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ABIOMED, Inc. (NASDAQ:ABMD)

F4Q 2013 Earnings Call

May 2, 2013 08:00 AM ET

Executives

Susie Lisa - IR

Mike Minogue - President and CEO

Robert Bowen - CFO

Analysts

Matthew O'Brien - William Blair

Greg Simpson - Wunderlich Securities

Jayson Bedford - Raymond James

Anthony Petrone - Jefferies

Brooks West - Piper Jaffray

Charles Croson - Sidoti & Company

Steve Beuchaw - Morgan Stanley

Operator

Good day, ladies and gentlemen, and thank you for standing by, welcome to the Abiomed, Inc. Q4 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Susie Lisa, Senior Director of Corporate Development and Investor Relations. You may begin.

Susie Lisa

Thanks Mercy, and thanks everyone for joining us for the Abiomed fourth quarter fiscal 2013 conference call. I am joined here this morning by Mike Minogue, Chairman, President and CEO; and Bob Bowen, Chief Financial Officer of Abiomed.

The format for today's call will be as follows. First, Mike will provide you with strategic highlights for the fourth quarter. Next, Bob will provide details on the financial results outlined in today’s press release, and then we will open up the call for your questions.

Before we begin discussing the fourth quarter fiscal 2013 results, it’s necessary to remind you that during the course of this call, we will be making forward-looking statements, including statements regarding development of Abiomed’s existing and new products, the company’s progress toward commercial growth and future opportunities and expected regulatory approvals.

The Company’s actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors including uncertainties associated with development, testing and related regulatory approvals, including the potential for future losses, complex manufacturing, high quality requirements, dependence on limited sources of supply, competition, technological change, government regulation, litigation matters, future capital needs and uncertainty of additional financing, and other risks and challenges detailed in the Company's filings with the Securities and Exchange Commission, including the most recently filed Annual Report on Form 10-K and quarterly report on Form 10-Q.

Listeners are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this conference call. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this release or to reflect the occurrence of unanticipated events.

Lastly, compared to references made financially in this call to revenue expenses, gross margin or other increases or decreases will be indicated by references to fourth quarter fiscal 2013, as compared to the fourth quarter of fiscal 2012 or fourth quarter fiscal 2013 as compared to the prior third quarter of fiscal 2013.

I am now pleased to introduce Mike Minogue, Abiomed’s Chairman, President and Chief Executive Officer.

Mike Minogue

Thank you, Susie. Good morning everyone. We are proud to report another record quarter and record fiscal year in both numbers of patients supported and total revenue. Abiomed grew 17% year-over-year in total revenue for the fourth quarter to $43.7 million and set Impella usage records within the quarter for the highest day, highest week, and highest month in Impella history.

We grew 25% for the fiscal year with total revenue at $158.1 million and grew Impella 31% to $140 million. The clinical demand exists for patients requiring percutaneous hemodynamic support because of the size demographics and complexity of the heart failure population. This fiscal year demonstrates the company’s ability to execute our strategic goals while driving operational excellence with 10 times increase in net income over prior year and customer satisfaction.

Today I will summarize our first three corporate goals for the year and provide an update on our regulatory status. So goal number one was on revenue growth. This quarter Abiomed achieved double digit sequential and year-over-year revenue growth, driven by strong Impella usage. We have now grown sequentially in six of the last seven quarters and achieved year-over-year double digit growth for 14 straight quarters with record patient utilization, prophylactic and emergency support represented 48% and 41% respectively of total usage.

We continue to invest significantly in resources to provide clinical onsite support and training. We also have an increasing net number of independent cases each quarter supported by our expanded 24x7 call center.

Our second goal was on clinical publications. There are 11 publications regarding Impella within the quarter and over 40 for the fiscal year including the PROTECT II in circulation and announced yesterday PROTECT II cost effectiveness study in the American health and drug benefits journal. We believe that many of these new publications will strengthen the medical society guideline. To remind everyone Impella is now incorporated into four different guidelines.

The number three goal was around executing on our clinical and regulatory processes. This quarter we initiated the Impella CP roll out and starting in enrolling Impella RFP patients in our FDA study. There is strong clinical need and growing physician demand for both the Impella CP and the Impella RP or our right side device.

These two products have unique capabilities recognized by the experts in the field. We believe Japan also remains on-track for an end of calendar year PMDA approval for Impella and our new AIC console with reimbursement to follow in six months.

Now I would like to provide an update on the topic of the 515 FDA panel meeting held last December. It was recommended that Impella remain a Class III device and that all existing and future temporary ventricular assist devices will require a PMA.

In advance of our scheduled post-panel FDA meeting, the agency requested that Abiomed submit a briefing document describing the totality of the Impella data. This summary includes 685 patients including the Impella registry and also references 201 publications covering 1,877 patients.

Within the clinical literature amongst the four largest Impella high-risk PCI studies, a total of 564 patients have been studied and published, 225 of whom were under FDA IDE protocol and randomized to a control arm.

In addition we are planning to do more analysis from existing databases and continue to collect data from our registry and single center studies and have ongoing communication with the FDA on multiple subjects.

We can confirm there was a face to face meeting in February between Abiomed and the FDA and it was positive. Abiomed Impella submission criteria must meet the PMA standard of reasonable assurance of safety and effectiveness.

The PMA that Abiomed intends to submit to the agency will contain all reasonably known information which includes extensive real world experience and readily available medical device reporting or MDR safety records.

Unlike standard PMA submissions, our Impella PMA submission describes a product that has cleared on the market since 2008 and have hemodynamically supported over 14,000 U.S. patients. We recognize that the FDA views percutaneous LVADs as a future new segment of technology that provides hemodynamic support for minimally invasive procedure and actively unloads the heart.

Because this new product segment has the potential for broad applications, we understand the FDA assessment requiring PMA like controls and post market monitoring. While many details remain to be worked through, we are pleased to offer the following specific updates.

Number one, Abiomed intends to submit a modular PMA submission for Impella by the end of our fiscal year. Our proposed modular PMA will have the following three components, preclinical testing, manufacturing and quality systems and clinical data and conclusions.

A modular PMA allows for parallel submission of preclinical and manufacturing data for review while still preparing the clinical module. Abiomed appreciates the FDA's flexibility to review its submission as this will allow us to leverage prior work completed under 510(k) clearances and our Japanese submission.

The review clock starts when the final module is submitted and the expectation is for 180 days without a panel requirement and 320 days with it. Until this is completed, everything is business as usual for Abiomed and our Impella 510(k) clearances.

Number two, FDA has also requested that we work interactively to refine and complete the analysis of existing clinical data from PROTECT II and our U.S. Impella registry. Number three, as noted at the panel meeting and in our communications, the FDA has expressed the desire to work with Abiomed to complete the process. The FDA is not interested in pulling Impella from the U.S. market, provided Abiomed makes efforts to complete the process.

Moving forward and independent from our PMA submission, Abiomed is committed to maintaining our post market surveillance and expanding the IRV approved U.S. Pella registry, both in terms of the number of sites and the data collected at each site. This registry will continue to be a source of scientific analysis to generate peer reviewed publications around both safety and effectiveness for patient populations.

In summary, we believe in Impella PMA approval will provide a significant long term benefit for the company in our quest to become the new standard of care for percutaneous hemodynamic support. Our company culture is motivated by our ability to impact the lives of our patients and support our customers.

Our company has transformed into a resilient commercial organization that is profitable, debt-free and expanding the number of exclusive regulatory approvals, breakthrough innovative products and geographical reach. This has been an exciting fiscal year and has increased our confidence and commitment to our company mission. Thank you to all of our stakeholders for your support.

I will now turn the call over to Bob Bowen, our Chief Financial Officer.

Robert Bowen

Thank you, Mike, and good morning everyone. Before I get started, I would like to refer you to the Safe Harbor language noted at the outset of the call as well as the risks and uncertainties noted in our SEC filings, particularly our most recently filed 10-K and 10-Q. Today I will provide some brief comments on our fiscal year 2013 fourth corporate goal mainly operational excellence as well as provide guidance for fiscal year 2014.

As noted in our press release on April 17th as well as this morning’s full earnings release, record fiscal fourth quarter revenues was $43.7 million increased 17% from last year and increased 14% from the prior sequential quarter on record Impella patient utilization.

Worldwide Impella revenue grew 22% to $439.3 million. Service revenue grew 17% to $2.6 million and legacy product revenue decreased to 1.7 million. An additional 30 new Impella 2.5 sites were opened compared to 26 in the prior year and an additional 55 hospitals purchased Impella CP, bringing the total Impella CP sites to 106 or approximately 14% of the overall installed base of 748 U.S. Impella 2.5 customer sites.

Impella CP represented nearly 20% of overall reported patient usage during the quarter compared to approximately 10% in the prior sequential quarter reflecting strong demand for this higher flow device. The average hospital owned Impella 2.5 and CP catheter inventory on the shelf was consistent with prior quarters at the low level of approximately 2.4 catheters per site.

In general, hospital sites are increasing unit catheter inventory levels by approximately 1 catheter, while adding in Impella CP to the mix. On a full year basis revenue increased 25% to $158.1 million, which exceed the high end of the revenue range guidance we provided during last year’s conference calls.

The gross margin rate for the quarter was 79.8% compared to 81.8% in the year ago period and slightly above to 78.7% in the prior sequential quarter. Our gross margin rates are sensitive to the number of console placements in the quarter for new site openings, expanded needs or AIC upgrade.

During fiscal Q4, we placed a record number of Impella Consoles totaling 216 units compared to a 102 in the prior year and a 149 in the prior sequential quarter. Our current thinking given the improved use of the AIC is to continue this aggressive pace of AIC replacements for the older MPC units through fiscal year 2014 and largely complete this replacement cycle.

As such, the gross margin rates for the most recent two quarters are likely to persist through fiscal year 2014. For the full year, gross margin rates were 80% compared to 80.6% in the prior year. We placed 640 Impella Consoles during the year compared to 455 Impella Consoles in the prior year, a 41% increase to support a 117 Impella 2.5 U.S. site openings compared to a 110 in the prior year and to support the Impella CP launch increased our international business and support the AIC replacement process.

In addition, we completed the successful startup of the Impella CP production increased our safety stocks to provide six months of risk mitigation and increased manufacturing capacity. Our manufacturing organization adapted is necessary and successfully executed each and every challenge.

Average domestic Impella catheter selling prices were slightly higher than the prior year and slightly higher than the prior sequential quarter. Largely as a result of a favorable mix from the addition of the Impella CP which is a higher price catheter than the Impella 2.5. Our pricing strategy is to differentiate pricing between the Impella CP and Impella 2.5 while maintaining the overall Impella catheter ASP at approximately current levels.

Total operating expense in the fiscal fourth quarter was $30.7 million, compared to $27.6 million in the prior year or up $3.1 million or 11% on a 17% increase in revenue. Included in Q4 fiscal 13, SG&A expense was $2.3 million of outside legal fees related to the DOJ and shareholder matters.

In the fiscal fourth quarter income from operations totaled 4.1 million or 9.5% of revenue, up 41% compared to 2.9 million or 7.9% of revenue in the prior year. On a full year basis including 3.1 million of legal fees related to the DOJ and shareholder matters. Operating margin totaled $16.5 million or 10.4% of revenue.

GAAP net income for the fiscal fourth quarter was $3.7 million or $0.09 per diluted share, up 42% compared to GAAP net income of $2.6 million or $0.06 per diluted share in the prior year. This is our seventh straight quarter of GAAP profitability. Year to date GAAP net income of 15 million or $0.37 per diluted share was 10 times higher than the GAAP net income of 1.5 million or $0.04 per diluted share in the prior year.

This is a major accomplishment for our company particularly at this revenue level and reflects the discipline of the management team and commitment of all employees. As a reminder we have a U.S. federal net operating loss carry forward of approximately a 190 million which is fully reserved for accounting purposes.

The balance sheet remains in excellent shape. Accounts receivable of $22.9 million equated to 52% of quarterly revenue compared to a balance of $20.5 million in the prior year or 55% of quarterly revenue. Inventory of $14.9 million equated to 34% of quarterly revenue and compared revenue of $11.1 million or 30% of quarterly revenue in the prior year.

We have explicitly increased Impella disposable and console inventory levels during the year, with the addition of Impella CP as well as a planned effort to increase safety stock levels and maintain safety stocks at both our Ocken, Germany and Danvers, mass facilities for risk mitigation purposes. We are fortunate to have the financial flexibility to take these precautionary actions.

We ended the quarter with cash, short and long term marketable securities of $88.1 million. During the quarter we generated cash of $7.6 million from operating activities, used $0.8 million for CapEx and used $4.4 million to repurchase approximately 324,000 shares to complete our $15 million stock repurchase program.

On a fiscal year-to-date basis, we have generated cash of $26.4 million from operating activities, used $2.8 million for CapEx and 15 million to repurchase stock. In fiscal year ’12 we generated $3.6 million of cash from operating acidities compared to $26.4 million in fiscal year ’13. This improvement in operating cash flow is a remarkable achievement by the team.

As a reminder we have no debt. Turning to guidance full year revenue guidance for fiscal year ’14 as noted in our press release is in the range of $180 million to $185 million with Impella growth expected to be approximately 20%.

Consistent with prior years, we expect 45% to 55% of revenues to flow in the first half of the year and 50% to 55% flow in the second half of the year including currently estimated outside legal cost associated with the DOJ and shareholder matters in the range of $6 million to $8 million, we expect operating margins to be in the range of 7% to 8% as we continue to invest in growth and our product pipeline.

As previously stated, operating margins could vary outside that range in any individual quarter. We will now open the call to questions.

Operator, will you please open up the line for questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question is from Matthew O'Brien from William Blair. Your line is open.

Matthew O'Brien - William Blair

Just hoping to start up with the FDA commentary that you provided Mike and if you wouldn’t mind just you mentioned having to refine and complete the PROTECT II study. Can you just give us a sense for what that will entail and then your thoughts on whether or not you’ll need the panel?

Mike Minogue

Sure, the first point Matt is we’re working with the FDA and as I stated there is more detail to be worked out but we are going to continue to do data analysis on PROTECT II, which could mean that we’re looking at patient populations that were pre-specified such as atherectomy, non-atherectomy or triple vessel disease or even the learning curve as well as any other request they have looking at that profile from high risk PCI perspective, whether it’s risk level like STS scores or things like ejection fraction.

We’re also looking to validate and correlate that information and how it applies to our registry, both what been published today and Europella as well as USpella, as well the U.S. Impella as well the data that exists in the registry that gets us up to the 1,000 patient range and we are continuing to do that as well.

And then the last is we are just continuing to make sure that we meet the analysis that we meet the requirements for reasonable assurance of safety and effectiveness. So where they want us to add more input or even follow up patients through the PMA, post-market analysis like our own registry, we are open and we are supportive of any action that gives them more confidence around reasonable assurance.

And then the last piece on the panel, I would always assume to be conservative and say that it may require a panel but that’s a decision that they will make in the future as well. And the most thing is that during the entire process it is business as usual. We have the 510(k) clearances and it’s clear that that’s how we will operate in the meantime.

Matthew O'Brien - William Blair

Okay and then question for Bob on the guidance, I know there is some moving pieces here with the Impella outlook for the year but just as I do the calculations, I am getting something around utilization per center at around nine catheters for the full year and that’s pretty similar to what you did in fiscal ’13 even though you have increased by about 1 catheter per center over the last couple of years. First of all am I doing a math right and then secondly if that were the case, why you would be generating catheter levels like that?

Robert Bowen

Matthew, I think I am going to have to take that offline with you. I am not quite sure I understand.

Matthew O'Brien - William Blair

Okay just try to simplify, the utilization per center just seems to be flat year-over-year that you have been increasing last couple of years. Just not sure why that would be the case given you know the interest that people seems to have in CP and just general utilization trends of it improving.

Robert Bowen

I don’t think we have specifically said how many centers we would be adding for fiscal year ’14. We think the Impella business grew 22% in the last couple of quarters and we think that given the fact it’s a bigger number to grow off of that, the 20% target that we mentioned in the press release in the call was within the circle of reasonableness.

Operator

Our next question is from Greg Simpson from Wunderlich Securities. Your line is open.

Greg Simpson - Wunderlich Securities

I will limit my question on the FDA front to just one, then move to some other things. Mike I appreciate the very detailed update you gave us and realize you are still probably a little bit limited but my takeaway from listening to what you said and a lot of nuances in there but seems to me and this has been my opinion all along, so I am trying to read into something that agrees with my own opinion but it seems to me that the risk of having to do another randomized trial from what I am hearing from you seems really low I do not know if you want to go on record with that but it just strikes me especially given the existing data and the randomized data that you already have it seems to me what I read into your comments was that the FDA is very open to using this existing data to get to the finish line here. Is that a fair assumption or is that something you won’t touch?

Mike Minogue

So Greg I think the feedback at the December panel meeting from the physicians and also the FDA indicated there could be the potential of sufficient existing data to file for PMA without doing another trial but again we may be asked to do additional work which could be potentially the single arm study, perspective study or just more additional registry work or post market analysis of tracking the patients and filing reports and so we are in discussions with the agency requiring these requirements.

Just kind of as a reminder, Impella has 262 patients that were studied under IDE already. And if you look at other LVADs implantables and permanently implanted devices including our own surgical devices, those have been approved and compared to a performance criteria, not randomized and those studies range from 65 to 150 patients enrolled.

The other component is what is different about this is this PMA submission will include the real world data and so Impella has a very strong safety record. If you go and look at our 8-K that was filed I think December 7th it shows the Impella has very comparable good NDR rates. You can also look at in the slides the comparison to the balloon pump.

And I think what people should remember is the PROTECT II was really designed for superiority but the process we are going through is to utilize that data to show reasonable assurance of safety and effectiveness, which means that you can look at pre-specified endpoints. You should be looking at 90 day endpoints and as well as some of the post hoc analysis along with the totality of the data which is again the ongoing registry and all the other publications.

Greg Simpson - Wunderlich Securities

And to follow up on that just a bit, is it fair for us look at the FDAs proposal for AEDs and draw any parallels to what this based on your meeting, face to face meeting with them, is it reasonable for us to look at and draw some takeaways.

Mike Minogue

Well I think what the AEDs shows is you have technology that’s been out there for a while but does have clinical data and extensive real world use and if you look at that it kind of talks about the path for products that you have that extensive real world utilization. They have not completed this segment but certainly we believe that in our case we do have a lot existing data, a lot of patients support in the U.S. and very good safety records. So, yes.

Greg Simpson - Wunderlich Securities

And moving on, can you break down the procedural mix, I didn’t hear that but high-risk versus emerging?

Mike Minogue

Prophylactic was 48% and the emergency was 41% and then the rest is all other bucket and the biggest component in the all other bucket is probably the application of hemodynamic support during VT ablation.

Greg Simpson - Wunderlich Securities

And then, trying to look at the use of CP and I continue to get great feedback on that device and you talked about how maybe 20% of Impella procedures were the CP in the quarter. Do you have any, even kind of rough kind of guess, I’m a little surprised by how many doctors are moving towards the CP for the high-risk PCI procedures, not just AMI which seem kind of obvious but can we talk about that dynamic, how significant is that transition and the use of the CP and high-risk PCI?

Mike Minogue

Greg, there is tremendous demand for the Impella CP. Of the 750 sites, a little over 400 have the AIC which is required to run the CP and we’ve already penetrated a quarter of them in really our first quarter but we’re continue to do it the way to have the best protocol if there is training, the best outcomes of patients.

Relative to the decision on hemodynamic support, the product choice, we look at that is protocol driven by physician preference, based on potentially the need for more flow, as well as the size of the patient and what we are really trying to do is allow the physicians to practice medicine and allow them to use the preferential flow rates that they want, which also includes the Impella 5.0 and we will continue to work with them to support their patient outcomes.

The second component of that is we do see a price differentiation between the Impella 2.5 and the CP and so we think that that will also allow for those that are more cost conscious to make those decisions, whether it is for prophylactic or for emergency basis.

Operator

Our next question is from Jayson Bedford from Raymond James. Your line is open.

Jayson Bedford - Raymond James

Just a few kind of follow-ons. I appreciate the color on the 515 process I guess my question is when do you expect to have full clarity on what exactly the FDA wants?

Mike Minogue

So Jayson the meeting we had wasn’t face to face but we are having weekly communication with them we are doing multiple deep dives on different segments and I think what the important part is under a modular submission two out of the three components we believe we have clarity that is the pre-clinical testing as well as the manufactured quality systems so that we have five plus Impella, 510(k) clearances and we had the Japanese submission where we had a lot of work done. So we are going to move forward on two out of the three and an ongoing basis we are going to be working with them to again complete our submission before the end of this fiscal year for the PMA.

So it will be an ongoing basis but again the point of doing the briefing document the pint of doing the shell work with them is to come to clarity around what their looking for to really give them confidence in safety a reasonable assurance of safety and affect in there. So obviously before the end of the fiscal year when we are going to submit we believe we will have that clarity because we are working together in collaboration to make sure that the final submission meets that objective.

Jayson Bedford - Raymond James

And then it looks like usage is growing a little faster in the emergent setting than it is in the high-risk PCI. Is that largely reflective of the introduction of CP and the mix associated with that or is there a more concerted effort to emphasize use in the emergent setting?

Mike Minogue

Well we did see a nice sequential bump this quarter on prophylactic use as well as the emergency use. I think it's really driven around a couple of things. One is the appropriate use criteria and there are many patients that just don't have maybe surgical options and again there are publications around the benefits of PCIR for this patient population.

The second is the shock 2 study that was published on the insured balloon pump that demonstrated that it did not provide additional hemodynamic support as compared to no support. So I think there is some discussion over that. I think you even saw in California there was a tech assessment done where they recommended for this tech assessment not to reimburse or not to support the use of intra-aortic balloon pump in cardiogenic shock and I think the last is just as the AICs, our new console gets out there, the ease of use really helps us to make sure that the techs and the nurses are more comfortable which leads to, in our mind better outcomes for patients when they have more rigor around the patient treatment.

Jayson Bedford - Raymond James

That's helpful and then again just lastly from me, I’ll get back in queue. On the folks using CP are they using it more than they were the 2.5?

Mike Minogue

For the ones that are doing it, it's a bit of a transition it really depends on their personal preference but certainly as we've introduced the products we've see an increase of overall patients and our focus as a company is not to drive one product versus the other, it's really to allow for the physicians and their practice of medicine to incorporate the right level of hemodynamic support for their patient population. But what we're seeing is an increase of overall patients supported.

Operator

Our next question is from Anthony Petrone from Jefferies. Your line is open.

Anthony Petrone - Jefferies

Good morning, a couple on the comments on the FDA guidance and PMA process, Mike. Just wanted timing, you mentioned that all three modules you think possibly could be sort of finished by the end of the year or that you'll only have two, the preclinical and manufacturing side and that, the clinical data and conclusions will take a little bit longer.

Mike Minogue

We believe that all three will be completed and submitted before the end of the fiscal year.

Anthony Petrone - Jefferies

So a follow up there is that if in the absence of formal guidance from the FDA, similar to what they issued for AEDs, how are you sort of looking to proceed on the clinical front without that actual formal industry wide guidance and it's sort of if you don’t have that, is the process sort of stuck in limbo similar to the AED experience?

Mike Minogue

That’s a good question Anthony. We expect that they will have that completed before the end of the fiscal year, if they do not have a completed we’re still working interactively with them to prepare for the formal PMA and to still address the concern they have so that we can provide evidence of reasonable assurance, safety and effectiveness.

Anthony Petrone - Jefferies

Okay. Just in timing, okay. So, there is an expectation and this all could be done by the end of the fiscal year but its contingent upon that full industry guidance and there is hope based on your conversations with the FDA that that formal industry wide guidance will be out sometime before the end of the fiscal year?

Mike Minogue

Correct, but in our case the FDA has already agree to work with us and they are working with us now for our formal PMA submission, partly because of the extensive data we have and that we’re trying to get ahead of it and we’d like to be one of the first success stories in the industry that’s converted from a 510(k) through the 515 process to PMA and we’re excited to kind of be the role model and they’ve agreed to start working with us on the process.

Anthony Petrone - Jefferies

And I guess just switching gears a little bit to shock 2. It wasn’t motioned here on the call yet but there is a competing pump company that mentioned fall off in balloon pump volumes in Germany actually after shock 2 has been digested and here out in the wild a bit about a year. I know international is not a big focus right now but in light of some geographies potentially shifting as related to shock 2 what is your sort of international approach outside of Japan.

Mike Minogue

So Europe has been producing our best results driven on patients, albeit at PCR, it is this month and we’re seeing really nice progress over there and also in Germany and we’ll continue to add the right heads but the patterns and trends are all positive and we’re very excited and kind of doing a bit of a prelaunch or mini-launch of Impella through the new console as well as the CP.

Anthony Petrone - Jefferies

So is it fair to say this share gain opportunities the pump in the Germany or other geographies in Europe?

Mike Minogue

Well, I don’t know if I’d call share gains. I’d say that we’re seeing an increase in usage on Impella, whether or not they’re not using the balloon or they’re failing on the balloon pump. It’s a combination but we’re seeing our best progress in Europe and we’re definitely seeing that in Germany as well.

Operator

Next question is from Brooks West from Piper Jaffray. Your line is open.

Brooks West - Piper Jaffray

Mike, I wanted to circle back to the label discussion and could you talk a bit about what your goal for the Impella label is at the end of this process and I’m thinking about specific therapeutic indications and then I got a follow-up?

Mike Minogue

Sure, Brooks. So this remains an area of discussion with the agency but what we think or what we believe is the most likely path is to submit a PMA for a temperature hemodynamic support label or indication for high-risk patients and/or procedures.

As we get more specific on other types of indications that could take the shape of HDE or more registry submissions on collection of data or could be specific indications from single-arm studies compared to your performance criteria such as bridge store cover which we’ve talked about in the past, but worth the FDA on whatever their preferred path is but again what our device does is provide hemodynamic support to enable a minimally invasive procedure and/or it improves the hemodynamic stability of the patient and helps their organs.

Brooks West - Piper Jaffray

So then you would be left with a label that would look something like what you have without superiority claim right just broad circulatory support and then I asked the question because I know I’m going to get it, as you think forward then to the reimbursement arena, how do you think about your kind of labeling progression with the FDA as you relate it to the payers?

Mike Minogue

I guess, I don’t think your assessment is what we think we’re going to end with. We think we’re end up with something that is more specific and we think we’ll be able to augment it with other things like HDEs or registry submission, so you can even be more specific on this specific applications like bridge store recovery.

In the case of superiority, there is not in FDA study that exists in 30 years compared to hemodynamic device like VADs (ph) that say superiority over a balloon pump. Patients that got prior VADs (ph) always failed the balloon pump and went to either our devices or the competitors devices because the balloon pumps are not ventricle assist devices. Therefore it hasn’t been seen from a hemodynamic perspective to specifically call out the superiority.

And again Brooks in the end I think that is it comes back to the practice of medicine and if what we’re looking to show is that Impella provides superior hemodynamic and is saved to increase hemodynamics, whether it used prophylactically or emergently and we’ll give more guidance as we go and that’s what’s what we’re working with the FDA as well.

Brooks West - Piper Jaffray

Thanks for that Mike and just one more on that so I make sure I understand. So this sounds like then a step process where maybe your first outcome is the most general label and then you would run kind of series of modular approach so to speak to define the specific label, is that correct?

Mike Minogue

Well not modular approach, it can be general, it can be broader, it can be specific, and for example if you look the balloon pumps or if you look at our prior VADs is they start with an indication and overtime with submissions either from registries or from single arm or even HDEs, they continue to add to those and that’s been the pattern and that’s essentially the way balloon pumps and all VADs have kind of worked in the past around recovery or just hemodynamic support.

And then from a clinical practice perspective, I think really what you would be looking on the way things are used or questions on CMS or even reimbursement, I think those folks look more to the data and they look more to the guidelines and what we really believe is we’re currently in four guidelines but many of those guidance don’t cover and don’t incorporate yet PROTECT II and some of our other publications. So, as that continues to get strengthened, I think we’ll continue to work with the right agencies to address their specific concerns.

Brooks West - Piper Jaffray

And then just one for Bob. Bob, could you give the revenue mix within the Impella product line for the quarter? So what was 2.5, what was 500, what was CP?

Robert Bowen

So for Impella, for U.S. Impella 2.5 was 22.3, CP was 9.8, 50 was 4, the rest was consoles, little bit of consoles.

Operator

Next question is from Charles Croson from Sidoti & Company. Your line is open.

Charles Croson - Sidoti & Company

Most of mine have been answered so I’ll just be brief. So kind of changing gears here from all has been discussed, have you had any insight in to what CMS might actually do with some of these listed items that were a big issue a couple of quarters ago and if so are they moving forward with that or do you have any idea what the discussions have been?

Mike Minogue

So Charles you are referring to our?

Charles Croson - Sidoti & Company

The MCD on the non-roller pumps, the roller pumps, the potential to get that.

Mike Minogue

We believe after and we put this out in 8-K, after our normal communication and our yearly review which has happened in February with CMS that there is not a pending national coverage decision on Impella. We don’t think there is a consideration for it. We were named to the potential list I think among 33 other types of products or technologies and I think they do less than 10 or potentially five to 10 per year for all the products in the entire industry.

So if you are on the list it doesn’t necessarily mean there is a pending question but where we were listed was also along with the intra-aortic balloon pump and we think that there may be some analysis being done on that side as well because that’s been around for a long period of time and has had some recent publications that are not very favorable.

So if and when we hear that we believe something like this is coming, we will bring it up, we will let you all know that and we also think that based on their criteria to become a national coverage decision, we are still a small number and we don’t meet that criteria because there is a controversy with regional people. We continue to have regional payment in all the regions within the country and have had so since 2008 and maybe the most common outcome which we would give a first look, some work may be done would be seeing things like a MEDCAC panel or a draft a local coverage which ever would get in advance, similar to what happened with NHIC two summers ago, where they did the analysis and they do pay for Impella.

So we will continue to give transparency to that process. We also believe that when it comes to medical devices we do believe we have the best cost effectiveness data in the industry and just to draw your attention to, we have had a bunch of recent publications around that.

The European cost effectiveness publication was in the Journal of Medical Economics in January. The budget impact model was published in the Journal of Managed Care Medicine in February of 2013. Yesterday we announced the PROTECT II cost effectiveness paper, which was published in the American Health and Drug Benefits and then we also, at ACC there was an abstract about percutaneous cardiac assist devices compared to surgical hemodynamic support devices.

So we are going to continue to publish around the clinical value but we also believe that our focus on trying to help patients get safer and more complete minimally invasive procedures, that that goal will lead to really good quality of life outcomes and cost effectiveness and that is really the goal of what we do and what differentiates us from pretty much every other company that is in the space.

Charles Croson - Sidoti & Company

Okay that is very helpful Mike. I appreciate the detailed answer. And then lastly any update that you can give us, I know you probably can’t really talk much about it but the investigation that you had come about in the last year because anything would be helpful if you can?

Mike Minogue

Sure Charles so the first, the important part is we did announced this quarter that we received a close out letter from the FDA, the Office of Compliance with respect to its previous FDA warning letter from 2011. The close out letter stated that the Office of Compliance has completed its evaluation and they obviously had looked at our processes and audited our past practices. .So we are glad that that has been closed out.

As regard to the subpoena, we will continue to work to resolve the issue and cooperate and we will continue to do so. We do not have any other comments on that. Relative to the shareholder lawsuits we believe that the suit has no merit and we are vigorously defending against it and then relative to the derivative lawsuit, we have also filed a motion to dismiss that suit. The tenuous brief was due in I think mid-April and ours was due at the of the month and that's one of the reasons we released our quarter and our full year revenue prior to the brief in order to demonstrate Abiomed's continue to have strong execution and positive results.

Charles Croson - Sidoti & Company

And one last quick one on the subpoena then; do you have any idea on when you might be able to give us a little bit more clarity?

Mike Minogue

I think the way these things work is they can continue to go on for an extended period of time or they can go away or they can come to resolution and right now we will continue to work them to provide any and all data and continue to be compliant as a company and as we move forward we are a smaller company. I know a lot of bigger companies can have three to five of these going on at one time. We are just going to follow their path and have confidence in our ability to work with them and to resolve it one way or the other.

Operator

Our next question is from Davis Louis from Morgan Stanley. Your line is open.

Steve Beuchaw - Morgan Stanley

Good morning everyone, it's Steve Beuchaw here for David. I had one just on the P&L into 14, I guess for Bob. On the $6 million to $8 million of spend that you called out in the Press Release this morning, should that be fairly evenly spread over the course of the year or more biased towards one half or the other, and how does that compare to the run rate let's call it in the second half of fiscal 13?

Robert Bowen

So Steve we incurred $2.3 million worth of outside legal costs in fiscal Q4 and $3.1 million for the year. So about $0.8 million in the prior quarter when it was just getting started up. Some of those costs in fiscal Q4 were related to setting up the information architecture and to be able to provide data in an efficient manner. And right now our current thinking is, is it's kind of like $1.5 million to $2 million a quarter spread across the year, but it's I would say best estimate and what we will, we'll spend what it takes to get through the process in a positive manner, but that's about as much as we know right now.

Steve Beuchaw - Morgan Stanley

Got it, very helpful, and a couple for Mike. Number one, Mike you made some comments on PCI volumes last quarter that were frankly ahead of the curve. You called out a couple of issues that I think others have spoken to since. So given that we have the heart team out there becoming more of a consideration and AUC which has gotten more attention since you mentioned it, I wonder if you could give us your latest thoughts on what's going on in terms of broader PCI (audio gap) going forward.

Mike Minogue

You know Steve, we don't look at it from the overall PCI but based on our insight is what's happening is that the patient population today are older, more complex and many of the physicians are looking for alternatives, including a number of surgeons who potentially are not able or not willing to operate in what's considered to be the highest risk area of appropriate use criteria.

Where we work best is where we kind of follow the guidelines around both the use of hemodynamic support as well as where you look at where the appropriate use is and again the most appropriate patients that are in those guidelines are around those are getting triple-vessel disease or have poor heart function or high complexity and that’s really where we see our sweet spot.

So, I think you are seeing that there is a drop in kind of the bread and butter single that’s all type of approach but that’s why I see a subspecialty continuing to grow with our users with a really specialized done more of those complex patients.

So there is a little bit of a parallel or similarity to those that are focused on radial approach, it’s a subset of physicians that are growing their business looking at certain patients populations and the benefit and then on the kind of the process of those building blocks, it’s really you have to have the DRG, you need to have a dedicated CPT code, you need to have inclusion in guidelines and then you want to match that up with really onsite support and training and rigor around patient outcomes and that’s where we’re focused.

Steve Beuchaw - Morgan Stanley

And then one question on some of the recent news from the company regarding the positive policy decisions for some of the private payers, I think we take these on face and say, hey, we’d expect a positive utilization trend to follow.

So, I wondered if you could put some more color around in what you’re seeing coming out in the wake of a number of these positive reimbursement decisions. Are we thinking about this the right way and what kind of utilization trends are you anticipating in fiscal ’14 given a positive tailwind there?

Mike Minogue

Well, I think we are projecting Impella growth at 20% which I think puts it in a top tier of products and I think you are seeing people look at the clinical data and look at the cost effectiveness and understanding the way you look at health care reform has changed from really quality of patients at the hospital to quality of the patients 90 days post discharge and as people look at quality, they’re trying to figure out ways to do it the best the first time, reduce length of stay, reduce readmissions and improve the quality of life and customer or patient satisfaction and I believe we have lots of data in studies that show that we can influence two out of the three main criteria that CMS is tracking which is heart failure, AMI and pneumonia and we do feel confident that the healthcare reform specifically putting a focus on 90 days post discharge really plays to the strength of doing a better job the first time.

Operator

Thank you. We have a follow-up from Greg Simpson from Wunderlich Securities. Your line is open.

Greg Simpson - Wunderlich Securities

Mike, since you’ve mentioned the cost effectiveness data in the press release yesterday, I want to ask a question about that. I actually had a dinner with Dr. O’Neil back in November 2011 when that data first come out. He thought that was a huge positive and I’m just curious now that’s in peer-reviewed form, how significant do you think that is. Is that something you can really use your advantage in the field or does it matter now that we’ve kind of jumped up to peer-reviewed fashion?

Mike Minogue

Greg, I think it always matters to have something in print in peer-review. This journal specifically chose because it has one of the largest distributions on the drug side to people that track health performances specifically around cost effectiveness and I think it just again validates the ability of this technology to help physicians do a better job and as well as compare it to other types of technology such as dialysis or surgical VADs or even MRI procedures. So what it gives us is a way to compare ourselves to other technologies that are being used today that are considered cost effective.

Greg Simpson - Wunderlich Securities

And then just one quick one on guidance for Bob. Came in a little higher than I expected given that it was my impression you guys probably want to be a little extra conservative just after fighting people’s concerns about guidance over the past few years even though you’ve beaten it consistently; just a little clarification; I assume obviously given the timeline there is no Japan in there, but what about RP? Any RP revenues from the clinical process?

Robert Bowen

You’re correct, there is no Japan in there and there is not a material amount of RP in there either. There is minor revenues from the clinical process largely 2.5 CP and 5.0.

Greg Simpson - Wunderlich Securities

And just real quick on Japan Mike, you’ve talked about, can you just maybe talk about the clarity you guys have on that process and kind of what’s the next step and things like that. You seem pretty confident about the approval timeline?

Mike Minogue

We’re confident and we’re even more excited about the opportunity to go to Japan. We disclosed that the initial introduction and the pullover there was from societies. We have letters of support from pretty much all the physicians' societies from cardiology to heart failure to heart surgery to even some pediatrics and we believe that our technology is custom made for a country that has smoking population with poor outcomes post-AMI as well as really not transplant alternative.

So we have a medical advisory board, a group already we were working with. We are identifying what will be top sites in the training centers and we are seeing tremendous interest and excitement and will be planning to have a hemodynamic training program and course for our initial users this coming fiscal year.

Greg Simpson - Wunderlich Securities

Okay and just to clarify, that approval will be for the entire Impella product line?

Mike Minogue

That Impella approval will be for the new console as well as the 2.5 and there will be other supplemental submissions that will follow around the CP and the 5.0 but the main focus initially will be on new console and the Impella 2.5.

Operator

Thank you, we have passed the time call start time. I will now like to turn the call over to Mike Minogue for closing remarks.

Mike Minogue

Thank you everyone for your time today and we are excited to start a new fiscal year. Have a great day.

Operator

Ladies and gentlemen, this does conclude today’s conference. You may now disconnect. Thank you.

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