCI accounts already with our peripheral business in the U S.
Just just it's really just solely the ability to go in and turn on accounts.
And then the speed with which we will do that in Japan is going to be limited by the personnel and the lack of existing business.
Okay. That's helpful and lastly, just on China, I don't think I heard any update on this call on the last call. I think you said you expect approval by the end of this year. So any update there. Please thanks for taking the questions.
I think I think we said mid year for or maybe you said this year, yes. So we will we expect I'd say.
Probably mid year look now for approval.
And then.
Work on starting to salaries.
It's still a real mass over there.
With Covid. So I think we have modest expectations for China. This year, but expect to get all three of the products the coronary and peripheral products approved midyear and then start.
Launching into that market.
So it just sounds like just sorry to follow up it sounds like you do have a little bit of revenue in for Japan in China in 2022 and the guidance.
There's a little bit yeah, but it's not much at all.
We want to be conservative on that on that front, you know until we get out there.
Got it thanks guys.
Thank you.
And our next question comes from Danielle and healthy from SBB Securities. Your line is now open.
Hey, good afternoon, everyone. Thanks, so much for taking the question congrats on a really good quarter and good start to the year.
Just to follow up on the U S in coronary and just.
Youre in three quarters of accounts already just curious to see how the different accounts are ramping and I guess, maybe a good way.
Characterize it if he could even quantitatively.
Some of your best accounts, what are you seeing there from a penetration perspective or how the market for vessel prep has grown in those accounts versus some of your less penetrated accounts and then.
When you look at the less penetrated accounts what are you doing to get whether its more users at those accounts or just.
Or is that or do you think to use it more.
What are you doing to get that great. Thanks, so much.
Can I just can I can tag team on this.
On a macro level. We are we are not close to 30.
30% of patients have calcium and some people like to use 20% as a sort of realizable number for for IV I'll use that 20% of the PCI procedures.
<unk>.
We are scratching the surface of full penetration hardly anywhere the highest penetration is probably at some small handful of small centers that don't have atherectomy and so this is the only tool they have for calcium treatment.
But at our larger centers.
We're not.
We're not in the double digit sort of penetration of PCI volume. So we're.
We have meaningful upside across the board.
Okay, and then if I could say the same thing about peripheral but certainly focus on coronary and how is it going to if you want to take them on the taxes.
So I think that what.
But the way we're thinking about it Daniel this year is we just annualize the launch so we still have accounts that have only been open a quarter or two quarters and like I said there is more constant go.
This is a year of the team just kind of doing or not doing the usual blocking and tackling.
And while we gather data on what the distribution and the way to look at it as what's the distribution of penetration across our accounts.
And as we get more data on that and track it will work to understand why do some accounts have higher penetration than others.
And once we really understand that at.
The customer level, then we'll develop tactics specific tactics to go after bringing the kind of the lower penetration accounts closer towards the higher penetration of accounts.
But right now I think it's we're doing the same stuff we've done throughout the throughout the launch which has only been a year and that is that is going in.
Making sure they know how to use the product getting more people to use it who haven't been using it.
And then as we've kind of shifted towards the M. Five plus lodge, which is an important launch.
Spending time on the peripheral side of the house and making sure that is getting the attention it needs.
Got it. Thank you. Thank you for that and then just a quick follow up on the guidance and Youre, increasing the guide by <unk> 30 billion at the midpoint and then you guys don't give quarterly guidance, but you beat consensus by seven.
Seven 7 million.
Annualized and that gets you closer to that $30 million, but I guess, just what if you could talk a little bit qualitatively about what is working better with them that this is is it coronary and peripheral is it all of that is it.
You can maybe just help us understand where in the guidance, you're seeing better trends versus where we were in mid.
That's right.
Well Asia broadly China, Japan is not is not different.
Is not affecting our guide we anticipated launching Japan next year, we're still anticipating launching Japan next year.
China is Isaac indicated it is a.
It is a small we have a surplus small plug number in for this year, we think we'll sell some.
So it was really driven by the same three drivers that we had anticipated from whereas we started the year, which was international but more so U S peripheral U S coronary and.
The five plus like you always hope that Youre limited launch.
Is broad enough and that your rigor rigorous enough to be able to interpret what you see in a limited launch and extrapolated to a full launch and so far so good.
It isn't just the early folks who really really liked him five plus it seems to be everybody really really like some plus and sees it as a sort of meaningful new product not just an upgrade of an old product.
Really resonating very well the team has done a did a great job in developing it and now launching it so far.
And then coronary just continues to.
Sort of.
Outpace.
Adoption expectations.
It's.
I'm sure you've heard it in your physician call Daniela like the.
Yeah.
Our full year into launch for people still debris, referring to it as a game changer.
Actually I have the pleasure of going with my dad to get a stent.
Last week and in the dark there said.
Shockwave Micah that things again so.
On a personal level glad my dad didn't need shockwave, because he didn't have calculated calcified arteries, but.
It's nice that the consistency with which folks.
Responsive positive your device.
Maybe to tack on our <unk>.
Did the guidance in February for the year, we were maybe two weeks of positive trend out of January and January was was bad.
Especially in the U S. Yes, I didn't think we didn't have enough we didnt have enough.
Of a quarter under our belt, yet to feel great about the year.
Okay Fair Fair point, Doug Hope, you're doing well thanks guys.
He is crushing it thanks.
Okay.
And thank you.
And our next question comes from Travis Steed from Bank of America. Your line is now open.
Hey, guys congrats on a great quarter.
Doug most of the spin off so I'd just love to get your views on kind of like the update on the pipeline progress a potential for an R&D day at some point this year and I'll ask my second question now as well as since it's getting late.
Just any update on the competitive environment as you see it. Thank you.
Yeah.
Those two are actually intertwine Travis thanks.
We were tentatively looking at doing a full investor day towards the middle of this year, but with the sort of competitive noise or sort of future sort of distant future competitive noise. We we've decided that we're going to be a little bit more.
Judicious about how much we share about our next product development folks of folks have talked about <unk> plus a little on this call that'll be a.
<unk>.
Late second half 'twenty, two international product, a 2023 U S product.
L. L. L. Six has also been talked about a bit that's our larger peripheral catheter sort of larger than the what M. Five plus is able to achieve in terms of diameter.
And beyond that we are.
We have a sort of multiple products a year product launch plan.
Well into sort of the next three or four or five years.
But what we don't want to do is provide a roadmap to folks who are looking to.
Trying to figure out what's working for us and make it easy for them to try to try to just copy us.
We're spending a lot of money on R&D.
Obviously, we continue to expand our team we.
You've got our last call, we talked about being north of a 100 R&D folks by the end of this year.
The hiring plan is going well and while we are.
We feel fortunate that we're able to.
Both.
Invest heavily and drive profitability.
We still.
Even though even though today's tape doesn't suggest that growth is very popular we still think growth is long.
Long term going to be what rewards are.
Our customers because it's going to be mean, we've brought them better solutions and it will reward our shareholders. So we're going to continue focusing on growth.
And try to maintain that profitability. So right now we are we will meet or out.
Our products when they are more visible closer to market and not provide a multiyear product roadmap.
Alright, great. Thanks, Congrats again on a great quarter.
Thanks, guys.
Thank you.
And our next question comes from Cecilia furlong from Morgan Stanley .
Your line is now open.
Good afternoon, and thank you for taking the questions. Doug I wanted to continue just on R&D, specifically and really what you're contemplating to the back half of 'twenty two versus Q1 level.
From a hiring clinical or pipeline product focus and really how we should think about R&D investments, okay beyond 'twenty two as well.
The ramp will slow because we'll we'll continue adding heads, but not at this sort of aggressive pace.
We will start.
Got the BT K trial up now, but 2023, you will start because we're in a bit of a lull on big trials, but we will we will have our PTK trial running into 2023 and will in all likelihood to have.
Have a coronary trial that will spool up into 'twenty three so you'll have a bit more clinical expense and then as some of our more advanced.
New product development activities started in the pit. The clinic then it will start shifting into also augmenting with.
With pre approval studies.
And that'll be probably plural into 'twenty three 'twenty four preapproval studies.
Some will be feasibility and some will be sort of pivotal preapproval studies.
Yes.
And in terms of the sort of what people think of as R&D sort of people designing and building new products that that spend is not likely to change as a.
If you do a run rate after Q4, because it will just keep churning through we'll keep churning through.
Sort of one a team will finish one project and those they'll roll on to the next project and so that'll be a.
A modest increase in spend uptick after Q4.
Okay, and if I could follow up just quickly on Japan, but how you are thinking right now from a timeline perspective around bringing peripheral product into the region and thank you.
Sure Hi, Cecilia.
We are working right now.
With our team our team in Japan is working with our consultants and starting to have conversations with regulators on what.
The appropriate trial is and to get our product our peripheral products approved in Japan. So I don't have timelines, yet, but they started to turn and turn the crank on that early this year. So hopefully we'll have more clarity on that.
As we exited the year.
Thank you for taking the questions.
And thank you.
And our next question comes from Michael Poll Arc with Wolfe Research.
Good day minus now we're taking that.
Hey, good afternoon. Thank you just in Japan, as we peer out to 'twenty three 'twenty four.
Trying to make sure I have the inputs in the ballpark 250000, PCI as we know our calcification rates are probably similar in high this.
Adoption, there whats the ASP for coronary in Japan give or take relative to the U S.
Can you frame that up so we can kind of <unk>.
Consider Japan, and we're not only drilling 24 better yes.
So we're still negotiating.
With.
The MH LW on the reimbursement.
<unk>, let's say.
It's an ongoing process it could be.
And a reasonably wide range of where it might land so prefer not to comment now, but once once we have the reimbursement decision.
That will drive ASB roughly.
Yes.
<unk>.
Close to the reimbursed amount.
So you're just going to say.
Japan uses atherectomy at a slightly higher rates in the U S, which is at a two X the rate of Europe .
So it'll be interesting to see as that is.
Is that.
In part because they've they do use they do use imaging so they see more.
And and you've got a decent chunk of hospitals, who don't have atherectomy because they don't have surgical backup so it's.
And yet they do use either so.
It strikes us as a really interesting alignment of clinical practice and.
And our product.
Capabilities.
So we're we're excited about Japan, obviously.
If I can ask one more just on the a fine point on coronary center activation in the U S. I'm trying to attract at quarter to quarter here as you ramp towards.
Close to full market penetration in the U S is it fair to say that new accounts activated in the first quarter given the lingering Omi crown challenges were de Minimis.
That the focus for the rest of the year, we'll be bringing on board.
That one quarter of accounts that you haven't opened yet basically had you at the end of the fourth quarter give or take at 1100 accounts.
You know I'm just curious what the what the first quarter kind of ended at and then so I can build the rest of the year.
In a reasonable way. Thank you so much.
I was just grabbing the sum.
A rough feedback, but I'd say.
To answer part of your question of what's the focus.
I mean, where we are as the as the launch has progressed we've already migrated towards a.
A stronger blend of better penetration.
Of existing accounts with us.
The addition of new accounts, obviously a few.
If you've got.
A territory, where you are in 50% of your target accounts, you might spend a little more time trying to pick up new accounts, if you're in a territory that is.
You've been there from day one.
You're at 90% in your territory Youre going to be already shifted very heavily towards getting more and more physicians at each center using the device.
And.
And getting more utilization amongst the physicians, who do use the device already.
And and we added so we.
It was a slower quarter for adding new accounts for coronary mostly because there is fewer accounts to add so you've kind of seen where government statistics last year. You saw the number of accounts per territory heads in the quarter going down progressively.
Still going down, but we did.
We did a pretty good job of bringing on new accounts.
Even with the January .
So we're pleased with the with.
The account growth we had in the quarter.
Getting harder to do we used to do in our count per territory per quarter, and we keep adding more territories, so that it's getting harder.
At it's like where do you where do you draw the line at the beginning of the quarter number of account territory has ended the quarter number of accounts and so.
That was that was one of the reasons, we shifted to the ASIC shifted to the percent of targets metric versus the accounts per territory per quarter metric.
Thank you so much.
And thank you.
And I'm showing no further questions I would now like to turn the call back over to Doug Godshall for closing remarks.
Thanks, very much and thanks, everybody for joining us today.
Sure.
I appreciate the interest and attention.
And certainly look forward to catching up with you over the coming weeks.
Have a good rest of your evening and take care.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
Yeah.
Okay.
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