Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

CryoLife, Inc. (NYSE:CRY)

Q1 2013 Earnings Call

April 30, 2013 10:00 AM ET

Executives

Steve Anderson - President and CEO

Ashley Lee - EVP, COO and CFO

Analysts

Jeffery Cohen - Ladenburg Thalmann

Tom Gunderson - Piper Jaffray & Co

Matt Dolan - ROTH Capital Partners

Joe Munda - Sidoti & Company

Operator

Greetings and welcome to the CryoLife’s First Quarter 2013 Financial Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Steve Anderson, President and CEO for CryoLife. Mr. Anderson, you may begin.

Steve Anderson

Good morning everyone. This is Steve Anderson, CryoLife’s President and CEO, and I would like to welcome you to CryoLife's First Quarter 2013 Conference Call. With me today is Ashley Lee, the Company’s Executive Vice President, COO and CFO.

This morning, we released our operating results for the first quarter of 2013. I am pleased to report that the Company has had all time quarterly revenue record with revenues of $35.5 million. That’s a 10% increase over the first quarter of 2012. Earnings per share were $0.08, a 100% increase over the $0.04 that we posted in the first quarter of 2012.

In addition to the overall revenue record, we set record revenues and worldwide BioGlue sales of 15.4 million, a 12% increase over the first quarter of 2012. PerClot revenues increased 34% over the same period in 2012. These excellent operating results for the first quarter add credence to our corporate development strategies that we began putting in place about three years ago.

At that time, we made the decision to focus on the retiring baby bloomer market for medical devices and our focus on vascular and cardiac reconstruction products and markets is coming to fruition. The agenda for the conference call today is as follows.

Actually, we’ll discuss the financial results in detail and by product area. He will discuss our continuing corporate development efforts. He will discuss the status of the PerClot IDE submission and the FDA clearance of the new adaptor for our HeRO device. I will discuss the recent Central Venous Pathology Summit that we held here at corporate headquarters in mid-April.

I will also discuss our recent paper on PerClot given by the Martini Klinik in Germany during a recent urology meeting that we held in Milan, Italy. I will discuss increasing international sales for PerClot and what we expect from the product in the future. And I will also comment on the apparent synergy between BioGlue and PerClot in controlling hemostasis.

After my comments have been completed, Ashley we’ll return to give financial guidance for the rest of the 2013. After Ashley’s guidance comments, we will open up the call for questions. At this time, Ashley will comment on this morning’s press release.

Ashley Lee

Thank you, Steve. To comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995, I would like make the following statement. Comments made in this call that look forward in time involve risk and uncertainties, and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future, including the guidance for 2013 that I will provide in a moment.

Additional information concerning risk and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings including the Risk Factors section of our previously filed Form 10-K for the year ended December 31, 2012, and our subsequently filed Form 10-Q for the first quarter of 2013, which we expect to file shortly, and in the press release that went out this morning.

This morning we reported our results for the first quarter of 2013. We achieved record quarterly revenues of $35.5 million, an increase of 10% compared to the first quarter of 2012, driven by year-over-year increases in most lines of our business and the acquisition of Hemosphere in May 2012. Our first quarter earnings per share totaled $0.08, double the $0.04 from last year’s first quarter.

The following factors influenced our revenue performance. Of the 10% year-over-year growth, organic growth for the first quarter totaled 6%, and growth from new products specifically HeRO Graft accounted for 4% of the top line growth. International revenues increased 28% in the first quarter of 2013, compared to the first quarter of last year, with revenues in Europe up 15% and international revenues outside of Europe up 47%. Domestic revenues increased 5% year-over-year.

For the first quarter, total product revenues increased to 20% compared to the prior year, or 13% for products we had for the first quarter of both 2013 and 2012. Worldwide BioGlue revenues were up 12% for the first quarter compared to the prior year. This resulted primarily from increases in international markets, specifically Japan where our distribution partner continues to deliver excellent results.

PerClot Sales increased 34% for the first quarter compared to last year’s first quarter. This resulted from increased demand in Europe where we had focused on expanding utilization beyond cardiac and vascular surgery. Revenues from our TMR product line increased 4% in the first quarter compared to the first quarter in 2012, driven by a 14% increase in disposable hand piece revenues in the first quarter compared to the prior year quarter, partially offset by the absence of laser console cells in the first quarter of 2013, due to our focus on driving hand piece utilization.

Revenues from the sale of the HeRO Graft were 1.3 million in the first quarter. Momentum is continuing into the second quarter, and April was our highest revenue month since we acquired Hemosphere last year. We remain very optimistic based on the feedback we are receiving from the field, and we expect to see the results of our expanded selling effort over the next couple of quarters.

We also expect to begin a controlled launch in Europe in the second quarter of this year. General administrative and marketing expenses for the first quarters at 2013 and 2012 were 18 million in each quarter. The first quarter is generally one of our more expensive quarters from an SG&A expense standpoint and we expect that as a percentage of revenues, these announced will be lower in the remaining quarters of this year.

As of March 31, 2013, we had 13.9 million in cash, cash equivalents and restricted cash in securities. Our balance sheet remains very strong. We continue to carry no debt and generate strong cash flow. We are pleased to be able to return a portion of our profits to shareholders while continuing to build shareholder value to our dividend recently renewed and expanded share buyback program in our investments and organic and acquisition growth opportunities.

I have a few updates on various subjects. We are in the process of preparing to re file our IDE for the use of PerClot in surgical applications. That filing is expected to go into the FDA in mid-May. We anticipate that we will receive a response to that filing from the FDA within 30 days. While we prepare to re file the IDE and await the FDA’s response, we have already begun the process of negotiating contracts with some of our clinical sights so that we can begin enrolling patients as soon as possible following IDE approval.

If all goes well, we expect to begin enrollment in the clinical trial during the third quarter of this year, which could potentially put us on timeline to receive PMA approval in 2015. From the very beginning, we have built in some cushion into our time table for the clinical trial. From this point going forward, any delays in beginning the clinical trial will likely affect the PMA approval timeline.

In regards to the FDA warning letter, as we previously communicated, we fully responded to the FDA's concerns within the required 15 day timeframe. We have had very constructive dialogues with the FDA about our proposed corrective actions to the concerns raised in the warning letter, prior to the submission of our response.

A teleconference with the FDA is scheduled for this week to discuss the status of their review, the sufficiency of our corrective actions and a timeline for re-inspection. We are committed to fully resolving the concerns and the warning letters and continue to remain focused on safety and quality. We believe that the growth initiatives for our TMR business that we implemented in the second half of 2012 are beginning to pay-off. Specifically the laser console evaluation program has made it easier for physicians in hospitals to trial the TMR technology. This has resulted in a 13% sequential quarterly increase in hand set revenue in the first quarter of this year, compared to the fourth quarter of 2012. We continue to see momentum from this program in the second quarter of this year.

Additionally we expect to begin enrollment in the web-based clinical registry that we established this quarter. Through the registry we will track important data about the clinical utility of TMR, which we believe will lead to increased utilization of the TMR technology. We currently have been first from about 80 centers to participate in the registry and approximately 20 centers have been actively submitting for IRB and contract approval. More information on the clinical registry can be found on clinicaltrials.gov. We believe that these initiatives will drive incremental growth in our TMR business. We also announced during the first quarter that we received FDA 510(k) clearance on a next-generation HeRO device. The newly cleared version features an adaptor that provides the option to pair the HeRO devices’ proprietary venous outflow component with certain other available hemodialysis access grafts, including early access grafts.

The currently available generation of the HeRO graft includes a standard PTFE graft, which requires the placement of a temporary dialysis catheter for approximately two to three weeks until the graft incorporates into the surrounding tissue and can be used for hemodialysis access. By the time early access grafts allow access in a matter of days, thus eliminating the need for an accompanying dialysis catheter. Over the next several months we will work to optimize and validate the manufacturing processes for this next-generation system which includes scaling up our manufacturing supply chain. We anticipate launching the next-generation HeRO device during the fourth quarter of 2013, following scale up and validation of the manufacturing process.

In regards to ValveXchange we are pleased to report that they continue to make progress on their clinical trial in the EU and this could potentially lead to a CE Mark late in 2013. For more information about their progress we encourage you to visit their website or contact them directly.

Please refer to our SEC filings for detailed discussions and factors affecting our results of operations, including our form 10Q that we plan to file shortly. Now I'll turn it back over to Steve.

Steve Anderson

As has been mentioned earlier, international sales results for PerClot are very encouraging. A 34% year to year sales increase of our powdered hemostatic agent is testimony to the fact that it is significantly more effective in initiating hemostasis than other approved powdered hemostatic agents. We continue to take market share from our powdered haemostatic agent competitors.

When PerClot is approved for use in the U.S. we expect its impact on the competition to be similar to its results in Europe. From our point of view and from the viewpoint of the European physicians who have used it, PerClot is a game changing product. European physicians continue to comment about how fast it works in comparison to competitive products and the fact that it absorbs 4-5 times more fluid than at least one competitive product does.

Management believes that the worldwide market for a powdered haemostatic agent is about $1.3 billion. The recent sales growth of PerClot in Europe is testimony to the effectiveness and appeal of the product. Also we need to point out that it is effective in many different kinds of surgeries across many different specialties.

A recent paper given by surgeons from the Martini Clinic in Germany, attests to the haemostatic effectiveness of the product and prostatectomy surgery and it showed an additional benefit in decreasing the drainage associated with lymph node surgery. When we begin selling the PerClot that is manufactured in the U.S. we expect margins to be above 80%. Margins for the PerClot presently being sold in Europe are about 55%. On April 18th and 19th, we hosted 43 renal disease professionals and 13 faculty members at our first Central Venous Pathology Summit, featuring the HeRo graft held here at our corporate headquarters’ learning center in Georgia.

Participants were nephrologists, vascular surgeons, dialysis clinic professionals, endovascular surgeons and interventional radiologists. The meeting included both didactic and wet lab sessions. The wet lab sessions were held at the Saint Joseph's Translational Research Institute training center located on the Georgia tech campus adjacent to our HeRO manufacturing facility. At least 20 surgeons attended these animal surgery sessions that were proctored by some of the country’s leading renal disease physicians, and that allowed them to practice implanting the HeRO Graft. There were participants both presenters and surgeons from Germany, Ireland, and Israel, as well as the U.S. in attendance.

The CVP summit was oversubscribed and as a result we intent to have another CVP summit this coming fall. What is important to note is that we believe anecdotally, the HeRO Graft has greatly increased physicians’ interest in our preserved human tissue grafts such as femoral veins and arteries. With an average sales price of $3500, the HeRO Grafts have margins of about 70%.

We believe that the U.S. market for the HeRO Graft which is the only subcutaneous AV access solution, clinically proven to maintain long term access for end-stage renal disease hemodialysis patients with central venous stenosis, is about a $125 million. We believe that both the HeRO Graft for end-stage renal disease and PerClot will be the major growth engines for the company going forward.

BioGlue sales increased 12% year-over-year. BioGlue’s first quarter sales of $15.4 million is an all-time quarterly record. This increase was primarily driven by increased sales to our Japanese distributor and significant sales increases in Europe. Sales to Japan were up 98% year-over-year and sales in Europe were up 15%.

International BioGlue sales continued to grow in the face of increased competition. It is still the strongest surgical adhesive in the market and we estimate that it has been used in approximately 850,000 surgeries worldwide. BioGlue enjoys a gross margin in the mid 80% range.

That concludes my comments and I would like to ask Ashley to give some financial guidance for the rest of the year.

Ashley Lee

We are reiterating our total revenue guidance with the full year of 2013. We expect total revenues to be between a $139 million and a $143 million. This represents annual total revenue growth between 6% and 9%. We expect earnings per share for the full year of 2013 to be between $0.25 and $0.28.

The company’s earnings per share guidance excludes expenses related to potential future business development, litigation, and share repurchases, which cannot be currently estimated. The details of this guidance are in our press release that was issued this morning.

Finally, we believe we’re continuing to successfully execute on our strategy of positioning the company for accelerated revenue and earnings growth by expanding our addressable market opportunities through internal R&D, expanding and leveraging our sales and marketing and executing on business development opportunities.

Looking forward, we believe that we have several opportunities to expand the Company’s market opportunity with higher growth, higher margin products. These include, one, drive revenue growth in the HeRO graft through the recent launch in our broader U.S. direct sales force. The plan launched in Europe in the second quarter, and the introduction of the next generation HeRO device beginning in the fourth quarter.

Two, initiate enrollment in our PerClot IDE clinical trial and gain additional marketing approvals in new international markets. Three, expand our European sales and marketing coverage for PerClot to include other surgical specialties in addition to cardiac and vascular surgery.

Four, potentially gain expanded indications for BioGlue in Japan. Five, build on our commitment to the Asia Pacific region by gaining distribution partners for our products and new markets such as China and Southeast Asia.

Six, drive our TMR business through our clinical registry and increase the laser console evaluations. Seven, continue our planning discussions with ValveXchange on the European distribution of their exchangeable heart valve product, and finally, eight, continuing to evaluate business development opportunities.

If we executive on these initiatives we will be in a good position to drive top line growth on our higher margin medical products and further leverage our operating infrastructure to improve profitability. That concludes my comments and now I’ll turn it back over to Steve.

Steve Anderson

At this time, we’ll open the call for questions.

Question & Answer Session

Operator

Thank you. We will now be conducting a question & answer session. (Operator Instructions). Our first question comes from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

Jeffery Cohen - Ladenburg Thalmann

I noticed that you’re now breaking out U.S. international revenue. Do you have any projections forward looking as far as what that might look like for the balance of ’13 or ’14?

Ashley Lee

Well in total, you know we’ve given out the revenue guidance for between 139 and 143. We continue to believe that the higher growth opportunities for us are in international markets. So, we would expect Europe to grow more than the U.S. market and international business outside of Europe to grow faster than Europe. In regards to specific guidance for those regions, we don’t get that out, but that’s generally how we see those businesses evolving over the balance of the year.

Jeffery Cohen - Ladenburg Thalmann

Okay, got it. The SG&A for the first quarter was similar to first quarter 2012 and your commentary is that it might look similar as far as the cadence throughout the year. But I’m wondering how that coincides with your commentary about adding more sales and marketing effort because during Q2 2012, it came off as your 17.9 down to 13.9 from our first quarter to second quarter ’12.

Ashley Lee

Yes, a couple of comments on SG&A, Jeff. Just to put the first quarter of ’13 in perspective compared to the first quarter of 2012. In the first quarter of 2012, we had a significant amount of litigation related costs. I think it approach throughout about 1.7 million. That number was significantly less in the first quarter of 2013. So, we had a decrease there.

That was essentially offset by the increased sales and marketing infrastructure related to the acquisition of Hemosphere in 2013, which we did not have in the first quarter of 2012. So, those kind of largely offset each other.

Now, in regards to the spend in the first quarter of 2013. The first quarter is typically always our most expensive quarter. We have our annual sales meeting. We go to industry conferences and typically from an absolute dollar stand point, it is our most expensive quarter. In absolute dollar is going forward, we expect that SG&A will be lower in the remaining quarters of 2013, both in absolute dollars and as a percentage of revenues.

The comment that we made earlier about expanded sales and marketing efforts, that was really directed towards our sales efforts in Europe in regards to PerClot and a lot of the marketing related efforts are, relate to the studies that Steve mentioned that came out of the Martini Klinik and then this increased sales effort is just really focusing on those medical specialties outside of cardiac and vascular surgery. So we are looking to add nominally to the headcount, potentially this year, its more some of this other activities and initiatives that we have going on. Hopefully that answers your question.

Jeffery Cohen - Ladenburg Thalmann

Okay just a couple more; can you tell me where you're $240,000 are device tax are located, is that in SG&A?

Ashley Lee

It is.

Jeffery Cohen - Ladenburg Thalmann

Okay, in SG&A. And finally I have wondered, Steve, perhaps you could talk about the HeRO device and the new iteration with the adaptor; what will that do that generally speaking to ASPs and margins when the new device comes out?

Steve Anderson

I think that the ASPs will probably stay pretty much the same. I think that building the product is going to become less expensive because we are doing it in our own facility, down on the Georgia Tech campus, and I think that there will be a number of efficiencies of scale. Too early to telling that for sure but that's kind of what I am expecting. I think the nice feature about the adaptor is, it does give the doctor flexibility of choosing which Graft he wishes to use with our HeRO device, and it doesn’t block him in to using our devices we have put it together. He can choose, if he likes other Grafts better, he can choose to use them if he chooses to do so.

Operator

Thank you. Our next question comes from Tom Gunderson with Piper Jaffray & Co. Please proceed with your question.

Tom Gunderson - Piper Jaffray & Co

So, let me follow up a little bit on BioGlue, up 12% as you pointed out; top quarter ever. And almost doubling, and doubling in Japan year-over-year. What's going on there, what's the dynamic? Is that of a small base, an aggressive distributor, is the Japanese market more accepting of these kinds of products? How should we think of Japan as an end market for BioGlue?

Steve Anderson

The current approved indication for BioGlue in Japan is for aortic dissections, and by and large almost all of the usage of BioGlue in Japan is currently on label. We think that market opportunities in the high single-digits in millions maybe approaching 10 million.

Last year, in Japan, for the full year we recorded about 4 million in revenue. We think that for 2013 we expect that business to be up I think at a minimum of 15% to 20%. It just so happened that in the first quarter of this year we received several large orders from our Japanese distributor so it was really a function of timing. And so in the first quarter of this year it just so happened that the business was up about 100% almost solely due to the timing of the orders. We do see a little bit of seasonality in the business in Japan so the order pattern will slow down a little bit in the middle months but longer-term we think that we are going to be able to continue to grow this business in Japan.

Another important point for consideration too is that we are currently working with our Japanese distributor to broaden the indications for use in Japan. We are working to potentially get the Japanese indication to mirror the U.S. indication which is essentially for cardiac and vascular surgery. In the U.S., that business is in the mid-$30 million range. Is the opportunity in Japan that big? It probably is not, but it is certainly much larger than the current indication is. So we think that we have got, that expanded indication could possibly come within the next year maybe a little bit longer than that and if we are successful in getting that we think that we have got a pathway to continue growing that business meaningfully in Japan.

Tom Gunderson - Piper Jaffray & Co

And just a quick question on the cardiac tissue side in the press release down 6% and a comment that was made was the decline was primarily due to a decrease in cardiac shipments price I assume has been stable for a while so having a decline in revenues because you shipped less seems rather self-evident. Is there something going on, is this just a quarterly glitch, is there any trends that you are starting to see?

Steve Anderson

No there isn’t. That is a pretty seasonal business because most of the tissue is implanted in kids so you will see that increase in the vacation starts in the summer when the kids are out of school and you'll also see it if there are long periods of vacations or holidays and things like that. The kids have opportunities to recover from the surgery and return to school, so I just happen to think it's a glitch. But it is very centered around the fact that they're primarily used for pediatric reconstruction. So I wouldn't read anything into it.

Ashley Lee

The other thing that I'll point out Tom too, is we tell our investors that the tissue processing business as a whole we believe is a low growth business and you really shouldn't look at any single quarter as an indication as to what the trend in the business is. If you look at the annual revenues over a period of time, you will see that, they have grown on an annual basis and that's our expectation going forward.

Tom Gunderson - Piper Jaffray & Co

And one last question, on the IDE for PerClot, this is dealing with the FDA as a medical device company is always a test of patience, have you had the same reviewers throughout this couple of year process or are you getting new reviewers and having to educate them and then I'll listen to that answer and give you the follow up right away here and that is, as you re-file and as you expect to start in Q3, are we still at 400 patients, 50-50 randomizations, 30 day follow up?

Ashley Lee

I'll start with your first question Tom, we have the same reviewers, since we initially filed the IDE and I think one of the things that has caused a little bit of delay is that we felt it was very important for us to have a conference call with the FDA prior to re-filing the IDE because we wanted to make sure that our resubmitted IDE was responsive to their last round of questions. And it took us a little bit longer than we wanted to schedule that call with the FDA, but that has occurred and we are going to re-filing in May.

What the trial currently looks like and this again is subject to final FDA approval is a 320 patient study, randomized 1:1 with a 30-day follow up over across several medical specialties and if all goes well and we get the IDE approval, we believe that there's an opportunity to rapidly enroll these patients short follow up and get the PMA in to the FDA.

Operator

Our next question comes from Matt Dolan with ROTH Capital Partners, please proceed with your question.

Matt Dolan - ROTH Capital Partners

I wanted to continue on the revenue line. It sound like everything in Q2 is starting pretty well based on your commentary, but even the top end of your full-year guidance doesn’t imply much sequential growth from the Q1 level that we saw, I think maybe a few hundred grand on average. So can you walk us through that? Is that solely the stocking orders in Japan and if so can you quantify what that was in Q1, so we can get a better basis on which to build the model throughout the year.

Steve Anderson

We had about $2.3 million in orders from Japan. And again that was roughly about 100% or double what the level of business was in the first quarter of 2012. So that kind of gives you an idea of the impact that, that had. We are one quarter into the year right now and we are very optimistic about how the year is going to play out. We will get to the end of the second quarter and we will re-evaluate and if we need to make some modifications to our guidance then we will do so with the time.

Matt Dolan - ROTH Capital Partners

Okay, that’s all for this, making sure we’re thinking about it correctly. And then on the warning letter, you gave us some detail. Do you have any guess as to when this could be resolved? And I guess, secondly, probably more importantly it doesn’t appear that it’s had any effect on your business. But just comment if it has had any noise in the field.

Steve Anderson

Haven’t heard any noise in the field.

Ashley Lee

As far as the timing of the resolution, it’s a guess at this point, as I stated we do have a cost schedule with the FDA this week, and we are going to get a status update and we will know exactly where we are. We are hopeful, that we can schedule re-inspection sometime this summer. But again that’s just a guess and a wish at this point. But again we should know more shortly, but to reiterate Steve’s point, we are currently not aware of any customers in the U.S. that have discontinued ordering product from us due to the warning letter.

Matt Dolan - ROTH Capital Partners

And then on the R&D budget, you didn’t change the dollars, even though it looks like PerClot has pushed out slightly in terms of the study, walk us through the pacing, does it tick up in the second quarter or is this entirely a second half phenomenon for the R&D spent to ramp towards your guidance level?

Ashley Lee

It’s going to be a significant ramp in the third and fourth quarters. We’ve also taken a look at all of our internal projects and where we’ve added a couple of projects to our rosters, so the delay in PerClot from the first quarter is finding other opportunities to spend those hours on?

Matt Dolan - ROTH Capital Partners

Okay and on your business development program, are you still actively looking at other acquisition, I know you’ve got a ton of things on your plate currently so just maybe frame that for us?

Steve Anderson

We have two or three things that we’re looking at currently and we’re continuing that very actively. I mean, I’m very interested in finding some additional products to fit in around the HeRO Graft and that kind of is our primary focus at the moment.

Matt Dolan - ROTH Capital Partners

Okay great and then last one Ashley on the gross margin. I’m assuming the strength that you saw on BioGlue helped in the quarter, where should that go from here? Thank you.

Ashley Lee

We expect it to be relatively flat from current levels, if you look at the last four quarters it’s been anywhere from 64% to 66% and we think a lot of its really just going to depend on product mix.

Matt Dolan - ROTH Capital Partners

Thanks.

Operator

Thank you. The next question comes from Joe Munda with Sidoti & Company. Please proceed with your question.

Joe Munda - Sidoti & Company

All my questions were covered but Steve I’ve got a quick question for you. Let say you guys do get the PMA and in anticipation for the PerClot launch, I mean, is there any CapEx or significant CapEx that’s been devoted towards that. I know it ways off but how should we look at CapEx in 2013 with all these moving pieces.

Steve Anderson

I think we’ve already spent the money that we’re going to spend to build out our manufacturing facility that frankly is up and ready to go, it’s over here if you visit us it’s over in building two located right behind the marketing department and I think that those expense are already figured into our financials.

Joe Munda - Sidoti & Company

Okay and then as far as the question before regarding acquisition, I mean, could a possible acquisition be the full buyout of ValveXchange, you guys devoted about 3.5 million there. Is that kind of wait and see mentality, and, if it interests you, would you be interested in taking the whole ownership stake?

Ashley Lee

Anything that we do there is really going to be largely predicated on progress that they’re making in their trial one so forth. So, it’s probably premature to have any commentary on that. But as I mentioned earlier I would refer you to their website, they frequently have updates on their clinical progress and I’ll refer you to that.

Steve Anderson

There is going to be a clinical update given by one of their implanters that will be at our AATS up in Minneapolis and you can get that schedule off of our website and if you’re going to be there at that meeting you might want to make sure you’re there to hear the presentation but they will go through their clinical results that they’ve experienced in Europe and which are pretty good. And bring you up-to-date there, you can even talk with the implanter, if you want.

Joe Munda - Sidoti & Company

Okay. And then I had just follow up, you spoke about PerClot and HeRO Graft actually driving growth going forward with the success you’re seeing with BioGlue in Japan, I mean can you give us some color on the possibilities of PerClot in Japan, is there any cross over there?

Ashley Lee

I’m expecting the approval process to be considerably easier than it was with BioGlue simply because it’s made from potatoes, it’s a vegetable-based product, and that’s in our plans but the Japanese FDA has a reputation for being more conservative than the United States FDA, so that’s anybody’s guess. But we do intend to make an application there for PerClot and probably sometime this year that will happen.

Joe Munda - Sidoti & Company

And Steve, I mean when you do get approval would it run through same I guess distributor you’re using in Japan.

Steve Anderson

Yes. We use Century Medical and we’ve very, very happy with how that relationship has developed and so they will definitely be our distributors.

Operator

Thank you. We have a follow up question from Tom Gunderson with Piper Jaffray & Company. Please proceed.

Tom Gunderson - Piper Jaffray & Co

Just a quick one. R&D tax credit from 2012 I think was booked in Q1 can you tell us the amount of that Ashley?

Ashley Lee

It was approximately $200,000.

Operator

There are no further questions at this time. I would like to turn this floor back over to management for closing comments.

Steve Anderson

All right thank you for joining us and we look forward to talking with you again during the summary of the second quarter.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

This Transcript
All Transcripts