Abiomed's CEO Discusses F1Q 2014 (Qtr End 6/30/13) Results - Earnings Call Transcript

| About: ABIOMED, Inc. (ABMD)

Abiomed, Inc. (NASDAQ:ABMD)

F1Q 2014 Earnings Conference Call

August 1, 2013 8:00 am ET

Executives

Susie Lisa - Senior Director, IR and Corporate Development.

Mike Minogue - Chairman, President and CEO

Robert Bowen - CFO

Analysts

Matthew O'Brien - William Blair

Greg Simpson - Wunderlich Securities

Raj Denhoy - Jefferies

Steve Beuchaw - Morgan Stanley

Jayson Bedford - Raymond James

Operator

Good day, ladies and gentlemen, and welcome to the Abiomed First Quarter 2014 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. (Operator Instructions). As a reminder, this call is being recorded.

I would like to introduce your host for today’s conference Susie Lisa, Senior Director of Investor Relations and Corporate Development. You may begin.

Susie Lisa

Thanks, Ashley, and thanks everyone for joining us for the Abiomed first quarter fiscal 2014 conference call. I am joined today 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 first 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 first quarter fiscal 2014 results, it is 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 approval.

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, margin or other increases or decreases will be indicated by references to first quarter of fiscal 2014, as compared to the first quarter of fiscal 2013 or first quarter of fiscal 2014 as compared to the prior fourth 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 pleased to report our first quarter progress. Abiomed increased total revenue by 10% year-over-year to $42.7 million for the first quarter. While we had a slower April in the U.S., May was our best month and included our best week and best day, we ever reported in Impella history.

The scientific physician societies in Europe, Japan and United States have embraced the clinical need around the science and therapy of percutaneous circulatory support. Hemodynamic presentations and case studies have now become mainstream at the medical meetings. We believe the Impella technology is now recognized by the major regulatory agencies as a new product category based on a first of its kind catheter VAD technology.

Our execution this fiscal year on the regulatory approval processes is critical because it will transform Abiomed and create Impella as the new benchmark for percutaneous heart pumps. As a result of this progress, we will execute our plan around these four strategic goals for fiscal 2014. Number one maximizing the customer satisfaction and patient management experience with product quality, clinical training and optimal outcomes. The size of the U.S. field team continues to expand to five zones and 125 field employees.

We are investing in our field on-site support and hospital training as well as a more interactive 24 hours a day, 7 days a week clinical call center staff with seven experienced technicians and nurses. Our company offers this valued service, which may impact the outcomes of critically ill patients. Therefore, it is imperative that we help optimize the patient management experience and train appropriately.

In April, we conducted our annual national field team meeting and provided face-to-face training. Additionally, we completed eight employee headquarters training courses and seven physician events within the quarter. We expect our first half training to provide a return in the second half of the fiscal year.

Goal number two is achieving significant patient and revenue growth. We have now grown double-digit for 15 straight quarters. In Q1, our patients exceeded our reorders. Some sites were drawing down their Impella 2.5 inventory in anticipation of receiving Impella CP and others are reacting to healthcare reform initiatives by reducing overall inventory. As a result, we predict higher quarterly growth for the rest of the fiscal year.

Patient utilization of prophylactic and emergency circulatory support represented 49% and 41% respectively with 10% in the all other category of total usage. We continue to preserve our discipline to limit quarterly new site openings and maintain low customer inventory levels.

Goal number three is supporting the medical community to publish manuscripts on hemodynamic support, patient outcomes and cost effectiveness. There were seven publications regarding Impella within the quarter. The Protect II Cost Effectiveness Study was published in the American Health & Drug Benefits Journal and provide insight into the cost associated with out of hospital adverse events and repeat revascularization.

Additionally, the original Protect II publication in circulation made the Editor's Picks as one of most read articles and most important manuscripts published on the topic of cardiovascular interventions within the last year. We encourage all investors to read both publications.

To remind everyone, Impella is now incorporated in to four different guidelines and has dedicated hospital DRG and physician CPT codes from the U.S. government for establish payments. We believe our focus on publications and cost effectiveness has been critical to our reimbursement in the U.S. and recent approval within the Netherlands.

Now, I would like to spend the rest of my time on our fourth goal, executing on our clinical and regulatory processes in order to achieve approval in Japan and the United States. We are tracking ahead of our last reported 515 schedule on a modular Impella PMA submission. A modular submission is summarized by a PMA shell, which outlines the modules, provide the table of contents and a plan for submission and identifies information necessary to support the filing and approval of a specific Class III product through a combined IDE PMA process.

We are pleased to report today that the FDA has formally approved our PMA shell indicating that they agree with our approach and are ready to receive the three components on pre-clinical and testing, manufacturing and quality, and clinical data, all submitted within five modules.

Today, we are also pleased to communicate that we have already submitted 40% of the modules to-date and will have approximately 80% submitted by September. The remaining 20% of the submission is the clinical module which is planned for a February submission to allow for ongoing FDA input. The FDA has already reviewed and provided written feedback on our clinical summary and proposed indications. The FDA will review each module within 90 days of submission.

A key data point to note is that for all patients in PROTECT II Impella significantly lower the primary endpoint of major adverse events at 90 days per protocol with a P value of 0.023. We believe this is the foundation of our rationale for reasonable assurance of safety and effectiveness for the use of Impella in high risk PCI patients.

However, we are also augmenting this data by describing the totality of the Impella clinical experience, hemodynamic science and consistent five-year safety record with now over 15,000 U.S. patients supported making it the most widely used heart pump in the country.

Our overall clinical summary incorporates eight years of clinical studies referencing over 200 publications specifically three FDA studies including 225 randomized Impella high risk PCI patients, 20 Impella high risk PCI patients from PROTECT I and the peer reviewed published Impella registries totaling 319 patients. This Impella product was initially cleared by the FDA in 2008 after completing the 510(k) review process which included peer review publications and the PROTECT I FDA safety study.

Unlike standard PMA submissions, PMA is filed as part of the 515 process provides the FDA access to real world clinical experience. In the case of Impella, the FDA will access to five years of U.S. clinical experience and mandatory company reporting of readily available medical device reporting safety records.

Until this 515 process is completed Abiomed operates under the existing Impella under 510(k) clearances. The FDA PMA review clock starts when the final Impella clinical module is submitted. The PMA approval process requires 180 days without a panel requirement and 320 days with it. We understand the FDA rationale requiring special PMA like controls and post-market monitoring for Impella and all future products in this new temporary ventricular support Class III category.

The FDA has expressed the desire to work with Abiomed to complete the process and is not interested in removing Impella from the U.S. market provided Abiomed makes efforts to complete the process. We also continue to expand our portfolio and have received outstanding cooperation from the FDA for the Impella RP trial. We also expect to have the Impella Japanese approval and the Impella RP CE mark approval in Europe by the end of the fiscal year.

In summary, we are on track to achieve our fiscal year revenue guidance and set new record in patient utilization. The size, demographics, and complexity of a heart failure population are driving global healthcare reform towards more minimally invasive procedures that improve patient quality of life, have shorter length of hospital stays and reduce hospital readmissions.

We are investing for success in our products, in training and regulatory approvals. We believe an Impella PMA approval will transform our company and provide a significant long-term benefit while validating our quest to become the new standard of care for percutaneous circulatory support.

In the future, the depth of our intellectual property and organic growth opportunities from new clinical indications, new geographies and new products would provide a long-term growth engine. We look forward to another record here. I thank all our stakeholders for their 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. Today, I will provide comments on our fiscal year 2014 first quarter results, as well as provide guidance for the balance of the year. Most of my comments on the fiscal first quarter comparisons will refer to the same quarter of the prior year.

As noted in this morning's full earnings release fiscal first quarter revenue of $42.7 million increased $3.9 million or 10% from the prior year.

Worldwide Impella product revenue grew $4 million or 12% to $38.7 million from $34.7 million in the prior year with reported patient use in the U.S. up 12%. Following a record U.S. patient volume and our typically strong fiscal Q4 April got off to a slower start but both May and June rebounded with double digit year-over-year patient volume increases.

Service revenue grew 44% to $2.6 million from $1.8 million in the prior year, and legacy product revenue decreased by $800,000 million to $1.3 million from $2.1 million in the prior year. An additional 27 new Impella 2.5 sites were opened yielding $2.4 million in revenue, $0.5 million less than the 35 new Impella 2.5 sites opened in the prior year which yielded $2.9 million in revenue.

I would remind investors that we opened a 117 Impella 2.5 sites in fiscal year 2013 and a 110 in fiscal year 2012. And we plan to open between a 100 to a 120 in fiscal year 2014, and historically we have seen some variability by quarter. An additional 66 hospitals purchased Impella CP bringing the total Impella CP sites to a 172 or approximately 22 % of the overall installed base of 775 U.S. Impella 2.5 customer sites.

Impella CP represented approximately 30% of overall reported patient usage during the quarter, compared to approximately 20% in the prior sequential quarter, reflecting continued strong demand for this higher flow device.

U.S Impella unit reorders have trailed patient use in each of the last two quarters, after tracking relatively close in the prior four quarters. We believe this headwind reflects remixing its site inventory toward Impella CP along with hospital efforts to maintain low unit inventory carrying levels in this challenged healthcare environment. Over time we would expect the reorder to patient use rate to move closer to one-to-one.

The gross margin rate for the quarter was 79.6% compared to 80.8% in the year ago period. Our gross margin rates are sensitive to the number of console placements in the quarter for new site openings, expanded use needs, AIC upgrades.

During fiscal Q1, we placed a 191 Impella consoles compared to 163 in the prior year. Our current thinking is that we will begin to see improvement in the gross margin rate in the second half of the fiscal year.

R&D expense of $7.3 million grew $600,000 or 9% compared to the prior year, largely due to expenditures to support the PMA application.

SG&A expense of $28 million grew $7 million or 33%. The increase comprises basically four items. During fiscal Q1 we incurred $2.6 million of legal expense related to the Department of Justice subpoena, shareholder lawsuit and derivative action. We also incurred $1 million of the higher stock compensation expense compared to the prior year and $600,000 of medical device tax expense. Lastly, the build out of the U.S. sales and marketing field organization to support growth increased expenses by $2.5 million compared to the prior year.

GAAP net loss for the fiscal first quarter was a loss of $1.7 million or a loss of $0.04 per basic and diluted share, compared to GAAP net income of $3.1 million or $0.08 per basic and diluted share in the prior year.

The balance sheet remains in excellent shape. Accounts receivable of $21 million equated to 49% of quarterly revenue compared to a balance of $18.3 million in the prior year or 47% of quarterly revenue. Inventory of $16.5 million equated to 39% of quarterly revenue and compared to inventory of $12.5 million or 32% of quarterly revenue in the prior year. The increase reflects the addition of the Impella CP and increased safety stock levels for risk mitigation purposes.

We ended the quarter with cash, short and long-term marketable securities of $88 million and as a remainder we have no debt. Fiscal Q1 is our most challenging quarter from a cash generation standpoint that it is the quarter in which incentive compensation payments are made that have been previously accrued during the fiscal year. We expect to generate cash in each of the next three quarters.

Turning to guidance. As noted in the press release, we are reiterating our full year revenue guidance in the range of $180 million to $185 million, with Impella growth expected to be approximately 20% for the year.

Consistent with prior years, we expect 45% to 50% of revenues to fall in the first half of the year and 50% to 55% to fall in the second half of the year; and we are expecting higher revenue growth rates in the balance of the year. As previously mentioned, we believe our gross margin rates will begin to improve in the second half of the year.

Our R&D spend is focused on U.S. and Japanese regulatory approvals, the RP Recover Right trial, symphony development and ongoing product support, all of which are core to our future growth plans. We currently believe that R&D expense will be $2 million to $3 million higher than previous expectations.

We also are prepared for higher legal expenses related to DOJ shareholder lawsuit and derivative action, which we believe will total approximately $9 million for the year compare to a previous estimate of $6 million to $8 million.

I would like to emphasize that we are a few months in to the process and have a better understanding of the ongoing cost of collecting, reviewing, categorizing and submitting the requested documents. The requirement or work activity has not changed, but we believe our understanding of the cost is improved.

Lastly, we expect stock compensation expense to be approximately $3 million higher for the year based on a true-up of our expected forfeiture rate of previous grants and the most recent grants, which were granted at higher stock price post our May 2 prior earnings call, then our estimate as of May 2 and which reached deeper into the organization. We also have assumed going forward a lower forfeiture rate.

Taken together on a GAAP basis, we believe income from operations will be in the range of breakeven to 5% for the year. At present, we expect the second fiscal quarter P&L to look similar to the first quarter with somewhat higher R&D costs related to the U.S. and Japanese regulatory submissions. And we expect to begin to rebuild operating leverage as we move in to the second half.

We will now open the call to questions. Operator, would you please open the line for questions?

Question-and-Answer Session

Operator

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

Matthew O'Brien - William Blair

Thank you for taking the questions. I was hoping we could start out on the patient versus unit -- inventory volume commentary. Can you just give us a sense for the delta between patient utilization and the inventory work down in the quarter? And then specifically, when you were providing guidance at the beginning of the fiscal year as you incorporated this dynamic in to the guidance or asked in different way would the Impella growth actually for the year have been a little bit higher if you weren’t facing this headwind?

Mike Minogue

Sure, Matt. Well, the drawdown in each of the last two quarters was a little bit in excess of a 100 units. And I think our guidance of $180 million to $185 million has been constructed pretty consistently both from the last call and this call. So, I do think that the reorder rate is going to move toward one to one as time goes by.

Matthew O'Brien - William Blair

Okay. So, 100 units per quarter so for the last few quarters.

Mike Minogue

A little more than a 100 units in Q4 and a little more than a 100 units in Q1.

Matthew O'Brien - William Blair

Okay. And so that translates into I want to say $2.5 million in inventory work down. I think I am doing the math right in my head. So again, to the first question as far as the guidance goes, because I’m anticipating you’re expecting that inventory issue to persist a little bit here in fiscal Q2 and maybe into Q3 a little bit. So, would the Impella specific 20% growth target for the year actually be a little bit higher if you weren’t facing that headwind or is that something that you had already contemplated in the guidance?

Robert Bowen

I think if we were not facing the headwind the growth rate could potentially be higher.

Matthew O'Brien - William Blair

Okay, fair enough. And then, Mike we were just talking about the.

Mike Minogue

We don’t give quarterly guidance and there is some seasonality of business, but as far as the CP goes it’s a pretty much a one-to-one, so they are used and reordered, the drawdown in inventory has been more around the general sense or around the 25.

Matthew O'Brien - William Blair

And then one more quick one on the clinical side of things with the 515 process, is there an estimate and I know it’s a little bit difficult to really predict this, but that February date a little a bit later than you had mentioned before. Do you think that’s probably the latest likely a kind of worst case scenario in terms of submitting the fifth module? And when do you think we will know whether or not there will be a panel? Thank you.

Mike Minogue

So Matt, we actually had said prior last quarter that we submit the whole packet by the end of the fiscal year, which would be March, so we actually have accelerated 40% of the modules are in already now. We have to stagger some that is the point of the modules. So, we put in another 40% by September and then the last remained 20% is on the clinical. So, we are ahead of schedule and that would be worse case on the February side for the clinical piece.

On the panel, we don’t know at this time. And we will give more updates as that works out. Again everything remains business as usual and we keep our 510-K clearance until the 515 process is completed.

Operator

Thank you. Our next question is from Greg Simpson of Wunderlich Securities.

Greg Simpson - Wunderlich Securities

Yeah, thank you. Good morning guys. First I will stay away from clinical actually for a minute. First of all, I just wanted to ask on the CP, is it are we far enough into the CP launch Mike? Can you talk a little bit about without getting specific numbers, I know you don’t want do that but average usage rates at accounts I mean, are you seeing greater usage of the CP than what similar accounts were doing when they just had the 25?

Mike Minogue

So, the net answer is that at the CP sites in aggregate their usage goes up overall for patients. And we really are not trying to dictate which pump. We see different roles and different options depending on the physician’s preference of flow or prioritization of costs. And we are allowing them to have their own protocols and support them with extensive training in either case.

Greg Simpson - Wunderlich Securities

Okay, great. And then couple on the expense side. First on the phrase pipeline development and then your comments on the RP and Symphony, kind of jumped out to me and I’m a little bit of a conspiracy theorist on your pipeline development stuff. I’m curious the higher expenses, the higher R&D expenses. Is there anything new that we don’t know about or are we looking at accelerated development of the RP and/or Symphony based on feedback you are getting from the FDA?

Mike Minogue

There is nothing relative to the feedback from the FDA and we do, we are having an aggressive plan to improve the Impella platform in general to accelerate the RP study, to continue to work on the Symphony, which is an exclusive type of product, there is nothing like it. We think it’s got a great opportunity for heart failure patients outside the U.S. as well as in the U.S. And clearly we are working on some things that are not yet public information. So, we have a principal in the company that leading innovation and technology and we are constantly trying to innovate and improve not only our own products, but to add to that platform.

Greg Simpson - Wunderlich Securities

And just two more quick ones. First on the SG&A side, the sales force expansion, I didn’t hear a number of sales people added I may have missed that. It sounds like you guys you're seeing something or whatever else CP launch or whatever that seems to make you more optimistic or more aggressive without expanding the sales force, can you maybe talk about that?

Mike Minogue

Well, we see this year as a transition year getting ready for a PMA, getting ready for more products like the CP, in the future the RP and also supporting the trial. So, we are accelerating. We've said in the past its four to six per quarter and we've been trending more on the six, six plus size for the last two quarters as we ramp up. But we're also spending additional times to really get our field team at the level and training and understanding best practices. We have regional training experts. Our call center now is really not just interactive, but proactive. We're trying to check in to make sure that local hospital have the support they need and we're really trying to do the best we can to make that patient experience very positive and get great outcomes.

Greg Simpson - Wunderlich Securities

Okay, and I apologize, just one more and I'll get back in line. I was doing some hardcore research on the TMZ website and I see Randy Travis get out of the hospital. All jokes aside, you guys got just an absolute ton of publicity over that situation. Can you maybe just talk about the usage and I mean, are there any kind of a goofy question, but are there any real benefits that have emerged from that? I got to tick out of all those stories talking about this great new technology when I guess, it is to some people, but not so much to the people on this call, but can you just talk about that situation in general?

Mike Minogue

Sure. So, we have to be somewhat confidential. It's a patient issue, but one is we wish Mr. Travis and his family the best wishes and we're glad to see the progress. We have permission from the physician, who implanted the Impella, if directly asked that the Impella did its job and was used early on to help stabilize and transport the patient. And I'll let him talk about his pleasure with the performance and that person has been in the new is Dr. Todd Gray. But we feel very confident and we're happy the Impella was able to play a role in his support.

Greg Simpson - Wunderlich Securities

Okay, thanks. I'll get back in line

Operator

Thank you. Our next question is from Raj Denhoy of Jefferies. Your line is open.

Raj Denhoy - Jefferies

Just a couple of questions. Just first on the FDA issue and their approval of your shell PMA submission, I appreciate the way you laid it out in terms of the different modules you have to submit. But in terms of the clinical data piece of that, have they actually given you any indication as to whether the data, which you've laid out will be sufficient or is it really that they just given you some approval on the overall structure of what you will submit?

Mike Minogue

So, the way a Shell works and you can go Google it or go on the FDA website and read it. It’s a very specific plan. It's a table of contents and you outline the information that's necessary to support the filing and approval of the PMA. So, it's very specific and in the outline and the content we did describe the Impella. We just talked about PROTECT I, PROTECT II it goes into detail of the totality of the latest things that I'm talking about. And there is no mention of another randomized study and so this is a formal approval, it's signed off by the agency, they send you a letter and it formally starts your submission process along with the user fee. So, we feel very confident and we're happy whether or not we collect some other data or single arm or produce some specific things from the registry. We'll work with the FDA on that. They've been very supportive and cooperative and we look forward to being one of the first companies to successfully transition from a 510(k) to a PMA under the 515 process, but it is specific for us.

Raj Denhoy - Jefferies

Okay, that's clear. And then just going back to the U.S. Impella performance in the quarter it’s maybe about 7% growth. I appreciate that commentary around inventory drawdown in some of your centers. But I guess I just wanted perhaps ask about your level of confidence in a return to growth over the balance of the year because obviously that number pragmatically quite a bit worse when we have seen for the long time in that business and even I think the 12% unit growth we talked about actual patient unit growth is still below trend of late. So, maybe just some additional commentary on that would be helpful.

Mike Minogue

Sure, I think the big thing is April was slower. We had tremendous amount of training within April. We had a lot of focus on headquarters training as well and that does impact us, but I think it's a good investment. And historically if we go back since we've had Impella cleared the Q1, Q2 what we had this somewhat of a slowdown perspective, whether it's in Q1 or Q2 based on just the training we do, based on resetting the template for the year, the compensation plan and also it tends to be a little bit slower time for our customers in the cath lab.

Raj Denhoy - Jefferies

And nothing that you're seeing in terms of any change in terms of use or lease activity or anything falling out of the pocketing processing and you are showing no change in your mind what's actually happening to deal at this point?

Mike Minogue

Yeah, I don’t think 90% of our customers don’t know what the 515 process is and they have no idea, whether it's a 510(k) PMA. I think that's not something that they understand or even track. I think that PCI in general, there's a lot of scrutiny on appropriate use criteria that we talked about in the past.

Again in the presentation we did at the 515 panel those slides are public and we posted them on our own website. That explains the positioning of where the patients that are high-risk, but they're not surgical candidates that's different than a bread and butter single vessel approach.

So, I think what you're seeing in the cath labs is a lot more scrutiny on the type of PCI they’re doing. And I think that's where we will continue to publish data because that's PROTECT II shows us that there is a benefit to these patients with their ES improving and again the minimal invasive treatment has some other benefits as well. So, we're going to continue to publish around that and we have more data to publish from PROTECT II around quality of life and will continue to announce those as they come.

Operator

Thank you. Our next question is from (inaudible) of Piper Jaffray. Your line is now open.

Unidentified Analyst

Yeah, hi, Mike. I'm just wondering if there is any more clarity around what the potential PMA label may look like. Is it going to be temporary hemodynamic support or is there a potential to carve out high risk PCI cardiogenic shock? I'll just note that I guess last night in Thoratec’s presentation they discussed going forward in the U.S. and cardiogenic shock well in Europe and high-risk PCI and I was just wondering if you have thoughts around that and if that have any implications for where you might be able to go forward working in your own label. Thank you.

Mike Minogue

Sure, so just to answer the first part of the question. It will be along ground some type of benefit of the hemodynamic support for something with high-risk procedures or patients being a benefit we believe will be the reduction of major adverse events to 90 days and that was the primary endpoint. And obviously we see that as a foundation for reasonable assurance of safety and effectiveness.

The FDA also first evaluates safety so before you do any randomization of any study you have to prove the safety and when we came into the States before we ever even done PROTECT I, we had done thousands of patients in Europe. We had double-digit peer-reviewed publications. And then from that point after you've proven safety and you're proven safety to FDA then you can go forward and do a randomized study.

As we expand I mean that will be with the FDA if they want us to do something around bridge to recovery or data collected from our registry or we are filing HDEs. We'll leave that up to them and we will follow the path that they prefer.

With regard to Thoratec and their FDA path I really can't comment. I will let them communicate directly to you all. But and we look forward to seeing their progress. And we know HeartMate II and HeartWare as well helps patients, and we wish them both the best of luck.

Unidentified Analyst

Okay, great and then just one quick question on Impella CP. I think you said 22% of your customer sites are not penetrated. I believe that’s up from last quarter around 14%. Is there a goal or target level that you think you can penetrate as if you know all of the accounts, what do you think is reasonable, and why, I guess why is it 22% as opposed to, I would think that it could be substantially higher, so any commentary there would be helpful too. Thank you.

Mike Minogue

Yeah, I think what we wanted to do is we want to have a self-imposed discipline around new site openings, around training around the CP. So, in each quarter we are not only opening new sites which takes time and energy way from actively supporting patients. We are also training again on CP, and we also have to train around the new AIC consoles that were upgrading in the field each quarter.

So, there is a lot to do for our field team and we want to priority be around patients, and we want to make sure that our training is really optimized. So, that puts a little bit of competing priority. So, applying these disciplines so that we can do everything well in each different territories, the focus, and that’s why we are self regulating. Obviously, if we wanted to sell the CP to 100 new sites tomorrow, we could do that. There is the demand there, but we want to make sure we do it under a controlled manner to get the best outcomes.

Unidentified Analyst

Okay, great. Thank you.

Operator

Thank you. Our next question is from David Lewis of Morgan Stanley. Your line is open.

Steve Beuchaw - Morgan Stanley

Hi good morning. It’s Steve Beuchaw here today. How are you?

Mike Minogue

Good Steve. How are you?

Steve Beuchaw - Morgan Stanley

Very well, I just had a couple of quick follow ups. I wonder within the context of the relationships between revenues and volumes in the quarter over the balance of the year, would you expect any acceleration in the clinical contribution to the revenue line?

Mike Minogue

I’m not sure I understand. Are you taking about?

Steve Beuchaw - Morgan Stanley

With perhaps IDE is coming online, could we see any tailwind from the clinical on the USA Impella revenue figures?

Mike Minogue

I think it’s already backed into our forecast, and we are assuming nominal numbers for the Impella RP study.

Steve Beuchaw - Morgan Stanley

Nominal it’s a 5 million.

Mike Minogue

Oh yeah, the whole RP study is thirty patients, and we are basically charging as we go further patients. So, that’s already baked into the forecast.

Steve Beuchaw - Morgan Stanley

And then on higher risk PCI, as we track the volume growth trends, it has slowed down over the last several quarters, but the growth rate has gone to something that’s roughly stable in the low double-digit. Is there a case to reaccelerate the high-risk PCI volume growth line or is just the right level first to think about for the balance of the year?

Mike Minogue

Well, I think overall we’ve been growing double-digit and if you look at last quarter that the prophylactic was single-digit as you said, the emergency has been strong double-digit and the all other has been double-digit as well. So, we think it would continue to grow and we also think it has to do with the continuation of our training, our protocols and our publications.

Operator

Thank you. (Operator Instructions) Our next question is from Jayson Bedford of Raymond James. Your line is open.

Jayson Bedford - Raymond James

Good morning and thanks for taking the questions. Just a few follow-ups, the CPT code has been in place for a while now, any notable change in physician behavior due to the new CPT code at all?

Mike Minogue

So, Jayson, I don't know if I would say noticeable change. We know that it’s a lot easier for physicians as far as a process to submit. It has been standardized and they like that and you know in our goal to become the standard of care, you kind to have to check off the DRG code, the CPT code and be in the guidelines and we have achieved all three. And it probably makes it more mainstream now as we start to get some new users that they understand that they are not collecting all the extra information required under non-listed code and that has been approved by the appropriate agencies.

Jayson Bedford - Raymond James

Okay. The usage trends with respect to CP, how is breakup of use of the device high-risk PCI versus shock?

Mike Minogue

I think that the CP tends to be favored for the emergency patients for the highest, largest, riskiest procedures patient they’ll operate under. So, we see the trend basically along those lines.

Jayson Bedford - Raymond James

Okay. And then just generally using EP, it seems like a potential area of growth for your guys, if you look your volume both CP and 25, how much is going or being used in any EP?

Mike Minogue

EP is the largest other application in our all other bucket.

Jayson Bedford - Raymond James

Okay. And then I guess for Bob, what was the net impact of pricing in the quarter, meaning the CP help that a little bit, it’s been on a year-over-year basis, how did the price factor in terms of the growth?

Robert Bowen

The average catheter price was up less than 1%, a slight, a very, very slight uptick.

Operator

Thank you. I’m not showing any further questions in the queue. I would like to turn the call over to management for further remarks.

Mike Minogue

Thank you everyone for your time today as always if you have follow-up questions feel free to call in. Have a great day.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may now disconnect. Everyone have a great day.

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