Hansen Medical Inc. Q2 2009 Earnings Call Transcript

Aug. 4.09 | About: Hansen Medical, (HNSN)

Hansen Medical Inc. (NASDAQ:HNSN)

Q2 2009 Earnings Call

August 4, 2009 5:00 pm ET

Executives

Fred Moll - Co-Founder, President and CEO

Steve Van Dick - CFO

Jay Hansen - Director of SEC reporting

Mahmoud Elaskary - Director of Financial Planning and Analysis

Lasse Glassen - Financial Relations Board

Analysts

Tim Lee - Piper Jaffray

Charley Jones - Barrington Research

David Lewis - Morgan Stanley

Sameer Harish - Needham & Company

Jason Quinn - Green Coast Capital

Operator

Welcome to the Hansen Medical Incorporated second quarter 2009 results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator instructions) This conference is being recorded Tuesday August 4, 2009.

I would now turn the conference over to Lasse Glassen from Financial Relations Board. Please go ahead, sir.

Lasse Glassen

Thank you operator. Good afternoon everyone. Welcome to Hansen Medical's 2009 second quarter conference call. Before I turn the call over to management, please remember that our prepared remarks and responses to questions will contain forward-looking statements. Words such as may, will, should, expects, believes, estimates, targets, projects, goals, could, scheduled, plans, opportunity, guidance and variations of these words and similar expressions are intended to identify forward-looking statements that are subject to a number of risks and uncertainties.

Examples of such statements include statements about our expected operational and financial results, the expected numbers, locations and timing of placements of our Sensei system and recognition of revenue on systems, the timing and results of our clinical studies, the receipt and timing of future regulatory approvals, the expected results of our cost reduction initiatives and the timing of future product introductions.

Actual results may differ materially from those set forth in these statements due to risks and uncertainties inherent in our business, including potential safety and regulatory issues that could slow or suspend sales, our ability to effectively sell, service and support our products.

The rate of adoption of our systems and the rate of use of our catheters of our customers that have purchased our systems; our ability to successfully manage our manufacturing and operating expense; our reliance on third party manufacturers or suppliers that could adversely affect our ability to manufacture products on a timely basis; the scope and validity of the intellectual property rights applicable to our products, competition from other companies.

The effect of credit, financial and general economic conditions on potential purchases of our systems; our ability to obtain additional financing in support of our operations and other risks detailed in the risk factor section of our periodic SEC filings, including our annual report on Form 10-K filed with the SEC on March 16, 2009.

We undertake no obligations to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

With that, it’s now my pleasure to turn the call over to Hansen Medical’s President and Chief Executive Officer, Fred Moll. Dr. Moll?

Fred Moll

Good afternoon everyone and thank you for joining us. On today’s call, I will provide you an update on our operating results and business highlights for the second quarter of 2009. As well as provide additional details about our financial results. After our prepared remarks, we’ll open the call to questions.

Due to illness and meningitis, our CFO Steve Van Dick will limit his vocal participation on this call. For that reason, I have asked Jay Hansen, our Director of SEC reporting and Mahmoud Elaskary our Director of Financial Planning and Analysis to be available for financially related questions.

We believe that Hansen's making good progress in building its business in flexible robotics. Although the market for capital spending in hospitals present a challenging environment and although we are very disappointed by our system sales in Q2, catheter sales were at a record level and we believe utilization rates for active systems in the field are holding steady.

Also several recent studies are providing a growing body of clinical data that we believe reflects the benefits of our technology. In addition, we are very excited about the progress we are making in enhancing our current platform and developing new capabilities for our technology.

I also continue to be encouraged by ongoing actions, which we have taken to reduce spending, resulting in a lower cost structure. Finally, we're successful in completing our capital rates in Q2 that based on our current plan, we believe we'll fund the company to cash-flow break even.

As we pre-announced last month, during the second quarter we shipped six Sensei Robotic Catheter Systems and recognized revenue on three. Of the systems we contributed to the second quarter revenue, one was sold to an existing distributor for Spain and Portugal; one to a distributor in South Africa; and the final unit went to a hospital in the United Kingdom.

Sales were adversely affected by general macroeconomic conditions that continues to significantly impact our customers' capital spending. Due to the tight credit markets and general economic conditions, several potential customers sought additional approvals prior to making their purchase decision and/or spent time evaluating alternative financing arrangements during the second quarter.

We also found ourselves competing for the same capital equipment budget with other capital equipment technology. In each case, this extended the length of the sale cycle for Sensei systems and resulted in potential customer's orders moving out of the quarter.

In the mean time, our pipeline for potential customers is healthy and we're taking actions to improve our system sales performance in this challenging environment by restructuring our sales, clinical and service groups into regionalized teams and providing additional training for both our clinical staff, our clinical and sales personnel.

On a cumulative basis through the end of the second quarter we have recognized revenue on a total of 68 systems, which we refer to as our worldwide installed base. This includes 43 systems in the United States and 25 in international markets.

With regard to our recurring revenues, we have now experienced four successive quarters of increasing sales in catheters and service. In the second quarter, we sold a quarterly record of 626 Artisan catheters, which compares to 601 catheters for the first quarter, 520 catheters in fourth quarter of 2008, and 420 catheters in third quarter of 2008.

Also, I’m pleased to report that through the second quarter we have now converted a total of 41 customers through extended service agreements, up from 30 customers at the end of the first quarter.

One of the metrics that we are frequently asked about is, the average utilization rate for our systems in the field. We’ve been reluctant to provide detailed information on utilization for various reasons including the size of our installed base, the early stage of our commercialization efforts, and the inability to capture actual cases performed due to a number of customers performing cases independently.

In order to better track actual utilization, in Q1 our engineers developed software tools that will allow us to analyze logs that can be downloaded from our Sensei system and determine the actual number of procedures performed by that system over a defined period of time.

Going forward, we will pull these logs from our installed base approximately every six to eight weeks and analyze the data to determine the procedures done per week in a predefined time period. Although we are not up an running with the new software in all systems, I am able to report that the data we have retrieved from a majority of active accounts, which we define as system placements that were clinically active during the quarter, average about one case a week.

Clearly, this is an average utilization for our active systems with some "super users" performing significantly more cases and some lower volume users performing fewer cases. On a positive note, we have had a number of users, who will accomplish three procedures a day, and some very active users are accomplishing six procedures per week.

Going forward, we are evaluating our training and clinical support protocols and together with the release of the next generation Artisan and Sensei software, we believe that we can positively impact utilization rates.

Regarding our clinical experience, physicians are gathering a growing body of clinical data that we believe reflects the benefits of our technology. The physicians at the Texas Cardiac Arrhythmia Institute in St. David in Austin, Texas, published the largest perspective experience of a single center in the use of a Sensei system as it compares to standard, manual technique.

In this 396 patient study which was published in July in the issue of the Journal of Cardiovascular Electrophysiology, the authors report that "fluoroscopy timed with significantly lower for remote navigation at 48.9 minutes compared to 58.2 minutes for manual ablation" and stated that "the safety profile of the Hansen system was similar to that of the manual counterpart". They also reported "a success rate for remote navigation of 85% while for manual procedures it was 81%".

We believe that this study conducted independently by the Austin group, which describes lower fluoroscopy time and procedural efficacy, together with the safety profile comparable to manual technique is a very positive for Hansen going forward and will help strengthen the value equation for our technology.

In addition to the St. David's study, we began last year a 100-subject randomized study in Europe to compare Sensei robotic navigation to conventional technique for the treatment of AF. This study is being performed at St. Bartholomew's Hospital in London with Dr. Richard Schilling as the principal investigator. The study is progressing very well with all 100 patients enrolled. We continue to anticipate reporting initial findings from this study some time in the fall of 2009.

Now, with regard to product development, we are pleased with the progress we are making in developing new capabilities for the Hansen platform.

In electrophysiology, we are currently developing a next generation Sensei platform that we believe will extend the procedural capabilities of Robotic Catheter Control by providing advanced levels in the state of control, accuracy and ease of use. Specific benefits of this platform include tighter bending workspace capabilities, accelerated setup and procedural workflow and a more sophisticated navigational capability.

This new platform will support a next generation catheter to enhance robotic capabilities during complex arrhythmia procedures. We are currently working with regulators and we now expect to receive FDA, 510(k) clearance for the next generation platform and catheter by the end of the third quarter.

We are also developing a new, smaller and more flexible ablation catheter for the European market, which we would expect to launch in early 2010. Our initial clinical experience has been very positive. We believe that these development activities will strengthen the value equation of using the Sensei both for the hospital and the electrophysiologists.

Further more, we continue to develop our new vascular platform. This new Hansen platform is designed to offer a novel capability in a variety of complex vascular procedures. We believe this new platform will allow us to capture a significant opportunity for vascular surgeons looking to expand their capabilities involving advanced interventional technique.

Vascular surgeons by and large have not received formal training in catheter-based intervention. Hansen’s technology will provide a means for these surgeons to quickly become skilled in catheter control and give them the ability to expand their practice and increase their case volume in minimally invasive procedures. We look forward to updating you on the success of these initiatives in future reports.

Now, I would like to comment on our cost reduction initiatives. We remain extremely focused on controlling expenses. During the past 10 months, we have reduced total headcount by 20 percent and implemented targeted variable cost reductions, manufacturing furloughs and process improvement initiatives. These actions are beginning to bare fruit.

On a sequential quarter basis, we reduced total operating expenses in the second quarter by nearly $2 million. Through the first half of 2009, we are on target for meeting our goal to reduce 2009 operating expense below 2008 levels.

We have designed our expense reduction initiatives for 2009 to achieve our operating expense goals, without materially affecting our ability, to deliver the previously mentioned product enhancement in the EP and vascular segments. As importantly, the initiatives will not impact our customer facing activity such as sales, field support and field service.

In summary, we are confident that our technology and planned product development activities, coupled with the clinical data demonstrating the benefits of our technology, present a compelling value proposition to hospitals and payers.

Furthermore, we believe that our pipeline of prospective customer's remains healthy and the discipline in second quarter system sales in not reflective of Hansen's longer-term business opportunity.

Operationally, our cost reduction initiatives and recent successful financing activities have helped solidify our financial position. We continue to believe that our current cash position is sufficient to fund the company through cash flow break even.

Now, lets take a closer look at the second quarter financial details. Before commenting on Q2 results, I'd like to briefly mention the details of our recent financing activities. As I mentioned, we successfully completed a public offering of approximately 11.7 million shares of our common stock. The net proceeds to Hansen from this offering after expenses is approximately $35.3 million.

We intend to use the net proceeds to support commercialization, sales, marketing and general administrative activities for research and product development activities, for capital equipment and to fund working capital and other general corporate purposes.

Based on our current business plan and its financing, coupled with our cash on hand and existing debt facility its expected to be sufficient to fund us through cash flow breakeven.

Now, lets move on to our second quarter 2009 income statement. We recorded quarterly revenue of $3.3 million primarily on the sale of three Sensei systems and 626 Artisan control catheters, approximately 100 of which were sold to a single international medical center. This represents a 43% decrease over the $5.8 million of revenue in the same period of 2008, where we sold eight Sensei systems and approximately 279 Artisan catheters.

The average selling price for the three systems sold during the second quarter of 2009 was approximately $556,000, this compares to an ASP of approximately $585,000 in the previous quarter and approximately $614,000 in the same quarter last year.

The principal reasons for the lower ASP in the second quarter were worse than anticipated general economic conditions affecting the pricing of capital equipment purchases, which have resulted in discounting, the increase in mix of international units versus domestic units, and the impact of unfavorable movements in exchange rates.

The Artisan control catheters sold in the quarter had an average selling price of approximately $1580 when compared to $1620 in the previous quarter and down from approximately $1800 in the second quarter of last year. Cost of goods sold in the quarter was $2.9 million and included non-cash stock compensation expense of $214,000.

Gross profit for the quarter was $0.4 million yielding a gross margin of 11%. This compares to a gross profit of $1.1 million and a gross margin of 19% for the same period in 2008.

For the remainder of 2009, we expect that the cost of goods sold, both as a percentage of revenue and on a dollar basis will continue to vary from quarter-to-quarter due to a variety of factors, including revenue levels, fluctuation in ASP, product mix and manufacturing levels and yield fluctuations.

In reviewing the key expense line items in the income statement; research and development expenses for the second quarter were $5 million including non-cash stock compensation expense of $0.7 million. In the same period last year, R&D expense was $6.3 million, which included non-cash stock compensation expense of $0.8 million.

The decrease in research and development expenses was primarily, the result of decreases in employee related expenses due primarily to the lower average headcount and a one week furlough.

On a substantial quarter basis, R&D expenses decreased $0.7 million from the first quarter of 2009 due primarily to lower employee-related expenses related to lower average headcount and to cost reduction initiatives that have resulted in lower material supply and outside service charges.

For the remainder of 2009, we anticipate research and development expenses to decline modestly from the levels of 2008 as we carefully manage expenses related to development efforts for the electrophysiology market and other applications, and realized savings from our reduction in force and the one-week per quarter furlough.

Selling, general and administrative expenses during the second quarter were $9.09 million and included non-cash stock compensation expense of $1 million, $1.6 million of Luna litigation expenses, and $1.1 million charge for the impairment of a certain asset related to the company's decision to terminate this relationships with it's European sub-contractor for the manufacture of catheters.

This compares to SG&A expenses of $10 million for the same period in 2008 which included non-cash stock compensation expense of $2 million and $0.7 million of Luna litigation expense.

The decrease in selling, general, and administrative expenses was primarily due to decreased employee-related expenses, related to lower average headcount and one-week furlough, and a decrease in non-stock compensation expense, partially offset by increased litigation costs and the asset impairment charge in the second quarter of 2009.

On a sequential quarter basis, after backing out expenses related to Luna litigation in both periods and the impairment charge of the second quarter SG&A expenses were lower by approximately $0.9 million compared with the first quarter of 2009.

For the remainder of 2009, we expect selling, general and administrative expenses to decline from 2008 levels as a result of careful expense management and savings realized from lower headcount in a one week per quarter furlough.

A substantial portion of this expense reduction will occur in the second half of 2009 and is tied to the expected winding down of the Luna litigation expenses.

As previously mentioned, Hansen has already implemented a number of cost saving measures in each of its expense categories. Hansen will continue to evaluate the effect and extent of these measures against future economic conditions and actual revenue results for the remainder of 2009 and will consider the implementation of additional cost reductions during the remainder of the year, if and as circumstances warrant.

Other expense net for the second quarter of 2009 was $115,000 compared to other income, net of $323,000 for the same period in 2008.

The change was primarily due to higher interest expense due to the company's borrowing under its equipment line of credit in addition to lower interest income related to lower interest rate returns earned on the company's balances of cash, cash equivalent and short term investment.

Going forward, we expect our interest expense to decrease gradually as we begin to pay down our equipment loan and our interest income to remain constant.

Net loss for the second quarter of 2009 including total non-cash stock compensation expense of $1.9 million was $14.6 million or $0.42 per basic and diluted share, based on average basic and diluted shares outstanding of 35.2 million shares.

Net loss for the second quarter of 2008, including non-cash stock compensation expense of $2.9 million was $14.9 million or $0.60 per basic and diluted share, based on an average basic and diluted shares outstanding 24.7 million shares.

Turning to the balance sheet; Cash, cash equivalents and short term investments as of June 30, 2009 were $51.4 million compared to $35.2 million as of December 31 2008. The higher cash balance was due to the company's net proceeds of approximately $35.3 million raised from the financing completed in April partially offset by operating expenses.

In addition we have an existing debt facility with Silicon Valley Bank, which included in equipment line of credit that converted to an installment debt beginning April 1, 2009. During the quarter we paid down the debt by approximately $0.9 million leaving a balance of approximately $11.6 million as of the end of the second quarter.

Before wrapping up my prepared remarks, I'd like to reiterate that we have withdrawn our previous guidance regarding the number of expected system sales for 2009.

While we don't feel that the second quarter is representative of the interest in our technology, the quarter had demonstrated how the current economic environment makes it difficult to accurately predict the timing of customer orders.

We continue to be encouraged by clinical interest in our technology, that given the uncertainty around the length and severity of the current economic recession and the impact it's having on our potential customers purchase decisions, we are not providing specific quantitative guidance on the number of units, we expect to recognize revenue on for the remainder of 2009.

Thank you for your attention. And at this time, I'd like to open it up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Tim Lee with Piper Jaffray. Please go ahead.

Tim Lee - Piper Jaffray

Thanks for taking the question. Just first from a OpEx standpoint. I mean what kind of total operating expenses should we be thinking right here for the full year and relative to what things were or call it 90 days ago, is there a greater urgency to decrease expenses and could we see further headcount reductions?

Fred Moll

So, we have a plan to limit operating expenses and Tim that plan can be modified if necessary. We don't necessarily see further reductions with regard to headcount and other cuts, but we are determined to keep our operating expenses at a very controlled level.

We will do what's necessary to execute on plans that says they are going to remain at the level that is described in our plan that takes us to cash breakeven based on where we are today with regard to our cash position.

Tim Lee - Piper Jaffray

Just kind of looking on the top line, I appreciate you're not providing any type of placement guidance and alike. I think in your opening comment you said that the selling cycle had lengthened a little bit, so I hate to get down to monthly sales but were any of the unit orders that were expected in Q2, have they materialized yet here in Q3? And any type of color on that from you, we appreciate it.

Fred Moll

So, there were a number of systems that we talked about in queue that we expected to be sold and recognized of revenue that weren't those systems were pushed out and I am not aware of one system that we expected to come in as a sale that has disappeared.

So we do expect some of the activity we saw in Q2 to materialize into systems that are sold and revenue recognized in Q3 and I can't give you specific numbers but yes, we believe that all that business in Q2 we will recognize at some point in our future whether it drops in Q3 or Q4 or 2010, I can't get into.

Tim Lee - Piper Jaffray

I know in the past you had talked about new opportunities beyond the EP space in terms of some of the vascular opportunities, I thought there were some things on the horizon potentially end of this year? Is that still cracking our plan or is that more of a 2011 event at this point?

Fred Moll

Let me emphasize. We are extremely excited about the vascular platform and what it represents as an opportunity for Hansen to expand its reach into other specialties beyond electrophysiology. So we are deep into development and we do expect to be in clinical trials and accomplish first in man studies in vascular.

We've already done a little bit of work in vascular in man but the newer platform with regards to first in man is a 2010 event. We're very excited about raising the visibility of both, the capability of the actual platform and the opportunity in the marketplace for it.

Operator

Our next question comes from the line of Charley Jones with Barrington Research. Please go ahead.

Charley Jones - Barrington Research

I'll start with a question about just revenue. I think your year-over-year revenue decline seemed to be quite a bit lower than other devise companies and yet EP labs have been reported to be faring a little bit better. So I was hoping if you could help us understand why you think this is the case?

Fred Moll

I think what I said in my prepared remarks is that, we were certainly surprised by how Q2 came in. But it was not a matter of seeing in the marketplace a decreased interest or demand for the system, what we saw was, there is a lot of angst about paying for capital equipment, and that the sales cycle was stretched out to the point where in a 12-week period, were very difficult for us and clearly we were surprised at what did and did not happen in Q2. But we don't see that as reflective of our business going forward.

Charley Jones - Barrington Research

Do you think you can be up sequentially?

Fred Moll

As I said, we're not going to give guidance, and so I'm going to choose not to answer that.

Charley Jones - Barrington Research

Right. Well, maybe on international. Since two of the three of the replacements were to distributors. Could you tell us whether or not any of these were guaranteed contracts that they had to fulfill or whether or not they were actually sell-through systems?

Fred Moll

So, we have a relationship with St. Jude and honestly we can't answer. Steve can you?

Steven Van Dick

Let me try that other systems that were sold. One was an end user, and the second was to South Africa, that unit is already clinically active in July, and the third system was a Portugal distributor, and I believe that that system was also installed with end user [clients] in the July time frame.

Charley Jones - Barrington Research

Sorry to bring you out of hibernation there, Steve, I hope you feel better. I guess I have another question on the clinical study. Can you tell us what the criteria was from the [Texas test], was it 7 day, 14 day, 30 day continuous monitoring and just kind of curious how customers have responded as you've gone out with this, whether or not a 5% improvement in efficacy is good enough, given the equivalency and safety?

Fred Moll

So, I think you are missing the story there. I think this is a very, very important study that shows sort of out of box and we haven't been around very long. We are just getting started in this technology.

We already have the system that shows a very large study or sizable study anyway head-to-head with manual technique that is that the clinician, most of these clinicians have been doing for 10 years to 15 years that shows an increase in efficacy, a decrease in fluoroscopy time and equivalent safety. We think this as the first of decisive study out of the box is enormously possible.

Charley Jones - Barrington Research

My final question is related to your vascular program. Is it fair to say that interventional cardiologists would not find the same value as maybe a vascular surgeon because they have more experience with catheter manipulations, so they don't benefit as much from robotic manipulation and whether that is or is not the case.

Can you give us an idea of what percentage of coronary cases you believe vascular surgeons are doing today? Thanks a lot for taking the questions.

Fred Moll

So, first of all we don't see vascular surgeons doing coronary cases. They don't do that. So, what vascular surgeons do-do is non intra-cardiac procedure, in other words procedural intervention in the arterial vascular system, the aorta and the branches of aorta, everything from intervention in the legs to the clotted arteries and everywhere in between but not usually the coronary arteries.

So the power of this story, I liken it to my previous experience at Intuitive Surgical where we found a customer base and a specialty that were very interested in or had to convert to minimally invasive technique but didn’t have formal training or the skills, not with the urologist.

That were surgeons that had not been trained by and large in laparoscopy. But their specialty needed to move in the direction of minimally invasive technique. And so by giving them a technology, we are able to give them the skills that made them proficient in minimally invasive surgery and thereby we gave them the ability to do procedure and real practice in very successful fashion.

So the vascular surgeons are by definition surgeons, not interventionalist but their specialty is being driven every year in sort of an alarming rate to interventional technique with regard to periphery, with regard to endovascular grafting, with regard to [chronic stenting]. And they need to re-invent themselves as interventionalist and this is not news to anybody, I mean they know it but a lot of them have not had basic sort of training in catheter control.

So we have the opportunity again by giving them a technology, sitting them down in a consul and giving them exclusive catheter skills to create a market that we believe can be very dynamic and very exciting.

Operator

Our next comes from the line of David Lewis with Morgan Stanley. Please go ahead.

David Lewis - Morgan Stanley

Has there been any incremental changes in the macro outlook or order timings since the preannouncements? I mean if you think of your now versus about a month ago, is the selling environment looking incrementally better, incrementally worse or about the same?

Fred Moll

Yes, I think that's too shorter time period to say that it's any different. I think we are understanding better the challenges, and I think that is making us more effective than the selling process. But from a macro basis, I don't think I can --

David Lewis - Morgan Stanley

Second, given the suspended guidance for 2009 and the ongoing pressure in hospital capital spending, where do you expect cash is going to end up at the end of the year? And how do you get comfortable with that current financing that's going to be sufficient to bridge you through breakeven?

Fred Moll

So, Steve again. Sorry, to call on you. But you want to talk about the cash?

Steve Van Dick

Yes. We are not providing again specific guidance in terms of where we expect the cash. But remember what I said, what we are focused on is our current business model which of course, assumes a parameter assumptions for the rest of '09 and into '10. And based on with that current business model which has been modified based on what we hit in Q2. We still feel comfortable that the current cash, the $51 million that I got in the bank can carry us through to net cash or breakeven in the next two or three years.

Operator

Our next question comes from the line of Sameer Harish with Needham & Company. Please go ahead.

Sameer Harish - Needham & Company

I was wondering if we could just drill down a little bit on some of the operating expenses. Just trying to interpret the comments in the press release.

Do you expect R&D or sales marketing to pick up in the back half of the year or sort of stay at the second quarter levels?

Fred Moll

We expect them to stay at the second quarter level.

Sameer Harish - Needham & Company

Okay. So, it's going to be actually down especially in regards to R&D considerably from 2008 levels, not just that a minimal decrease.

Fred Moll

Yes. We have said that there will be a decrease.

Sameer Harish - Needham & Company

Okay. Traditionally, you guys haven't talked about a backlog but we keep hearing about pipeline. Maybe can you talk a little bit if you care to quantify maybe a backlog number of systems, that customers you are talking to or perhaps, just give us some indication of how the backlog has fared since the start of the year?

Fred Moll

So, I think as I have said previously, we feel very good about our pipeline, we don't talk about a backlog, because a backlog suggests that you have orders that you're waiting to ship, they are depended on sort of timing of installation and as you know, we get an order, we can ship and install in a short period of time.

So, that's the distinction we're making and I'm not going to get into the number of systems in our pipeline but I've described this as healthy and I think that's the right description.

Sameer Harish - Needham & Company

Okay, this is a follow up on that same line. If we talk more about pipeline versus backlog, the number of hospitals that you would consider in that pipeline area, has that materially changed in the last three months?

Fred Moll

No. I mean no. If I understand your question, I don't think that the market opportunity has changed.

Operator

(Operator Instructions). Our next question comes from the line of [Jason Quinn with Green Coast Capital].

Jason Quinn - Green Coast Capital

Thanks for receiving my call this afternoon gentlemen. I just have one question for you. In previous conference calls you had mentioned that you expected the approval of your catheters, of your Artisan catheters for use with a ablation catheters sometime in 2010. Do you have any update on the status of that approval?

Fred Moll

We don't. Well its progressing and we still believe that we will get some sort of approval for ablation in 2010 but can't get more granular than that for you.

Operator

Thank you. And I'm sure there are no further questions at this time. I'll turn it back to management for any closing remarks.

Fred Moll

Thank you everyone for your participation and look forward to updating you on our progress in the Q3 call.

Operator

Thank you, ladies and gentlemen. This concludes the Hansen Medical, Inc. second quarter 2009 results conference call. If you'd like to listen to a replay of today’s conference, please dial 1-800-406-7325 or 303-590-3030 of the access code 4124347. We'd like to thank you for your participation. You may now disconnect.

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