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Spectranetics Corporation (NASDAQ:SPNC)

Q4 2008 Earnings Call

February 19, 2009 11:00 AM ET

Executives

Bruce Voss - Lippert/Heilshorn & Associates, Inc.

Emile J. Geisenheimer - Chairman, President and Chief Executive Officer

Guy A. Childs - Vice President and Chief Financial Officer

Michael Voss - Vice President and General Manager, Vascular Interventions

Jason Hein - Vice President and General Manager, Lead Management

Jonathan W. McGuire - Chief Operating Officer

Analysts

Amit Bhalla - Citigroup

Jason Mills - Canaccord Adams

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Suraj Kalia - Sanders Morris Harris

Spencer Nam - Summer Street Research

Charley Jones - Barrington Research

Beth Senko - Williams Capital

Christopher Warren - Caris & Company

Operator

Welcome to the Spectranetics Fourth Quarter 2008 Results Conference Call.

At this time, all participants are in a listen-only mode. Following management's prepared remarks, we'll hold the Q&A session. (Operator Instructions). As a reminder, this conference is being recorded, Thursday, February 19, 2009.

I would now like to turn the conference over to Mr. Bruce Voss. Please go ahead, sir.

Bruce Voss

Thank you. This is Bruce Voss with Lippert/Heilshorn & Associates. Thank you all for participating in today's call.

Joining me from Spectranetics are Chairman, President and Chief Executive Officer, Emile Geisenheimer; Chief Financial Officer, Guy Childs; Chief Operator Officer, Will McGuire; General Manager for Vascular Interventions, Mike Voss; and General Manager, Lead Management, Jason Hein.

Earlier today, Spectranetics released financial results for the quarter end year-ended December 31, 2008. If you have not received this news release or if you would like to be added to the company's distribution list, please call Lippert/Heilshorn in Los Angeles at 310-691-7100 and ask for Amy Higgens.

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. These statements involve material risks and uncertainties that could cause actual results or events to differ materially from those anticipated. For a list and description of those risks and uncertainties, please see the company's filings with the Securities and Exchange Commission.

Spectranetics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether as a result of new information, future events, or otherwise. Furthermore, this conference call contains time-sensitive information, and is accurate only as of the date of the live broadcast, February 19, 2009.

With that said, I'd like to turn the call over to Emile Geisenheimer. Emile?

Emile J. Geisenheimer

Thank you. Good morning everyone, and thank you to you for joining us today.

I will begin today's call with an overview of our fourth quarter and full year financial performance. And review of our recent accomplishments. Guy will then provide a more detailed review of our fourth quarter and full year financial results as well as our outlook for 2009. I'll then close our prepared remarks with some discussion on key initiatives for 2008, and then we'll take your questions.

As previously recorded, fourth quarter revenues totaled $26.6 million, an 11% increase over fourth quarter 2007. The growth was driven by a 14% increase in vascular interventions despite a heightened competitive environment in atherectomy, and a 9% increase in lead management revenue compared to the fourth quarter of 2007.

Pre-tax loss for the fourth quarter of 2008 was $1.1 million compared with pre-tax income of 628,000 for the fourth quarter of 2007. The pre-tax loss during the fourth quarter includes a cost of approximately $2 million associated with a federal investigation announced in September 4 of 2008.

The excluding cost for the investigation, our pre-tax income was 893,000, which represent a 42% improvement over comparable period a year ago.

For the full year, we surpassed a $100 million in revenue for the first time, posting total revenue of $104 million, which represents a 26% growth over 2007 revenues. We achieved growth in all areas of our business during 2008 led by a 36% increase in lead, management 21% increase in vascular intervention.

The pre-tax loss for the full year was $4.7 million, which represents... which included $3.8 million of in process R&D cost associated with the acquisition of the endovascular assets from Kensey Nash Corporation and $2.4 million of costs associated with federal investigation.

During the fourth quarter, we received clearance to market two new product lines for the FDA. The Quick-Cross Extreme is used by physicians to facilitate placement of guide wire across occlusions and synergies (ph) of the vascular system. This treatment also allows the wire... for wire exchanges and provides a conduit for the delivery sailing solutions and diagnostic contract agents.

The second FDA clearance was for the Cross-Pilot, a support catheter, which was developed specifically for our 0.9 laser catheter. This design to reach just lesions and the lower leg is available in both straight and angle tip configurations.

Our international subsidiary, Spectranetics International B.V. also achieved a major milestone in 2008 by attaining revenue in excess of $2 million for first time in its history. In fact, the revenue totaled $11.7 million in 2008, which is a 51% increase from the $7.7 million in 2007. This impressive growth was driven by 78% growth in vascular interventions and 40% growth in lead management.

Looking forward, we're looking forward to continued growth in 2009 from our international organization through continued geographic expansion as well as expansion with our existing direct markets.

Now, I'd like to turn it over to Guy, who can give you more detail on the quarter and the year. Guy?

Guy A. Childs

Thanks Emile.

Consistent with our January 8 announcement, revenue for the fourth quarter of '08 was $26.6 million, up 11% compared with the comparable quarter last year. Disposable product revenue grows 12% to $22 million.

Laser revenue increased 8% to $2.3 million and service and other revenue increased 8% to $2.3 million, all compared with the fourth quarter of 2007. The increase in disposable of product revenue was comprised over 14% in vascular intervention products sales and a 9% increase lead management product sales.

Vascular intervention product sales include atherectomy products, which decreased 9%, and support catheters, which increased 36% all compared to the year-ago quarter. Vascular intervention product sales also include $1.4 million of sales of aspiration and thrombectomy products we acquired from Kensey Nash Corporation in May of last year.

Net laser placements during the quarter totaled 25 unit compared with 30 net placements in the fourth quarter of 2007. The pre-tax loss for the fourth quarter of 2008, was $1.1 compared with pre-tax income of $628,000 for the fourth quarter of 2007. Pre-tax loss during the fourth quarter of '08 includes cost of approximately $2 million associated with the federal investigation.

On a geographic basis, U.S. revenue was $22.8 million and increased 8% on a year-over-year basis. Revenue outside the U.S. this quarter totaled $3.8 million, which was up 35% compared with last year's quarter. The international growth was driven primarily by growth in all product lines within vascular interventions including atherectomy support catheters and thrombectomy and aspiration catheters, which were acquired in May '08 and totaled $664,000 during the quarter.

International revenue, which includes revenue from Spectranetics International B.V. as well as revenue customers in Asia Pacific and Latin America totaled 15% of worldwide revenue during the quarter compared with 12% of worldwide revenue during the same quarter a year ago.

Gross margin was 72%, which was consistent with gross margin during the fourth quarter of last year. The pre-tax loss, as I mentioned, was $1.1 million including the $2 million of costs associated with the federal investigation during the fourth quarter. Excluding those costs, pre-tax income was 893,000, which represents a 42% improvement over the comparable period a year ago.

Now for a brief discussion on year-to-date financial results, revenue for the full year 2008 rose 26% to $104 million from 82.9 million for the full year 2007. Disposable product revenue for 2008 was $86.3 million, up 26% compared with disposable product revenue of 68.6 last year. And laser equipment revenue was up 37% to 8.6 million from 6.3 million in 2007.

Within disposable product revenue, vascular intervention and lead management product revenue increased 21% and 36% respectively compared with last year. Service and other revenue for 2008 was $9 million, up 14% compared with service and other revenue of $7.9 million in 2007.

The pre-tax loss for the full year 2008 was $4.7 million including $3.8 million of IPR&D costs recorded in connection with the acquisition of certain assets from Kensey Nash Corporation and $2.4 million of costs associated with federal investigations.

Cash, cash equivalents and investment securities totaled $36 million as of December 31st, 2008 compared with $53 million as of December 31st, 2007. The decrease of 17 million consists primarily of purchase of endovascular assets from Kensey Nash of 11.7 million. Capital expenditures of 5.1 million, and cash used from operating activities of $1.1 million, all of which was partially offset by proceeds from the exercise of stock options during the year.

Within its non-current investment securities, we currently hold 15.6 million of option rate securities backed by student loans, which reflects a temporary impairment write down of $2.1 million based on analysis performed by a third party with expertise and valuation of these securities.

Of the temporary impairment right down, 900,000 was reported during the fourth quarter in 2008. Temporary impairment has been recorded within other comprehensive loss and did not impact the calculation of earnings per share during the year.

I will close with some commentary on our outlook for 2009. Revenue growth during 2009 is anticipated in both vascular interventions and lead management product categories. The year-over-year percentage growth rate in vascular intervention's revenue is anticipated to be in a single digit range through at least the first half of 2009. We're targeting an increase in vascular intervention's growth rate in the second half of 2009, which will depend primarily on new product introductions, most notably the next generation TURBO-Booster.

The management revenue growth in 2009 on a year-over-year percentage basis is anticipated to be in the mid teens, driven by continuing favorable market dynamics and our expanded sales organization. As we continue to focus on increasing revenue in existing accounts, net laser placements are anticipated to decline from 2008 level.

Gross margin may decrease during 2009 as compared with the 72% gross margin in 2008, the primary factor to consider in accessing gross margin is the impact of lower laser placements and the related unabsorbed manufacturing variances that maybe incurred as a result of reduced unit volumes.

Cost associated with the federal investigation cannot be reliably estimated, therefore specific guidance will not be provided in this area. We do expect to incur a pre-tax loss for the full year 2009.

Our 2009 strategic initiatives are aimed at further enhancing the company's sales and marketing footprint expanding its product offering and improving sales productivity. In particular, we intend to add up to 15 individual the United States field sales organization during the first quarter. Increasing the total headcount to nearly 130, including 90 within vascular interventions and 40 in lead management.

Additionally, we anticipate adding personnel to both vascular intervention and lead management marketing to support physician training, new product launches, and other marketing programs. We intend to continue sales growth internationally by extending our geographic market reach from 34 countries currently to 40 by the end of 2009.

Additionally, we will add approximately 10 individuals to the international sales and marketing organization primarily to support our direct markets in Western Europe. We intend to increase investment in research and development to accelerate new product innovation in 2009 and beyond. We intend to focus on improving sales organization productivity as measured by increasing sales per person and sales per account.

And finally, we will further enhance our compliance programs and resources reflecting the company's commitment to high standards of regulatory compliance. We expect to incur approximately $1 million of incremental costs in this area, which will be included within SG&A on our P&L.

Now, Emile will provide some closing comments prior to taking your questions.

Emile J. Geisenheimer

Thank you, Guy. Now I'd like to provide some additional background and color to the 2009 outlook that Guy just reviewed with you.

Starting with vascular interventions, I'd first like to share how we look at that business. There are three specific product... product categories within vascular solutions, atherectomy, crossing solutions and thrombectomy. I will review our key objectives within each.

Our vascular intervention business provides products for both peripheral and coronary atherectomy. Peripheral atherectomy can be divided into below the knee and above the knee market segments. First, some quick market statistics on peripheral arterial disease. You've all likely heard that the peripheral arterial disease is prevalent in up to 10 million Americans but only approximately 2 million Americans are diagnosed. In all those diagnosed patients less than 600,000 are treated annually approximately two thirds treated with endovascular interventions and approximately a third with bypass surgery.

Based on this facts, it's clear that this disease is under diagnosed and under treated. You may recall that Spectranetics into the peripheral atherectomy market following the completion of OAC study which examine the treatment of patients with critical limb ischemia. Since that time a large number of medical device companies have entered the market to provide devices for treatment of peripheral arterial disease or PAD. Yet sadly today PAD remains an under diagnosed and under treated disease. Indeed, despite the increased availability of endovascular treatments over 150,000 amputations result from critical limb ischemia each year in the United States. More sadly perhaps less than 50% of these patients survive more than three years following the amputation and less than 50% ever reachieve mobility.

Therefore we see our biggest competitor in below the knee as non-treatment. It's unfortunate that many patients that are treated by amputation were never evaluated for endovascular therapy. Our goal is therefore to increase awareness among referring physicians so that they can send their patients to an interventional center that can treat this disease with our products in a mildly invasive way and avoid the unnecessary cost and debilitating impact of amputations.

To address the above the knee atherectomy segment, we look to our next generation TURBO-Booster. The design features of that product address the ease of use objections and we believe hurt the market acceptance of the TURBO-Booster. We anticipate market clearance for this product sometime during the second half of 2009. Further, we will emphasize to our physician customers, the very positive 12 months clinical data from the CELLO trial which strongly supports the durability of TURBO-Booster, laser atherectomy for the treatment of above the knee disease.

For coronary atherectomy, where we have seven (ph) approved indications in the United States. There is renewed increasing interest in our coronary products among our physician customers. We will support this with various training marketing programs in 2009. So, you may look forward to hearing more about coronary sales in the future.

Within costing (ph) solutions, the launch of the Quick-Cross Extreme product line is underway and we hope to launch a smaller diameter size of this product, towards the end of 2009.

For thrombectomy, we expect to receive the CE mark this year for the ThromCat XT product, which is a next generation thrombotic device acquired from Kensey Nash Corporation in 2008. In Europe, this device is anticipated to have a general vascular indication of use. In the United States, the device is currently indicated for use and dialysis access graphs and we will pursue additional indications prior to launching the next generation device in U.S.

We are currently in discussions with the FDA to accept the clinical work that will need to be done in order to obtain clearance for these additional indications.

Now turning to lead management, we expect the favorable market dynamics that we observed in 2008 to continue into 2009. Key drivers in this business include the publication of our Lexicon data later this year which, Lexicon is a retrospective study of laser lead extraction cases in 13 U.S centers. In addition, a physician group associated with the Heart Rhythm Society is reviewing the current lead extraction guidelines and we anticipated that they will be revised and discussed at this year's Heart Rhythm Society meeting in Boston in May.

In our international business, we'll continue to expand our organization despite continued geographic expansion. In addition, we'll focus on regulatory approvals in Japan, including LLD (ph) and the TURBO Elite, in Latin America for non-laser products, as well as key reimbursement initiatives in Europe for TURBO Elite in France and the SOS in Hungary for example. We've also remained focused on our profitable business model in 2009. And as we mentioned in our press release, we expect to pre-tax loss this year, largely due to cost associated with federal investigation.

However, there will be high proven commitment to establishing productivity metrics just throughout the organization and driving improvements in these metrics which will ultimately drive profitable business model.

Operator, we'll now like take any questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Your first question comes from the line of Amit Bhalla of Citi.

Amit Bhalla - Citigroup

Good morning. Emile, I appreciate your commentary that the non-treatment that is the biggest competitors in below the knee market. But, I was wondering if you can just take a step back and also comment on your thoughts on patient volumes in PAD in general, what are the trends you are seeing there? Is that market growing at that 600,000? And also talk to us a little bit about what you're so you think your current market share is in the below the knee market and how that has changed recently?

Emile Geisenheimer

Good morning Amit, good to talk to you. Good questions. There is obviously a lot of... a bit of controversy about the growth rate in the PAV market. And I think that controversy arises out of blending above the knee and below the knee.

As we see it approximately two thirds of the market is above... potential market is above the knee and about a third, below the knee. Our perception is that the market below the knee has been growing. While perhaps the market above the knee has been shrinking, and that we don't think that the above knee shrinking because of a lack of case volume. So much of it is the lack of effective treatment of alternatives above the knee.

So, this is why we're so focused on the TURBO-Booster upgraded product, because we believe it will address that market. And that combined with our six-month CELLO data, we'd hope to be the spark plug to continued growth above the knee.

I am not going to comment on market share, but I do believe that we're on a very tight competitive rates below the knee. On the other hand, I do think there is tremendous opportunity to increase the size of pie as opposed to scrapping over the sides of the slice again. So we're going to work on of course both of those things. But as you can't refer positions, it's just going to be very important strategy for us in '09.

Amit Bhalla - Citigroup

Just follow up, maybe you can just comment on the number of active accounts you have today. And I also did want to follow up and give us some more detail on what features have been new TURBO-Booster are really going to address that ease of use piece.

Michael Voss

Amit, I can handle that. This is Mike Voss. If you look at with the TURBO-Booster 2 design, really the major impact that we are making to this design is we've improved the distill end of the catheter kind of making that a little bit more supportive as you advance the wire over that proportion of the device.

We've also changed the back end, which actually is really probably the most complaints that we've had from physicians from an ease of use perspective. And we've basically changed that design dramatically to actually add a component that allows us to just be like a clicking device like a ballpoint pen. You click at once, it advance the catheter up on to the ramp and it's locked in place on that ramp. And then when you're finished doing your atherectomy, you click it again and it slides back down the ramp, and then you can remove the catheter. So the feedback that we've got from physicians so far has been extremely positive, and they cant wait to get their hands on it.

Emile Geisenheimer

One other comment is if we were able to do this and deliver the 2.0 laser catheter in a lower profile device, which requires much less manipulation by the position as a result of their design changes. So we think that the members have never been clinical objections to the TURBO-Booster. The objection there has always been how difficult it is to use because of a need to hold the proximal end of both the Booster and laser catheter and the wire and deliver sailing and manipulate the device all at the same time with this locking device just locks in place; and the doctor is good to go.

Michael Voss

Okay. And Amit, to your other part of your question about the active account; we have about approximately 450 active accounts at this time.

Amit Bhalla - Citigroup

How has that changed?

Michael Voss

Our active accounts has increased as a small percentage, but it continues to increase.

Amit Bhalla - Citigroup

Okay, thank you.

Emile Geisenheimer

One more thing on active accounts. We have sort of highlighted this before, but we also have a great number of non-laser accounts by our vascular intervention products. And we have to quantify that, but it's perhaps even larger than the size of our laser accounts in terms of numbers.

Amit Bhalla - Citigroup

Is there an opportunity to turn those accounts into actual atherectomy accounts? What's holding that back?

Michael Voss

Absolutely. That's a great point; I'm glad you brought it up. The opportunity, obviously, as you look at our strategy as we look at expanding our products that are outside, let's say, laser atherectomy, the beauty of those products are that it gives the sales rep the opportunity in each of those accounts now to talk to them about the benefits of atherectomy in general, as well as talking about specific benefits to laser atherectomy versus others. So that is another key component of our strategy going forward. And I think it gives us certainly advantage over our competitors, because we do have multiple product lines that allows us to that in the future.

Amit Bhalla - Citigroup

Thanks.

Operator

Your next question comes from the line of Jason Mills of Canaccord Adams.

Jason Mills - Canaccord Adams

Good morning everyone, thank you for taking the question. First on the vascular intervention side, perhaps Emile or Mike, what have you seen in terms of inventory at your hospital accounts? And from a hospital perspective, given what they are dealing with or philanthropic giving operating budget constraints et cetera, are we seeing inventory reductions or any change in inventory in the cath lab in your area?

Michael Voss

Yeah, Jason this is Mike. We've seen in a few of our larger accounts. At the end of the year, they talked about reducing some of their caring inventories. But overall, if you look at large majority of our accounts, we have not really seen that overall. But again some of our bigger accounts, they have discussed with us wanting to reduce their inventories again by probably like maybe 25% at some of these larger accounts.

Jason Mills - Canaccord Adams

Respected to happen more often during 2009; am I suppose it requires that you have some sort of a call on the macro, which is a bit of a slippery slope, I suppose. But perhaps you could give us your thoughts on what you expect to see in 2009. We are assuming that you are thinking conservatively?

Emile Geisenheimer

Yeah, I think we've seen less, just to clarify, we've seen less reduction of inventory of our products per say then and overall reluctance to make large purchases, while they're reducing inventory of other products. And so, its not that we've seen specific cases where they are taking our devices off the shelf. Although, there have been, I've heard some reports where there are discussions of rationalizing brands, I mean atherectomy device where having a shelf, and that becomes a little bit of a competitive battle occasionally but I don't hear that very much.

Guy Childs

And Jason just to add to that, of or funds in the fourth quarter, you'll see some accounts that what we're entering to some type whole purchasing arrangement, and to be honest with you that was slower, I think not just for us but for standing balloons (ph) alone everything across the board. That wasn't as dramatic as it maybe has been in the years past.

Jason Mills - Canaccord Adams

So that's helpful. Next question get segue into the competitive environment, as you compete in environment perhaps even more competitive, given what you just said, they do be around the bush. CSI talked about in their conference call, specifically having an advantage treating calcium, their revenue in the quarter suggested they gained quite a bit of share. Perhaps you could provide color on how you kind of look at their results which seemed on service to be very good, and how you parse that between sort of real procedures and actually staffing up new accounts might, maybe you have an insight into that? And specifically how you're addressing customer questions as it relates to their claim to have the treat calcium better? And the reason I ask this is that as obviously as you look below the knee, you do have very heavily calcified legions, you are dealing with the most difficult legions and their message seems to be resonating at least on some level, perhaps you could address that?

Emile Geisenheimer

Well. A couple of things here, a rich question, (inaudible). Overall I think the I'm pleased to hear that they're focusing at least on their call on calcium, because its our observation that that's probably the part of the marketplace that they have the greatest application. Our advantage is that we can treat from a broad variety of reclusive materials, plaque formed, minor calcium and its... when there is small highly dense focal calcium then rotational atherectomy has an advantage there as it does in coronary. But, so yes, they have an advantage there, but I think that the first device to pull off the shelf is not likely to be the one long-term that's focused on relating to performing better in calcium. Look, the competitive framework is very challenging, their company is now has more sales people than we have, they have smaller territories, they are in front of customers therefore more, then our sales per person is higher, you got to ask yourself a question, at what point does that brute force marketing stop paying off and running a business to produce a profitable results begins to be a necessity. That's hard for me to predict, like their predictions take there.

Jason Mills - Canaccord Adams

Right. Okay. That's helpful. Last question, moving sort of more to a macro in the peripheral business. Referral development has been fairly important in growing this business over the last five years yourselves, and Fraxel (ph) both did a lot of work in that area. What are your plans for spending in developing the referral channels, specifically podiatrist, as I mentioned on the CSI call in a question, it's so astounding to me and how many podiatrist you talk to that have really no idea of the improvements in the technology genre over the last few years even to this day. So, maybe Mike from your perspective being out in the field so much and what you're hearing from your reps. How do you see that trending and augmenting growth in this market over the next couple of years?

Michael Voss

Yeah, Jason, I think you're absolutely correct. I think Fraxel did a very nice job with that early on, as part of their strategy, I think certainly that's dropped off quite a bit. We did quite a bit work early on. We are going to focus on that in 2009, we're looking at working with the company, that's going to provide us a system that is kind of an advanced AVI screening system. And the whole idea is really as you start to focus on it, its sort of like the hub and spoke type of strategy where the hub is, would be like your interventional cardiologist, and certainly we know that from data that's out there that approximately 40% of your coronary patients will also have PAD as well.

So, there is the opportunity to screen those patients and bring them into their practice for the treatment of PAD, as well as obviously, focusing on the spokes which are looking at your referring physicians which are your pediatrics, you also have your wound care centers as well as your dialysis centers as well. Those are all very high volume PAD patients as well. So the focus here is really on that hub and spoke if you will. And as we start to approach those, it's going to be a lot of that is going to be based on education especially as you look at your referring physicians. Because you are absolutely right, they're used when they have a patient that has critical limb ischemia, for example, and they can't get this wound to heal. They call their surgeon and then the surgeon nine times out of ten will probably perform a, basically they go through and take that portion of the leg off. Which is not, amputation is not really where we want to go. At least they need to try an endovascular procedure first and then if you have to you can cut that out (ph).

Jason Mills - Canaccord Adams

Great. Thanks a lot guys.

Emile Geisenheimer

Thanks Jason.

Operator

Your next question comes from the line of Thomas Kouchoukos of Stifel Nicolaus.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Hi, good morning guys.

Emile Geisenheimer

Good morning.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Hey, I just wanted to couple of here, one on just looking at the Kensey Nash piece of business, it looks like a lot of that is still OUS. What... can you talk about the product mix there and how much is quick (inaudible) maybe outside the United States? And then maybe give us a sense of where that $1.4 million can trend over the next coming quarters?

Guy Childs

Sure, Tom, this is Guy. Starting with OUS, as I mentioned 1.4 million of total business in those products during the fourth quarter of that about half was OUS. And of the OUS piece, the vast majority, say, 85, 90% is the QuickCat. I am sorry, I am looking at the wrong numbers. The OUS piece is about half of the overall total and of that 66,400 OUS nearly 500,000 of that is a QuickCat with most of the rest being with the ThromCat.

The other point that I'd like to make is we did make some strides in the U.S. on those products during the quarter, we actually did post sequential growth of nearly 200,000 in the QuickCat product line, which accounts for almost all of our product sales of those thrombectomy products in United States.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Okay, that's great; thank you. And then Guy, looking back over the last couple of years, the positive part of a story of Spectranetics was that the last couple of years were kind of years of investment. And if you got to $100 million run rate, it probably get to a level of sustainable profitability. It looks in Q3, you kind of get that margin and then you ran in the FDA issues. If we exclude the FDA issues and looking ahead, it looks like this year is going to be another year of investment with new reps and R&D investment and compliant spending, where is that new run rate you need to get to get the sustainable profitability again excluding any of the FDA noise into the picture?

Guy Childs

Well, in terms of where we're at, I mean clearly the major factor that contributed in 2008 was the lack of take up our TURBO-Booster launch and certainly that interrupted our plans to leverage the business. Going forward, we believe we have the people in the new products and the opportunities ahead of us that's truly that opportunity still exists and we're even more confident in that, however, clear interruption in our progress there.

I would hesitate to make a specific commitment as to where that all shakes out due to various factors that are tough to predict at this point. I will say that we look to the possibility in the second half of returning to profitability excluding investigation costs. It's likely that during the first half of the year that excluding investigation costs, we may in a loss position. But hopefully, that will turn back to profits ex-investigation costs in the second half.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Okay, great. And then one more just kind of follow up on that: with respect to R&D, how much of a pickup are you looking for in terms of investment and then aside from TURBO-Booster 2, it seems like that one is almost ready to go. Is there anything else in the pipeline that you look as more of a major product introduction coming into the next year or two?

Guy Childs

Yeah, I would say that just a frame a little bit, we grew R&D cost excluding the IPR&D about a little over $2 million in full year '08. And I would expect that it's going to grow a little faster than that in 2009. I am not sure we're going to go into many specifics as to the various products in the pipeline there. We had talked about the Turbo-Booster, and I will let some others comment on.

Emile Geisenheimer

Yeah, let me comment. I actually think it's a very rich topic of conversion; the two questions together. Productivity focus is what's going to lead us to profitability, but it's only part of the equation. The other part of the equation is our rich product pipeline and the specific products, Mike and Jason may want to mentioned couple of things. But what we are doing is making sure we have not only products for '09, but products for '10, '11 there in the pipeline of development.

So that we can bring more and more devices to products to our sales force now. While we are still investing in our sales organizations that investment rate is dramatically slowing in '09. And we will think it will be right at critical mass hopefully by year-end. And then to completely focus on driving more revenue per account, more revenue per person.

We are also working improvement internally and manufacturing and R&D and quality throughout the organization, so that as revenue grows, various categories as a percent of sales will go down. And that's the key turning that quarter. So, I agree with, Guy. I don't want to pinpoint exactly where this is going to take place, but I can see it, so look at there.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

You guys want to comment on specific products on the pipeline?

Michael Voss

Sure. I won't go into specific detail, but this is Mike Voss. The VI side of the business rest assured we have several new products that are scheduled for 2009, mainly in the second half of 2009. And those are really focused in our peripheral atherectomy line as well as our Crossing Solutions line, and then we have one for improvement in our CTO area that we're focused on.

And as Emile said, really our big focus here is to look at the investments is really how we generate. And make sure that we have new product ideas going into 2010 and 2011. And I think we mentioned this on the previous call that's really a big focus specifically of mine to make sure that that pipeline is always filled of robust new ideas that potentially could go into the product development funnel, so we continue to have new products throughout looking into the future.

Jason Hein

And Tom, I would add; this is Jason; at least would add for lead management side. Our investments over the last year or two have definitely been on our sales team. We've invested in some of our accounts as they develop the lead management program. We've also put some money into clinical development. But one obvious factor is we are investing in the product development side. So we won't see products in the early part of 2009, but we have several concepts that are in the R&D side during 2009, and then we'll see those launches in 2010.

Jonathan McGuire

Hey Thomas, this is Will. One additional product that we should note. Emile mentioned it in his prepare remarks, but that is the next generation ThromCat XT, and we would hope to get CE mark for that product sometime in Q2 or Q3, and launch it outside of the U.S. We don't expect to see it in the U.S this year, but it certainly could be a significant growth product force in the U.S in future years.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Okay. And just so I understand it right, and that is a... you won't be seeking a vascular label for the first-gen as it stands, right? You'll wait till you get the newer one of them in the market place?

Emile Geisenheimer

That's correct.

Guy Childs

Yes.

Thomas Kouchoukos - Stifel Nicolaus & Company, Inc.

Okay. Hey, thank you very much guys.

Emile Geisenheimer

Thanks, Tom.

Guy Childs

Thanks.

Operator

Your next comes from the line of Suraj Kalia, of Sanders Morris Harris.

Suraj Kalia - Sanders Morris Harris

Hi, Emile, Guy.

Guy Childs

Hi, Emile or hi, Suraj.

Emile Geisenheimer

Hi Guy.

Suraj Kalia - Sanders Morris Harris

Emile, somebody from your group, I just want to reference one of the earlier questions, somebody from group mentioned in response to an earlier question that the number and I quote, the number of active accounts is up, for our calculations, same-store sales are down for the last two quarters. Would you care to comment on that? Does it make more sense to spread out accounts or does it make more sense to increase the depth of penetration and increase same-store sales?

Michael Voss

Hi Suraj, this is Mike Voss. The... yeah, certainly when you look at our active accounts, we are seeing those drop and the reason why I say that is that a lot of from the competitive standpoint, there's a lot of trialing that goes on, but as a result of those, we tend to get those businesses back as some of the lackluster starts to wear away if you will. So, and then you've got the improvements to the sales organization where we feel we've got a tremendous number of A players within this organization. We're continuing to focus obviously on getting new accounts as well, but the way we measure our business going forward is not necessarily going to be on new laser placements and new accounts.

We also want to make sure that we're focused on a metric that measures that revenue per sales represented as well as improving revenue per account. Because there's so much opportunity in the existing base of customers that we have, that we've really not focused on as much in the past and we're making sure that we're doing that and by that I mean, things, as simple as increasing the number of users in each account. And as you start to look at accounts that are using multiple different atherectomy type devices, there is a push here in the future, especially with the economic environment to reduce the number of atherectomy devices that are on the shelf. And certainly we see the utility of lasers being the clear winner in those types of situations.

Emile Geisenheimer

Hey Suraj, let me elaborate on that just a little bit and try and get right on point to your question. It is almost always the case, and it's better for us to build volume in the account than go and chase what might become an unproductive new account. So, as we get the number of accounts up to a certain level and we're covering the big places, they're doing lots of cases and chasing accounts out that may just do a few cases a quarter, is probably not the right answer for us. And from a salesman's perspective, if you just pick it from his point of view, if he's got to increase the number of placements he has to cover in the course of 2009 and reduce, it will actually reduce the tension on the accounts that he already has.

And so those are kind of trade-offs that one has to maintain, and I mean (inaudible) particularly where your competitor is doing what I call brute force marketing. They are just out there spending very quickly, hiring a ton of people at low productivity levels. If we try to match that, what we're only doing is delaying our profitability for a couple of years now. I don't think that's a wise thing to do. At the same time, we have to maintain our current momentum because we have momentum. Where we've got some really, really bright capable people in our organization in the field and they're driving that and keeping them motivated to build our business is an important thing for us do. So, I think that's a right balance for Spectranetics.

Suraj Kalia - Sanders Morris Harris

Emile, you just mentioned brute-force marketing, I mean I think so we all know, what's going on in the field and looks likes history is repeating itself, but having said that, is it fair to say that Spectranetics, when John was around and the guidance was given in early '08, the guidance included theoretically a glitch-free TURBO-Booster launch and then essentially for lack of better word, Spectranetics was shutout of the above the knee market because of the glitches and whatever numbers for the most part have been posted, really have come below the knee, lead removal and what you all thought was going to happen, didn't happen in above the knee but still you came close to the numbers. Is that a fair way of looking at it?

Emile Geisenheimer

I think it's quite fair. It's, I think, right from day one our gross disappointment with the launch of TURBO-Booster. I want to repeat, however had emphasized that the data... the clinical data from TURBO-Booster is extraordinarily good. The durability of the results shown in that 12 month follow up shows the device in its first generation produced very positive clinical results. The easy views just really dramatically affected its working acceptance, let me say there is physicians today love it. But there is just not many of them. So TURBO-Booster 2 plus the CELLO data is going to really help us attack the above the knee market in the latter half of 2009.

I think your assessment is fair.

Suraj Kalia - Sanders Morris Harris

Okay. Let me... I'll just try to squeeze in a couple of questions; hope that's okay. Given the space, Emile, and again what's the internal thought process in doing a head-to-head comparison knowing what the risks are, but head-to-head comparison so that we know apples-to-apples what the latest stands versus some of other treatment modalities and what the adverse events rates are; whether it's hemolisys (ph), whether it's arterial spasms so on and so forth. Why don't you all embark on that drug, or do you just think that so the risk reward is not favorable enough?

Emile Geisenheimer

Well, I don't you think it's a matter of risk reward as it is a difficult thing to actually put together with two competing companies; just a hard trial to pull off. But I can tell you I think that specially seen a lot of mechanical atherectomy companies come and go. And I wish I could replay the tape on our role player from some years ago, and then there were cutting devices and there have been scraping devices, there have been rotational devices. And there are inherent weaknesses and a mechanical approach to treating arterial disease. And eventually, they all either fall away or fall into small niches.

So while I am patient about this that I'd like to trail rate the process, I think that's eventually what will happen to clinical data almost always rules on clinical experience position almost always rules out. And in the end, things find their place if there is a place for them.

So when I think people should look to and evaluate Spectranetics, this is a company that's been doing a lot of... those are tax over the years and it just keeps on going. And we are not going to respond to the same kind of methods. We're not going to respond by adopting the same kind of methods. This is our competitors' risk. We think is the right thing to bring good medicine to our patients and go forward.

But let me say one other thing. I am welcomed to a great extent people entering the market to treat for peripheral artery disease, because they bring more awareness, which is the real issue out there. And the more companies that are out there, brining this to the attention of the referring positions and potential patients that there are alternatives to the horrible consequences of some of the treatment that are out there. I think that benefits all the companies that benefits healthcare. And I just wish we had more companies that doing it and that they doing it in a responsible way with the devices.

Suraj Kalia - Sanders Morris Harris

Okay. And last question, Emile, I remember years ago, when John got, I think, maybe three, four years ago, when John started... John and Guy started the Evergreen program, we can see a direct correlation a few quarters down the line between sales and disposables so on so forth. Specifically, Emile, given what has happened now, with the federal investigation, I think so we all understand. What would you say is the key metric we should look for as testimony to the initiative you've put in place and that it is bearing fruit?

What specific metric would you say, and not sales particularly, but what... whether it's a calculated metric or otherwise, what would you say the key thing that we should pay attention to and we should judge our management initiatives by?

Emile Geisenheimer

Well, I could tell you that we are just beginning to measure some of these matrix ourselves. And ones that we are focused on these productivity metrics. And as we get more and more of a database there, we'll begin to share that externally. And it's probably going to be things like revenue per account and things like revenue per salesmen as the key metrics of successful company.

Suraj Kalia - Sanders Morris Harris

Gentlemen, thank you for taking my questions.

Emile Geisenheimer

You're welcome.

Operator

Your next question comes from the line Spencer Nam of Summer Street Research.

Spencer Nam - Summer Street Research

Thanks for taking my questions. I will just be very quick. In terms of guidance, why you guys are not providing a specific number here? You guys sound like you guys have some target single digit growth so for. Why not even a range here?

Emile Geisenheimer

Well, this is Emile speaking. I am the bad guy there. I think that probably notice over the last several months that there is a increased level of communication to shareholders. I believe in more transparency and I believe in letting analyst and investors do the little math.

So we are getting more and more color and detail out and wrong guidance is not the... my opinion, I think we should be focusing on, so that's one thing. The other thing is the current environment. I mean the current environment is rather challenging to make estimates and particularly with respect to profitability and their timing of that. So we made a decision that we are going to give you more detail color on the various parts of the business, so you've got things to look for as the company progresses. And we'll follow-up in those areas. And hopefully giving you that information lets people to develop their own models.

Spencer Nam - Summer Street Research

Okay, I appreciate that. And then, I didn't quite understand your gross margin argument. I recognize sales of laser. But wouldn't that actually improve your gross margin since laser typically is a low gross margin product?

Guy Childs

Yeah, Spencer, this is Guy. To start about laser sales, you're right, because obviously laser sales at capital equipment type margins, which are lower than our overall margin. But we are talking about laser placements here may decline as a result of our focus on driving business in existing accounts.

Now certainly, we're going to continue to place laser could be at a slower rate than in '08. So, the impact area is really about the factory and the fact is we have certain fixed cost on the laser side that whether you're making 30 lasers a quarter or some smaller number, that are going to exists. So we do not have good clarity on the extent of any decline in laser placements in '09, but the fact is there is likely right around 20,000 of fixed overhead cost some of which can be managed, some of which can't, that exist in each laser. And we are going to manage them to the extent we can but there is some piece of that that is just going to stay regardless of the number of lasers that you build.

Spencer Nam - Summer Street Research

Okay. And two final... two quick final questions. First of all the clinical trials that had to be suspended because of concerns over the laser usage in the instent restenosis, where are we with the FDA on that?

Emile Geisenheimer

Well, this trial was suspended by the VIVA group.

Spencer Nam - Summer Street Research

Yes.

Emile Geisenheimer

Based on this question that was raised. We have submitted to the FDA, the... let me backup little bit. The company had been engaged in testing interaction of laser and night stents (ph) for some considerable period of time. And I was working under a protocol to do that test which was very similar to the protocol we used to get appeal A approval in the coronary. That protocol was adjusted for periphery and agreed to guided by the FDA. That was virtually complete, was complete at the time of this whole set of matters was raised. That date is now, was submitted to FDA some time ago, and shows the safety of the laser in use with like restenosis, or interacting with night stents and VIVA (ph). So, the FDA has not yet referring to all that data but we believe that the data is very good.

Spencer Nam - Summer Street Research

Do you know if that opining, FDA opining on that data maybe related to the ongoing FDA investigation regarding other claims or other issues or are they two separate issues?

Emile Geisenheimer

Because I can't claim to know anything about that, but I would certainly hope that they're separate issues and they certainly should be treated as separate issues. But I can't claim to have any knowledge of that.

Spencer Nam - Summer Street Research

And do you guys, you guys do not expect any financing activities, not in any plans to raise capital here with looking at another year of negative cash flow or you guys feel okay with your financial situation?

Guy Childs

We do Spencer, our cash position is solid and that we believe it's more than adequate to fund our operating needs into the future.

Spencer Nam - Summer Street Research

Great. Thank you, very much.

Guy Childs

Thanks, Spencer.

Spencer Nam - Summer Street Research

Thanks.

Operator

Your next question comes from the line of Charley Jones of Barrington.

Charley Jones - Barrington Research

Good afternoon. Thanks for taking the questions.

Emile Geisenheimer

Sure.

Charley Jones - Barrington Research

Guy or Emile, could you discuss how January and February proceeds or volumes have trended relative to December and November?

Guy Childs

Sure. Yeah. Happy to... I think the short answer there is, we haven't seen any remarkable trends compared with fourth quarter. One way or the other if we had, we'd likely to be commenting on that, so the business is stable and ongoing.

Charley Jones - Barrington Research

So, do your customers talk to you about the economy affecting their procedure volumes over the last 4-5 months and was October the worst, because more the fear, or is it, does that chatter seem to be increasing?

Michael Voss

Yeah. Charley, this is Mike. I could touch on some of that. Yes, we did have physicians speak to us about a slowdown in their case volumes, especially if you start to look at the fourth quarter. But then as you start to revisit with these physicians, they're saying that those case volumes are starting to pick backup again. So, it's something that is out there, and I think everyone is really kind of in a wait and see mode, based on the economic environment, because we do know obviously, there are a lot of people that are out of work today and the concerns that they have obviously is that some of these patients especially with elective procedures may choose not to move forward with those until absolutely necessary.

Charley Jones - Barrington Research

And do you think you have a feeling of how you can position yourself against Pathway, are you starting to see them? And are they getting trialing and do you expect that to stop by the end of the first half of '09 or do you think it just increases from here?

Michael Voss

Well I think with any new products you'll continue to have trialing that goes on. They have just launched their second generation of the product where they apparently corrected some deficiencies that were out there from what we are hearing. So, I mean that will continue to happen. We do feel obviously that we are positioned very well because of the greater utility that we have as laser being able to treat the whole leg as well in the coronaries and then also on lead management for lead renewal. So, that's especially when you look at the economic conditions and you have these discussions, at the sea level in the hospital, they perk up and listen when you start to talk about the greater utility of this device and what it can do for them in multiple forms within the hospital. So, it's no longer just one little niche device that is going to be used by one physician, this could be used by multiple operators within the hospital and more cost efficient for them overall.

Charley Jones - Barrington Research

This type of more here (ph). What is... Emile, can you give us the 12 month latency rate for TURBO-Booster? And if you can't, can you tell if it's more than 85, less than 80 or somewhere in between?

Emile Geisenheimer

Actually, I can't off the top of my head, the results from the 12 months that we think are important for the lack of target vascular rationalization (ph) after 12 months and the stability of the clinical end points in terms of Rutherford class and walking survey. So, what all that means is that the patients feel better, they were better and that endured for a year and most people believed that once twelve months have passed and that type of things remain fairly stable. So, Rutherford class improvement was sustained from six months to twelve months exactly at the same level and the walking survey were also extremely positive and the lack of reintervention tells us a couple of things, what these patients feel better. Now that's obviously is the goal. Two, the referring physicians said this patient to the interventionist is pleased that he did it and therefore the... the that's important to interventionist because he wants that results to be durable so that his referring physician network will send him more patients. So, that's why we think this is so positive.

Charley Jones - Barrington Research

And with regards to the 14 site lead removal registry, how many patients are included in that, what were the follow up period six months a year, two years etcetera? And have you seen the data?

Jason Hein

Yeah, Charley, this is Jason. For Lexicon trial, we look at 13 centers in United States. It was actually a retrospective data collection so it wasn't perspective with follow up. So, we went to 13 centers, they were roughly about just over 1400 patients in that study and about 2 to 1 in the lead ratio, so you are looking to about 28,000 leads. So, very good data set that we working on that right now, we don't have that published that should become out here in probably the late Q2 timeframe, but to your question Charley, it was retrospect and not prospective.

Charley Jones - Barrington Research

Right, now I got that. And then a last one here, Emile your point about giving us more detail, I am sure Guy does not want to do this, but would you guys consider going back and giving us unit data on the various parts of the business? That's it. Thanks a lot.

Emile Geisenheimer

Request noted. Next question.

Guy Childs

Next question.

Operator

Your next question comes from the line of Beth Senko of Williams Capital.

Beth Senko - Williams Capital

Hi, good morning. Just a couple of quick things. I am happy to see sort of a move towards productivity metrics but I am wondering if that change also includes the change in compensation, or compensation structure for the sales-force will they be incentivized to grow any existing accounts more? Has there ever been a difference historically, could you talk about that?

Michael Voss

Yeah, Beth, this is Mike. At this point in time, no, we're going to stick with our current compensation plans that we have, that is based on overall revenue growth.

Beth Senko - Williams Capital

Okay and...

Emile Geisenheimer

Let me elaborate.

Beth Senko - Williams Capital

Sure

Emile Geisenheimer

Because you ask us about salesmen. That doesn't mean that the managers and executives don't have a difference in their competition.

Beth Senko - Williams Capital

Okay. And then can you speak... you didn't mention it any change in sales force turn over given you've got other people out there with your three-forth marketing.

Guy Childs

Certainly on the VI side of our business, we've had some turnover. And to be honest with you, a lot of that turnover was forced on our end. As we continue to focus on making sure that we fill our sales organization up with our players across the board, and we've been very successful with that. As we start to look at end of 2009 though one of the strategic imperatives that we have is that this is our year of stability as far as the sales organization goes, and we are continuing to focus on the team that we have in place today. There maybe some exceptions on that, but we expect a dramatic decrease in any turnover going forward.

Jason Hein

Beth, this is Jason. I would add on the two comments. First on the turnover on the lead management side; we've had slight turnover here in the fourth quarter, but again it's been 13 months that we split the sales team to create dedicated team. So, we've actually ramped up dramatically the turnover has been slight; we've had a few, but we've had the good fortune also of picking up some very talented people in that process. We've actually seen on both sides of the business. Turnover has actually is going positive as we also want to address productivity, we're trying to do more with less.

So, we've actually upgraded in a few positions as well and there are some talented people available, so that's working well. Second comment I'd have is you asked about the sales compensation plan. Like the comments were said, of course the compensation is the same, was definite how we're allocating resource to focus on productivity wise new account development. So, compound the same, but how we're going to get to the revenue goals is shifting in its focus.

Beth Senko - Williams Capital

Okay. Last question; this one is probably hard to answer. But given the large installed base of... and I'm focusing really on the laser side both peripheral and lead extraction. What sort of capacity usage is out there? I mean are these things operating in your best accounts at 80% of max and your less successful account 20% of max? Do you have any sort of sense of that or is that something you could hopefully provide in the future.

Emile Geisenheimer

From time to time, we have accounts, where we get to a certain capacity limit and place another a second laser. In most of our accounts, I'd say however that our challenge is really the second doctor, so we can get the thing, the lasers utilized full capacity. So it's really... it's not a big challenge for us.

Beth Senko - Williams Capital

Okay, clearly that's all, thank you.

Emile Geisenheimer

You're welcome.

Operator

Ladies and gentlemen, we have time for two more questions. Your next question comes from the line of Christopher Warren of Caris & Company.

Christopher Warren - Caris & Company

Thanks so much for taking the question. I wanted to ask really about the Quick-Cross competitive space. I am hearing that Vascular Solutions just launched a mini support catheter at a 10 to 15% price discount to Quick-Cross. Can you comment on how you sort of view that competitive risk?

Emile Geisenheimer

Sure, I mean any time we have a new competitor and that's a pounded company, it's always a risk. On the other hand, I think this was very interesting, because we're talking about... if you were to list the components of cost at a hospital of doing a case, the lab time, the lab personnel time, the cost of the capital equipment all of that stuff, the therapeutic devices, the wires, the... all those things, you'd find it Quick-Cross is down like at the bottom of that phrasal (ph) chart if you just list it them from a highest cost to the lowest cost.

So saving 10% or 15% on such a device, which is enabling device, the reason Quick-Cross is so popular is it helps that physician to get that wire across quickly, so he could do the case. So the risk to a hospital is if they were used competitive devices that are not proven, the risk is one bad case could blow six months worth of savings over a small amount of dollars.

So while we expect to be to have to meet that challenge, that's one place, where the appeal is not to the doctor, because he's got something driving through he's happy to have. It's to the purchasing people and cath lab administration. And they certainly understand that getting that case done quickly and efficiently without delay, because it can't get across is perhaps more important than what they actually pay for Quick-Cross.

If there in addition to that, there are features and benefits associated with the design of our product that not obvious, we'd like to talk about them, but I think it is so successful. And we don't think that it's going to be that easy to replicate.

Christopher Warren - Caris & Company

And just the follow-up, did you just take a price increase on the Quick-Cross? And then could you just size how bigger revenue driver that is? Is it about 15 million of 2008 revenue?

Jonathan McGuire

We took a price increase across the board on all over products, about a 5% increase. And you know to be honest with you, a 5% increase on the sector products really isn't a large jump, because we have not taken a price increase in quite a while. So, we've not really had any push back in the marketplace.

Guy Childs

And Chris, this is Guy. Quick-Cross on a worldwide basis is about 16.5 million of 2008 sales.

Christopher Warren - Caris & Company

Okay, thank you very much. I appreciate it.

Guy Childs

Thanks.

Operator

Your final question comes from the line of Tom Munson (ph) of RBC Wealth Management.

Unidentified Analyst

Good morning. Guy, you gave some detail on the Quick-Cross or QuickCat in Europe. But you did not give a forecast of what type of growth you'd see in that line?

Guy Childs

You are correct. I think getting that granular, Tom, I appreciate the question. We expect continued growth in that line as the sales force learns the product and gets more focused on it as we pay a little more attention to the coronary, so we do expect growth. I'd hesitate to be specific about the rate.

Unidentified Analyst

Okay. And then one other question on your productivity for sales rep, if you just use... take the, extend the percentage growth that you anticipate in each business line, your productivity really goes down if you're going to add 15 sales people. Does most of the growth come per sales person come in latter part of year?

Emile Geisenheimer

Yes.

Guy Childs

Yes, absolutely Tom. And that was conscious and we do anticipate after they get the legs under what we make further progress within our existing sales productivity as well as launch new products in the back half that will hopefully lead to increase productivity at the end of 2009.

Jonathan McGuire

And I would also add too. When you have open territories, that obviously leaves that area wide open to competitive attacks. And by filling some of these open territories, certainly we're able to basically stop that loss and move on gaining in those different open territories.

Unidentified Analyst

And is your goal to... is it $1 million per sales rep or do you have goal that...

Emile Geisenheimer

We're not ready to put that out there, Tom, but stay tuned.

Unidentified Analyst

Very good. Thank you.

Unidentified Analyst

Thanks, Tom.

Operator

There are no further question at this time. Please proceed with your presentation or any closing remarks.

Emile Geisenheimer

Well, I'd like to thank everybody for joining the call. The management team of Spectranetics is very excited about 2009. We've got a lot of work to do, and few challenges out there. We're all working very hard, and looking forward to a very good year. Thank you all for attending the conference.

Operator

Ladies and gentlemen, that concludes our conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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Source: Spectranetics Q4 2008 Earnings Call Transcript
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