Q4 2021 Shockwave Medical Inc Earnings Call
[music].
Okay.
Good afternoon, and welcome to the Shockwaves fourth quarter and year end 2021 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 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 <unk>.
Wait.
Introductory comments.
Thank you all for participating in today's call joining me today from Shockwave medical or Doug Godshall, President and Chief Executive Officer.
Zacharias, Chief Commercial Officer, Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter and year ended December 31 2021.
A copy of the press release is available on <unk> website.
Before we begin 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 the expectations or predictions of future events results and 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 are based upon our current estimates of various assumptions. Please.
These statements involve material risks and uncertainties, including the impact of the COVID-19 pandemic that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place any undue reliance on these statements for a list and description of the risks and uncertainties associated with our business. 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 only as of the live broadcast today February 17, 2022, and with that I'll turn the call over to Doug.
Thanks, Debbie good.
Good afternoon, everyone and thank you for taking the time to join US to review shockwaves results for the fourth quarter and full year of 2021.
The past year has been full of ups and downs for all of us, but the Shockwave team has persisted through the many challenges as we continue to pursue our mission to improve outcomes for patients with calcified vascular disease.
We achieved quarterly revenue of $84 2 million in the fourth quarter of 2021, which was 271% above the fourth quarter of 2020.
And annual revenue of $237 1 million in 2021, an increase of 250% above the full year 2020.
Our strong global growth confirms how significant the clinical need has been for a better calcium treatment and.
How well our team is hitting the mark with IBM.
Despite the ongoing impact of Covid Delta transitioned into omicron, our business and our team continued to outperform our expectations.
Isaac will touch on more specifics in a moment, but at a high level, while coronary led the quarter. Once again, we also saw a nice uptick from the third quarter in both our international business.
Our U S peripheral franchises.
2022 shaping up to be another strong year for the company with three main drivers.
Continued coronary growth as we add new accounts and better penetrate existing accounts.
Accelerated peripheral growth due to the combination of the upcoming launch of our <unk> plus catheter and the improved peripheral reimbursement for our above the knee codes and <unk>.
Continued strengthening of our international business led by a full year's benefit of the transition from distributor to direct sales in France and the UK.
Well Amazon will be a downdraft on the first quarter for Shockwave and most of Med Tech we have high hopes for the post first quarter recovery and as a result.
We expect our full year 2022 revenue to fall in the range of $405 million to $425 million representing growth of 71% to 79% from 2021.
To provide more color on the commercial front I will now turn the call over to Isaac then Dan and I will share more detail on the broader business and financial results.
Thank you Doug despite the increased number of Covid cases in the latter part of Q4 are keeping up great numbers to finish out 2021 U.
U S coronary sales continued to be strong as we near the anniversary of that March further our U S peripheral and our international businesses reported strong sequential and year on year growth.
With these solid numbers it is hard for us to parse out the specific impact that COVID-19 had on our Q4 business.
That said, we did start to see an increasing number of restrictions on elective procedures and staffing issues as we exited the year.
This has continued in Q1 with staffing shortages, causing postponement of cases, keeping one electric procedures are not being restricted by the hospital.
On balance the situation seems to be getting better globally as Q1 progresses.
In the absence of a new strain or some unforeseen situation. We remain cautiously optimistic that there will not be significant COVID-19 related disruptions to our business for the balance of 2022.
We continue to be pleased with the performance of our U S sales team and their ability to service customers effectively with the peripheral and coronary products in one bag as.
As expected more accounts are using both coronary and peripheral as customers increasingly adopt ABL for a variety of indications.
In the fourth quarter, 58% of our U S accounts purchased both coronary and peripheral products.
20% purchased on the coronary and 22% purchased only peripheral.
Our goal remains to eventually have all of our customers using both coronary and peripheral IBM.
I think you are not some of the U S coronary metrics from the fourth quarter.
Two reorders represented 83% of the quarterly revenue continuing the solid trend we have seen throughout the year and we expect this to keep growing as the number of new accounts decreases throughout the year.
While U S. Coronary growth was driven by launched accounts new account openings were strong in Q4 as we added an average of one new coronary accounts per territory per month.
This number has trended downward as expected as we continue to steadily penetrate that total account base and selectively add new territories.
We will continue adding accounts throughout 2022, while at the same time, increasing C to use within our existing customer base.
Our initial order quantity continues to average five units per new account we.
And we don't expect this to change for the accounts that will launch this year.
The team delivered solid growth in the peripheral products in the quarter. As you are aware. This is a hospital based business for us and the solid performance in the quarter is a reasonable indicator that despite the challenges our customers have with COVID-19 and staffing they will see the value in treating heavily concentrated regions with IBM.
In the fourth quarter nearly half of our U S territory managers sold more than $1 billion of IPL product.
This is a testament to their ability to deliver on both the coronary and peripheral sides of the business we.
We don't have a target number for how large a territory should be in terms of sales, but we are pleased with the growth we have seen and expect this will continue to grow.
Turning to the international business, where we're selling products in almost 60 countries. We saw healthy sales growth as the team finished the year strong.
Our international team expanded from 19% to 40 people in 2021, as we continue to add to our sales and marketing teams.
We now have employees based in 11 countries, including Japan, India and across Europe .
The global presence of Shockwave employees helps us stay close to our customers and make sure. We are able we are being responsive to their feedback and needs.
The team also worked closely with our distribution partners and we are pleased with that side of the business.
Q4 was the first full quarter of direct sales in the UK and France.
Our engagement with customers had an immediate impact, resulting in new accounts and increasing penetration in existing accounts.
Revenue from the UK in France in the fourth quarter increased 90% compared to the fourth quarter of 2022.
This increased 63% was attributable attributable to increased unit volume.
Our direct team was also able to focus more on the peripheral business in those countries and we expect to see solid growth for peripheral IVF, albeit off a small base.
Turning to Asia, we remain on track to receive <unk> approval for <unk> in Japan in late Q1. Early Q2 2022, we expect to have reimbursement in place in Q4 at which time, we will begin launching <unk> in Japan.
We have also begun working with Kols and the <unk> on our strategy to bring our peripheral products to the Japanese market.
In China, we have made excellent progress with our joint venture and now expect to have approval for the Shockwave important coronary and peripheral catheters later this year.
Finally, we are pleased to have started enrollment in a 1000 patient post market registry for our <unk> product in India.
Together with our distribution partner in India, we will gather high quality data and what will be the biggest real world registry for coronary IBM.
In closing I'd like to thank our global commercial team and distribution partners for another strong year as it continued to bring IV out to more customers, while dealing with the day to day challenges from Covid.
Doug.
Thanks Isaac.
I'll now touch on some other updates and highlights for the Shockwave business in 2021.
Our success in securing reimbursement for both peripheral and coronary applications where of course some of our more important accomplishments in 2021.
On the coronary side, we're pleased to be granted a new technology add on payment or <unk> for coronary IV outperforming the hospital inpatient setting as well as a transitional pass through code for coronary IBM in the outpatient setting.
And then in November we had a big win for our peripheral business when the centers for Medicare and Medicaid services or CMS.
Reassign the payment for peripheral IV all procedures performed on above the knee arteries in the hospital outpatient setting.
This rule, which became effective January one 2022 increases payment that hospitals received when IV Ellis performed by itself or Doug do you believe with drug coated balloons, stents or atherectomy and iliac femoral and public key loggers.
Above the knee procedures are the large majority of peripheral cases and ICL procedures in hospitals are now paid on parity with atherectomy, which puts us on a level economic playing field for the first time.
This uplift in payment was certainly excellent news and we anticipate that we'll have a progressive positive impact on our above the knee business over time.
Also in the peripheral front, we are increasingly enthusiastic about the upcoming launch of <unk> plus we.
We had briefly describe this new product a few months back when we were commencing our limited market release, so as a reminder.
Compared to EB, five and five plus has three meaningful upgrades.
First <unk>.
<unk> plus has a longer catheter shafts, which enables it to reach below the knee when using a femoral access.
Or to reach the Gilead and common femoral artery from the radial approach.
Second.
The plus version also comes in an eight millimeter diameter size, a large percentage of iliac arteries are eight millimeters. So having this larger size will help us further strengthen both our symptomatic iliac procedures as well as the large bore access segment of our business.
And third.
The feature that is resonating most in our limited limited release is the doubling of the pulse rate sort of a double tap.
Instead of taking 30 seconds to complete a cycle. It will now take 15 seconds with Empire plus.
One physician told me a couple of weeks ago that he refuses to go back to <unk> slow he only wants to use up fast.
Customers have responded to all of these upgrades even more positively than we had anticipated.
Our plan is now to switch from a limited release to a full launch of Empire plus globally in the second quarter of this year.
Yeah.
As the pioneers of Intravascular lithotripsy, we're constantly receiving feedback about what features and designs. Our customers are looking for and we incorporate that into what is becoming an increasingly substantial product pipeline.
The extremely positive initial response, our customers customers have had to implied plus suggest that our team is doing a very good job of hearing what enhanced features our customers want.
We have not describe our portfolio in detail, but we are targeting two launches each year with a blend of meaningful performance and feature upgrades such as within five plus.
As well as new configurations and designs that will expand the addressable patient population of our customers are able to treat.
By 2025.
We expect to have at least six different designs that our customers will be able to plug into our generator.
And everything we will be selling then will be different and better than what we are selling today.
Being first has its advantages.
To ensure we have the capacity to execute on a steady stream of products on our to do list.
We are well on our way towards more than doubling our R&D team from 40 talented individuals at the beginning of last year to what will likely be more than 100 by the end of this year.
And as our pipeline has advanced so has our portfolio of intellectual property.
We've continued to expand our patent estate, including continuation is related to the two patents that were recently and validated.
Notably the patent office issued these continuations after reviewing all the materials from the IPR process, which we included with the submission.
There are many other apparatus and method claims in our portfolio of over 50 U S and over 70 patents.
<unk> breadth of which gives us confidence that we have a very formidable patent position that is more than sufficient to protect our technology.
We won't win just because we have a substantial patent estate, but we certainly won't lose because of their patents either.
Of course, we're constantly trying to stay one step ahead, serving our customers better than anyone else, creating unique new products would that while them.
Strengthen our patent portfolio as we innovate.
We are also continuing to advance the science around Ivy Hill.
Which has supported the expansion of calcium modification, both in the peripheral and coronary vessels.
We had multiple very impactful clinical presentations and publications over the quarter.
In October at TCT.
One year results from the disrupt CAD III clinical study of coronary ABL were presented for the first time and were subsequently published demonstrating the consistency of chocolate coronary IVF outcomes over time across a wide spectrum of calcium morphologies and between genders.
Then earlier this month results from the gender analysis of CAD three were highlighted in the new expert consensus statement in the journal of the society for cardiovascular angiography and interventions or sky.
The consensus opinion was that due to the strength of the results IVF may emerge as the first line therapy for plaque modification in women.
This was quite humbling coming from such an influential group.
Also in October at the Viva 21 conference presentation of an interim analysis of our direct disrupt pad III observational arm.
Confirm that IVF safely effectively and consistently modifies calcium and complex calcified lesions across multiple peripheral vessel beds with a low need for bailout stenting.
Even in these very complex real world cases.
And in November we enrolled the first patient in our disrupt PTK two global post market study that is designed to assess the long term benefit of peripheral ABL.
On the most challenging calcified below the knee lesions.
2021 was clearly an exceptional year for the company on the commercial front.
And things are lining up to make 2022, another excellent growth here.
But none of this would've been possible without the stellar execution of our broader operational team.
In the middle of Covid waves supply chain chaos, and nearly quadrupling of our sales in a single year, we never had a hint of a backward or quality issue.
That's pretty rare and our team deserves an immense amount of credit for staying focused on doing everything they could for our customer and their patients.
Commercially we will be in over 1500 U S. Cath labs in the very near future, which means we will have successfully navigated our way through 2500 Vac committees.
No small feat.
On top of that we opened it opened a new clean room at least the new building. So we could double our R&D lab started shipping <unk> catheters from our contract manufacturing partner and past multiple audits, including <unk> and <unk>.
Rather remarkable that the team pulled that all pulled all that off without a hitch.
With that I will turn the call to Dan.
Thank you Doug good afternoon, everyone Shockwave Medical's revenue for the fourth quarter ended December 31, 2021 was $84 2 million or.
271% increase from $22 7 million in the fourth quarter of 2020.
U S revenue was $69 6 million in the fourth quarter of 2021 growing 449% from $12 $7 million in the fourth quarter of 2020.
The increase included $57 million from the coronary product Shockwave <unk>, which was launched in the U S. In February of 2021.
Both in the U S was also enhanced by continued sales force expansion.
International revenue was $14 6 million in the fourth quarter of 2021.
Presenting a 45% increase from $10 billion in the fourth.
Quarter of 2020.
The increase in international revenue over the prior year reflects continued growth in customer demand and the expansion of our direct sales force in Europe .
Looking at our product lines, our peripheral products sharp sharp with Empire and shock with S. Four accounted for $21 4 million of total revenue in the fourth quarter of 2021 compared to $14 1 million in the fourth quarter of 2020.
52% increase.
Our coronary product Shockwave situ accounted for $62 $3 million of total revenue in the fourth quarter of 2021.
Compared to $8 2 million in the fourth quarter of 2020, representing 661% increase.
In addition, the sales of generators contributed $5 million in revenue in the fourth quarter of 2021, which is the same as the fourth quarter of 2020.
Gross profit for the fourth quarter of 2021 were $71 5 billion.
Compared to $16 2 million.
In the fourth quarter of 2020.
Gross margin for the fourth quarter of 2021 was 85% as compared to 72% in the fourth quarter of 2020.
<unk> gross margin was partly driven by.
Product mix as well as continued improvement in productivity and process efficiencies.
Total operating expenses for the fourth quarter of 2021 were $57 5 million.
79% increase from $32 1 million in the fourth quarter of 2020.
Sales and marketing expenses for the fourth quarter of 2021 were $33 2 million compared.
Compared to $16 4 million in the fourth quarter of 2020 the.
The increase was primarily driven by sales force expansion.
R&D expenses for the fourth quarter of 2021 were $14 7 million compared to $9 million in the fourth quarter of 2020 the.
The increase is primarily driven by head count growth.
General and administrative expenses for the fourth quarter of 2021 were $9 $6 billion.
Compared to $6 $6 billion in the fourth quarter of 2020.
The increase was primarily driven by higher head count to support the growth of the business.
Net income for the fourth quarter of 2021 was $12 9 million.
Compared to a net loss of $15 $9 million in the fourth quarter of 2020.
Basic net income per share for the period was 32, 7%.
Diluted net income per share for the period was 34.
We ended the fourth quarter of 2021 with $201 million in cash cash equivalents and short term investments.
Finally, I'd like to briefly recap some highlights from our full year 2021 results.
Total Shockwave revenue for the full year 2021 was $237 1 million, an increase of 250% compared to full year 2020 revenues of $67 8 million.
Revenues from the U S for the full year 2021 was $186 3 million.
402% increase over 2020 revenue of $37 1 million.
International revenue was $50 8 million for the full year 2021, compared to $30 7 million.
In 2020, representing a 66% increase.
Gross margin for the full year 2021 was 83% compared to 69% in 2020.
Total operating expenses were $196 6 million in 2021, an increase of 75% compared to operating expenses of about $112 $5 million in 2020.
Total net loss for the full year 2021 was $9 1 million compared to a net loss of $65 $7 million in 2020 at this point I'd like to turn the call back to Doug for closing comments.
Thanks, Dan.
As I look back at what our team accomplished in 2021. The list is both long and impressive, particularly given the extraordinary challenges that have faced all of us for the past two years.
It is such a privilege to be part of this team and to be associated with such a game changing technology.
Thank you all for joining us today and for your continued support.
Ladies and gentlemen, if you have a question or comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.
Our first question comes from Adam <unk> with Piper Sandler.
Great. Thanks, so much guys for taking the questions and congratulations on a fantastic finish to a great year.
Wanted to start with the full year guidance that you provided and just drill down there a little bit.
Love to get some additional color by segment.
I think if I heard correctly I think you made the comment Doug that ATK.
Or im sorry, peripheral growth rather should accelerate next year did I hear that right behind the reimbursement change. So maybe just talk a little bit about peripheral versus coronary and then also kind of how you are contemplating.
Additional items like any potential staffing our capacity issues and.
Broader peso.
Procedure volume recovery, and then I had a follow up thanks.
Yes.
Thanks, Adam.
<unk> on this.
So the.
We think the combination of <unk>, plus and improved reimbursement.
Along with the expansion of our our staffing in the field and.
Of maturation of the launch on coronary.
<unk>.
Factors that harder towards a an acceleration in peripheral growth this year in the U S.
The response to <unk> plus has been frankly.
Frankly, a more positive we were excited about the product and we're more excited about it now.
After seeing how much or how positively our customers respond to it.
Above the knee.
Uplift in payment, which is tremendous for us.
We think is likely to be a.
Steadier multi quarter positive impact.
We saw it in the field.
<unk>.
A week, we can have in the field visiting with customers.
It doesn't sink in right away with them.
Particular physicians.
<unk>.
We essentially doubled the payment level or the hospital's payment level has just doubled for.
For the standard Shockwave as a standalone procedure.
And to some extent that's really a positive we wanted to have a.
A.
Steady.
Incremental impact over time, not like a light switch that happens one week and then is behind them.
So I think in that area, it's going to take a little bit longer to sort of remind folks regularly make sure. The physicians and administrators are all aware of the.
The fact that the Shockwave is.
<unk> is now actually both incredibly positive clinically, but now positive economically as well for.
For the center.
In terms of staffing.
I think maybe I wanted to just talk a little bit philosophically how are you thinking about the field.
Yes, I think.
It should be a very positive year for the peripheral business, particularly above the knee with the product launch and reimbursement change as Doug said, and we expect that momentum to build throughout the year.
The comps.
21 were a little off and places due to heavier COVID-19 impact in 'twenty.
And then we will as we got if youre looking at 'twenty two at least what we're seeing so far is.
Staffing shortages and that's a global phenomenon.
And <unk>.
Likely though we think those cases there'll be there.
When when staffing is there and so there might be a little shift back and forth, but I think early in the year here, we've seen staffing shortages coupled with.
Omicron, causing some some.
Challenges coming into the year, but it looks to be getting better I think and I'd say, that's true on a global perspective with <unk>.
A major country standpoint, with Germany, maybe being a little behind the curve still in terms of where they're at with Covid sweeping through.
Yes.
I'm not sure about yet at least in my.
For a small sample size in the field.
The centers I was in was lamenting.
How incredibly sick their peripheral patients where that were coming in sort of biased more severe which which may accrue to our benefit since we treat the more severe stuff.
But these are patients who had been kept out of the hospital longer than they should have so by the time. They came in they went from leg.
<unk> pain to open wounds.
And much more severe disease, so that may be one of the things we see is a.
As a tendency over the next quarter or so as youre catching up on cases, you may get the sicker people, who were once again being kept out of the hospital because of Covid restrictions.
Staffing shortages.
Okay got it that's very helpful. Fulsome response, and maybe I'll just pivot to the second question.
And it's on the pipeline.
I think Doug you talked about adding six different catheter designs that you can plug into the generator by 2025.
If I heard you right.
I know youre being close to the best year intentionally but.
Wondering if youre willing to at least say if these are going to kind of be in the same areas, where you're already playing in that being coronary and peripheral artery disease or if you anticipate you'll be playing in.
Jason markets.
By that time as well just any additional color. There that you are willing to provide would be great. Thanks, so much for taking the questions.
Yes commercially by 2025, I would expect it will be in the peripheral and coronary segments longer term.
TBD.
And I would just say, Adam and importantly to be clear.
They won't be interchangeable products for instance, it won't be two products that could or you could use either or in a specific vessel or clinical situations there'll be six distinct products.
Distinct applications distinct indications.
Okay understood. Thanks again.
Yes.
Our next question comes from Larry <unk> with Wells Fargo.
Good afternoon, Thanks for taking the question and I'll Echo Adams.
Congratulations that's pretty remarkable.
Year for you guys.
So.
Doug I wanted to start on international.
Is there any revenue in the 2022 guide for Japan and China.
I thought that was a new update that you slipped in there.
Got it.
Correct me, if I'm wrong, but that you would have approval for peripheral and coronary of the imported product by the end of this year.
Can you confirm if that's.
The timings move forward and how you see that opportunity and I had a follow up.
Yes, so working backwards, China, good catch we did pull it in a year or two because we had up until today, we had been saying 2023 2024.
So our team in concert with Genesis is done.
A really good job, it's still a little bit unclear exactly when this year it will be.
Be approved.
Like any regulatory body.
It's a little bit murky in China or.
Hard to hard to pin down with precision.
At.
<unk> on the other hand, we feel pretty.
Pretty confident that.
Best case end of March.
Sort of less best case, maybe sometime in may so sometime in the next few months.
We have we have a high degree of confidence that we will be approved.
But two.
Really get any commercial traction in Japan, Japan that would be worth.
Changing our numbers for you really need reimbursement and we won't have any and we will not have reimbursement until the end of the year.
So once approved will <unk> to get to.
To figure out what the reimbursement level will be and then we'll be able to start fully commercializing.
Essentially in 2023.
So Larry the guidance contemplates.
Small amount of revenue contribution from Japan, and China This year.
As Doug said uncertainty on timing in China, and just blocker.
Blocking and tackling timeline in Japan to get reimbursement in that launch.
Got it thanks for that.
Just one for Dan and then.
On for Doug just Dan on the P&L, how should we think about operating margin in 'twenty, two and Doug obviously, there's a lot of noise this quarter on competition maybe.
Maybe just a little bit more color on how you protect your first mover advantage and when do you expect competition in Europe .
The U S. Thanks for taking the questions guys.
Sure.
We're going to continue to invest in the business as Doug alluded to we're going to invest heavily in R&D and we're excited about that.
With that said, we're still expecting to get some more leverage out of the business as the year moves on.
Given the revenue ramp so things are there.
Trend is good.
For this year and into next year I would say.
In terms of.
<unk>.
Potential competition in the future.
As you and I had talked to and we've talked about publicly we anticipated.
Given the extremely positive response, we've had from our customers that we would we would have competition as soon as 2024, so nothing's really changed from our perspective other than people, who have stated publicly that they intend to compete.
While we are extremely bullish about our patent portfolio and the electro hydraulic lithotripsy arena.
And we will certainly assert that against anybody who tries to copy what were doing.
We are.
By no means sort of sitting back and waiting and intending to win through litigation.
Sort of full of strategy and that doesn't do anything to make things better for our customers. So.
I think what you heard today was.
A.
More public commentary on how an hour.
How intensely we've been approaching our product development activities, because we think hiring the best engineers is as important as hiring the best salespeople and in some ways more important because they are the ones who create these great problem solving technologies to feed the sales team.
And.
And we've we've.
We have more than double the number of projects in our product pipeline over the past 12 months and.
And we're quite bullish based on the feedback we've been getting from from customers, who have been sort of helping us think through what we ought to be prioritizing.
So where we intend to win by innovating and creating better products for our customers and and we think it will be helpful that if and when competition shows up we.
We'll have multiple things to plug into our generator that will be better than what we're selling today so whatever products.
People think they're going to be competing with it will probably be actually different in what they will be competing with them when they do try to enter the market.
Thank you very much.
Our next question comes from Bill <unk> with Canaccord.
Okay, great. Thanks, good evening.
First of all congratulations I don't think I've ever seen a company outperformed initial expectations by over $100 million.
In a year at this size so that's pretty impressive in my career.
Yes.
My questions are first.
In terms of guidance, how should we think of first quarter 'twenty two.
Given the commentary as it relates to the fourth quarter I mean, I think last year, you were up 40% sequentially I don't think thats realistic.
But because of the <unk> launch, but I was just wondering if you could help us understand that.
Second question is <unk> as a percent of U S sales and then just a broader question on.
What.
In terms of the usage today, how much of the uses in severely calcified lesions and what what do you think percentage you are starting to you see in moderate calcified lesions.
Yeah.
So thanks.
Thanks by the way for the.
<unk>.
Kind words.
The <unk>.
First quarter is it going to be an interesting one.
I was talking to a dock.
Of the top <unk> centers in January they would have expected to do.
Like 60% or 70 <unk> than they did three.
That's sort of more severe downdraft, then than we've seen in our business, but but it's representative of how severely some hospital shutdown procedures, because if they shutdown taverns theyre certainly shut down shutting down like procedures and a lot of the coronary.
So.
So that was loosening up end of end of January even in the most severely shut down but it's a little earlier for us to say.
With certainty that there is going to be.
How much of a catch up there will be in March because you also have the staffing constraints that prevent you from an overshoot. So we think all those old cases will get cleaned out it's just going to be cleaned out.
Overtime.
So so you are you are right to assume that the kind of quarter on quarter growth that we saw a year ago. When we had the product launch.
<unk> is not achievable given.
In fact, we had a product launch in the middle there and we have the Covid downdraft in the first six ish weeks of the quarter as we're anticipating will be.
So so as you're as you're modeling I think probably modeling the whole sector.
Really what our model.
The lighter Q1 than you otherwise would have had it not been for omicron, because I think omicron affected Q1 more than it affected Q4, probably.
In terms of <unk> fives roll in our U S peripheral business.
It's most of it and we have a.
We have a nice SVR business don't want to lose it and five is the business.
And large.
It's the preponderance of our U S and even more so it's the preponderance of our global business. So the fact that we're launching and flat plus globally is going to be a meaningful upgrade for all of our peripheral customers end and probably for future as yet not converted peripheral customers.
In terms of the mix of severe and moderate.
Yeah.
Most.
So.
Less than 10% of the docs in the U S do intravascular imaging and the only way to really quantify how much calcium as there is has to do ibis or OTT if.
If you look at.
And X Ray image of Florida image.
They say to look at whether you see calcium on both sides of the vessels. So you see this looked at looks like rails. So these white lines outside of the on the sides of the vessel and that tells you if you have severe calcium or not.
Kind of subjective yes, youre looking at an image, but it's not like you take a blood test and say Oh, Doug has severe and Isaac as mild.
<unk>.
Its unknowable what percent of our cases are critical moderate now certainly.
We are treating moderate patients where our customers are treating moderate patients because they probably put a inflated balloon it doesn't inflate well and they stop and they put it in Shockwave and it works really well so.
<unk>.
I don't know if it will ever know what percent is severe and what percent is moderate.
I think it's almost all of our cases are cases, where the doctor has either failed something else or so sure theyre going to feel something else that they've shockwave and so it's severe enough.
The way I would look at it.
Okay, and then when we think of the BT K disrupt PTK.
Two study.
What can <unk> replace mechanical atherectomy devices in but when will also atherectomy still be needed and if you kind of look at the cases I know, we've seen 5% penetration I think it's something like that with atherectomy today, especially be teekay, but maybe it's higher but.
What do you think you could displace there. That's my question. Thank you.
Yes, Bill Thanks for the question.
<unk>.
I think like we see like we've talked about.
Ultimately I think view atherectomy is a complementary technology, whether that's below the knee above the knee or in the coronary.
When you get below the knee I think there is.
Larger larger Lumens again, where you can get you can get a balloon and an IV all balloon.
These tend to have I think where you could benefit a lot from having.
Very atraumatic IVF below the knee that is not going to cause severe dissections.
And can crack.
The medial calcium and help the vessel expand ultimately I think with atherectomy.
If you've got tighter lesions you get a wire across then you can't get a balloon across and you got to open that up with atherectomy and I think a lot of times in doing that that might be definitive prep.
Prep for for the vessel and you'll follow up with a balloon or <unk>.
Maybe someday at ECB. So I don't think there is a conversion that we have I think what we're looking for is.
Demonstrating through data and with improved products that we are a good solution for a lot of below the knee calcified lesions, but not a solution that necessarily.
Yes.
Does away with atherectomy.
Yeah.
Thank you.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone. Our next question comes from Cecilia furlong with Morgan Stanley .
Great. Thank you for taking the questions and I'll Echo everyone else's congrats on another strong execution quarter for the team.
I wanted to ask just on coronary.
With <unk> now in place what have you seen from an inpatient outpatient procedure volume mix and as you look beyond the COVID-19 impacted type of environment, where do you see this going longer term.
We don't have we don't.
Data on the macro.
Coronary inpatient outpatient mix outside of Shockwave, and probably won't for another I don't know year, because it usually takes a little while for that all to get collected and in our own cases.
We kind of don't care.
So we don't care the Doctor often doesn't know am I going to keep the patient overnight not to keep the patient overnight its not really part of our conversation we may meet with the well we do meet with.
The administrative folks at the hospital, who do the coding to make sure that they know how to code and tap and how to code code transitional pass through.
I think I think the effect that both transitional pass through in July and then tap in November had was that the.
And predominantly it was win win trends as pass through came through.
Drastically dramatically reduced the economic anxiety that Cath lab directors and physicians had when using shockwave.
Prior to that.
Certainly, we couldnt get through some vac committees and pricing and cost was a constant constant topic, because we did not have an incremental payment on top of the standard PCI payment levels.
And while there is still a conversation about price and budgets and the like the fact that we can have add on payments, we have something to address that that economic anxiety, which we didn't have before before.
July so I don't.
What's what's quite evident to me and maybe Isaac will have some something to correct me, but I don't think anybody said, Oh, well now that you have and tap I'm going to do more inpatient procedures.
I think they are now able to treat that patient in any way they see fit and if they see if they think the best way to treat a patient with <unk> with Shockwave.
They don't they.
They don't feel guilty using shockwave, where they don't have to be reluctant to use shockwave, which is which they probably would have been.
Particularly over time, if we did not get.
Extra payments it probably would've they probably would have been under more pressure from the administration, which which now they they should be under less pressure.
I think thats right, Doug I think fee.
With where the payments are at now in the transitional pass through an untapped. There is no kind of overhang either way on what the physician does and what the patient needs.
For treatment I do think if you think about it from a patient physician perspective, if you're going in for an elective PCI, let's say in a position. Thank you should be able to go home that day.
In an outpatient procedure the best thing for that patient and a physician is that the patient gets out of the hospital and goes home.
And.
What really I think the way we think about it from.
Ibs standpoint is a safe procedure it doesn't it doesn't create complications.
During the procedure.
So more likely than not at that if that patient was intended to go home.
Make sure that patient goes home that day, which is a great thing.
Okay. Thank you and then if I could ask a few questions just on your international business as well.
Thinking about U K and France contributions to international sales in 2022, when you contemplated in your guidance just Directionally and then looking to 2023 as well how you view the ramp in Japan versus China, just any comments.
On a relative basis, how you view those two markets ramping beginning really in 2023 and thank you.
Yes sure so.
But the dynamic in the UK and France is a bit different because in the U K, we had a sales agent.
That was where we recognize the revenues that were sold that at kind of full asps.
So as we as we switch to a.
Direct sales team the benefit in the U K will be volume and that'll be predominantly I think.
Near term volume on coronary, whereas they get.
More.
<unk> in the existing accounts because there is some more focus on the product and there is more focus on teaching physicians more physicians.
And longer term on peripheral as the team will actually focus on.
Using IV L for pre tab of using IV Alpha <unk> in an appropriate peripheral situations in France.
We benefit to full benefit right. There is the ASP uplift you get because we walked from a distributor margin too.
Direct sale and on the phone and then you get the same focus benefit we're going to get in the UK and I think based on how things were going between the UK and France Theres more upside in France.
On on volume as well because it was relative to the U K lower penetration.
IDL and.
In coronary and.
And again, almost very little penetration of IV on peripheral so I think as we as we look at 'twenty two we'll get good contribution year on year from.
From UK, and France, there'll be a volume and ASP contribution.
And that won't be done in 'twenty. Two there is a lot a lot of opportunity there and I'm really proud and impressed with the team.
Just coming out of the gate strong.
Their ability to start driving activity and an awareness of IV all beyond where it was.
And then in terms of 'twenty three for Asia.
We're certainly we have our internal modeling.
That we have a range of possible outcomes, which are also influenced by when we get approved and what are reimbursed pursuant level looks like in <unk>.
In Japan.
We see this year very much one of the key activities. This year is really to set ourselves up for Asia to become one of our growth drivers next year, we're not whatever we get this year is great, but but we want to make sure what we do this year.
Is more of an eye towards 2023 2024 significant contribution.
And.
And so where we are.
Obviously, we're not guiding to 2023, but we have given that Japan is 250000, <unk>, which is about a quarter of the U S market.
A very high percentage of imaging very very very significant reluctance to do anything that.
Causes adverse events more than really any other country that are sold into it.
Like the perfect country for Shockwave.
The fit in terms of the safety ease of use.
And identification of calcium so.
We're quite optimistic about the role that chocolate will play and in Japan and.
Last I heard China was a pretty big country with a lot of patients in the one 5 million PCI, so that should be a nice opportunity for us to yes.
Yes, maybe I'll just throw a little a little more color on that.
One thing about Japan, if you look at the CAD four dataset.
The cleanest acute 30 day data set we've seen of any of the CAD trials.
Excellent PCI operators.
It's.
Really value safety and predictability.
And they're in their practices.
<unk>.
Favorable for IV, all generally I think the other thing that our leadership team in Japan is done.
General manager at particularly has really worked closely with the society of cardiovascular Society in Japan ceded to help.
Create together with the cardiovascular leadership in Japan, how is the what is the appropriate way to roll. This product out so theres been 18 months of commercial preparation on how to roll this product out in Japan.
So I think.
We'll be ready and we'll do that in conjunction with all the <unk>.
The leadership cardiovascular leadership in Japan, and that should help.
And then one of the thing about China that one of the reasons, we'd like to JV aspect in China is.
Instead of just importing product to a distributor we're importing product to a JV and.
That helps us drive focus.
As we saw with <unk>.
The unit volume uplift in the UK and France weapon, if we can get focus through a distributor in China through a JV, which really helps us keep focus on the product I think we'll we'll do a really nice job in China relative to.
Kind of a typical distribution arrangement.
Yes.
Thank you for taking my questions.
Thanks, Joe.
And im not showing any further questions at this time, so ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a wonderful day.
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