Sunshine Heart's CEO Presents at PropThink's Interview Conference (Transcript)

Sep. 3.13 | About: Sunshine Heart, (SSH)

Sunshine Heart Inc. (NASDAQ:SSH)

PropThink's Interview Conference Transcript

September 3, 2013 3:00 PM ET

Executives

David Rosa - Chief Executive Officer

Analysts

Jake King - PropThink

Jake King - PropThink

All right folks. We can go ahead and get started here. Welcome to PropThink's Interview with Sunshine Heart, Chief Executive Officer, David Rosa. My name is Jake King, Editor of propthink.com, and I’ll be leading the interview and Q&A today. We’ll be discussing Sunshine Heart and their leading product candidate the C-Pulse Heart Assist System.

Mr. Rosa, before we turn the call over to investor questions. You said PropThink’s research and analysis today are own risks, investor should be on due diligence before making any investment decisions with respect to securities covered in this call. As disclosed in our previous articles, PropThink’s or its key members have taken a long decision in Sunshine Heart. PropThink LLC not registered as an investment advisor and to the best of our knowledge and belief. All information on this call is accurate and reliable. PropThink has not been paid or compensated in any form for this event.

As many of you know, we’ve been interested in Sunshine Heart since April of this year following a $14 million equity financing. You can read our columns at propthink.com. Shares of Sunshine Heart have since doubled in price and in the last few months the company has garnered significantly more attention from the healthcare invested community.

With interest in the story increasing, we reached out to Mr. Rosa to gauge interest in an interview and Q&A with investors. David was happy to oblige and we orchestrated this call.

David, do you want to start off by giving us some background on yourself, maybe -- particularly your history in the medical device space?

David Rosa

Sure. And thanks for giving me the opportunity today. I appreciate it. You guys have really been kind to the company and while I don’t do many of these interviews. I really jumped to the chance to do this.

So in terms of my background, it’s kind of funny. I think, if you ask my parent, they tell you that, that I always wanted to help less fortunate people, dating way back when I was little boy. I remember taking a few homeless people back to my house, much that my mom surprise. And after the second time I did that, she pulled me aside and told me that I had to be really careful about bringing people home like that.

But I think that was really the start of my interest in the medical device field. I always love to help people and really that’s what we are trying to do at Sunshine Heart. But from a career aspect, I started in orthopedic sales many years ago, then move to the urology and skin and wound care field and then shortly after I actually relocated to Minnesota to work for SCIMED Life Systems and I was just the Product Manager and Marketing.

After about five year, I then had an opportunity to be the CEO of an early stage company that was actually in the field of heart failure, but it was considered acute heart failure. We had some pump technology for cardiac surgery and also a little mini pump that percutaneously placed for what was considered cardiogenic shock.

And really from that point on I became very, very interested in heart failure and always felt that at some point in time, I would get back into this space. And really with respect to Sunshine Heart, I mean, timing like it does really many things, played big part and me getting the opportunity here about almost four years go. And like I can tell you, I just absolutely love what I do. I feel no different. I just feel we have made great progress since four years ago.

Jake King - PropThink

Absolutely, so David, why don’t you describe the existing late stage heart failure landscape? And how the current treatments work and then maybe talk a little bit how the C-Pulse is different?

David Rosa

Sure. It was really when I consider two types of devices or two types of device categories, passive and active. So passive device is, there has been a few that have been around and there are others that are in development.

So basically what they do is, they reduce the workload on the left heart by trying to reduce the heart size through external compression whether its metal or some fabric or what they do is they limit the amount of blood that the heart seize internally by preventing blood from filling up the entire left heart.

So, all that is intended to do is really reduce the amount of work that the left heart has to do. And from just discussions really over the course of last four, five years, I think, a number of clinicians feel these devices can help, but probably more suited for lesser patient population then what we are looking at in Class III and ambulatory Class IV.

The other device category, which are refer to as active devices, what you typically see a blood pumps that are in the blood stream. So what they do is when activated they pull blood out of the left heart and re-circulated throughout the rest of the body. Our technology the C-Pulse technology, that’s considered to be an active technology.

But the main differences are really the following. One is we are outside the blood stream. The second is you can actually disconnect from our device safely. And third, the technology can be placed through small incision and the incision size is roughly about 3 -- about 3 inches.

And because we are out of the blood stream we are able to avoid a lot of neurologic issues, such as stroke and really avoid any of these blood sending medications that patients have to be on when you put a device in the blood stream.

So, hopefully, from what we’ve seen so far, it’s positively impacted the quality of life for patients. And we think there is also some safety advantages over and not being in the blood stream like some of these other technologies are.

Jake King - PropThink

Right. So why don’t you, can you go over the classification of heart failure. So NYHA Class III and ambulatory Class IV, and sort of describe of those classification and then what the existing treatment are targeting?

David Rosa

Yeah. So there is a lot of different classification systems that have kind of cropped up since the NYHA. You now have ACC. You have another system refer to as INTERMACS. But probably most people are familiar with NYHA.

So and what they all refer to are, what the limitation are on patient when performing normal activities and what the symptoms are. So if you are Stage 1, you are considered to have mild to really no limits when you are performing normal daily activities and you wouldn’t necessarily really have symptoms either.

Traditionally what patients will get in Stage 1 heart failure are drugs that help reduce the workload on the left heart in essence help slowdown the process. Then since heart failure progressive, a certain number of progress to Class II and by the way in the U.S. Class I is estimated to be about 1.8 million patients per year, Class II being the same 1.8 million.

When you get the Class II, there is a slight limitation activity -- of activity for normal activities. And again, you would have very mild symptoms. Also when you get the Class II, you start to see physicians looking at rhythm issues with these patients and really to determine whether or not they are indicated for pacemaker technology. The patients even in Class II are going stay on the same med that I refer within Stage 1 heart failure.

Now Class III which is really what I considered a sweet spot for our technology, that’s when you have limited activity during the performance of normal functions. So I sit before that these are people that have difficulty maybe walking from their coach to front door, walking a block, going a flight stairs and the symptoms that are generally refer to with these types of patients are shortness of breath, dizziness, slowing of the legs.

We’ve also had reports from patients, that say, they can’t sleep at night without sitting up or laying on their hands and knees, because the congestion their system is so bad, it makes them impossible to breath and actually family relative who had late stage heart failure who said the same thing.

In Class III you are going on stay on those drugs that you will be on in Class I and II. However, there are really isn’t any device that is prevalent in Class III. There is one company Thoratec that has a left ventricular assist device which was approved for Class IIIB and that’s the more (inaudible) set of patients. But its not reimbursed and the reason why CMS chose not to reimburse is they were looking for more clinical data from the company. So Class III right now doesn’t have a device which is why I think we are in a great spot.

Now with -- when you progress the Class IV, there is a pretty steep drop off in patient population. So Class III has about $1.5, Class IV has roughly 220 to 250,000 patients. So people already say Class III patients there are not as sick as Class IV, but we are not talking about people that have an illness like cold. I mean, when you got Class III heart failure, it’s a serious condition. So while people generally say you were not a sick Class IV, you are talking about a very, very old patient.

Class IV, you can't perform any activity, physical activity without having discomfort and you will have symptoms even when you are at rest. And these are pretty classic patients that are in bed, can’t get up, they are being supported by even more powerful drugs. And really their own options are or their only options are to get let’s call the left ventricular assist device or to get a transplant.

And every year I think the number of transplants are heart available has been pretty steady at 2 to 3,000, and when you are talking about a population of 220,000, there is a quite bit of room for technology.

So there is two companies with approved devices, approved LVAD in this space, one being Thoratec. It was been the market leader for awhile and newer entrant is HeartWare, which is the company that initially was founded in Australia and just received approval in the last 12 months. Other than that there are no other approved technologies for later stage heart failure in the U.S.

Jake King - PropThink

And so how about bridge-to-transplant versus dedication therapy? Do you want to talk about that a little bit?

David Rosa

Yeah. So HeartWare, which I mentioned is a newer entrant, they have an indication for bridge-to-transplant while Thoratec has both. There was some discussion with the government this year about whether or not they would phase out the bridge-to-transplant indication that may have had some positive implications or maybe even negative for the companies.

But given the Thoratec had both, it was probably going to really minimally impact them. And in the end they chose not to really eliminate the bridge-to-transplant which many people and many in the clinical community thought they would. So they didn’t do that but they made it a bit more stringent for you to be able to qualify under a bridge-to-transplant type designation.

So in the past, if the hospital puts on a transplant list then you are eligible under the hospitals requirements. You were then eligible to get reimburse. But what happen is, they went to a more stringent national coding system which makes it more difficult to be placed on the transplant list. So the thought is that you will see fewer patients that go under the bridge-to-transplant designation but you may see more that are considered destination therapy.

So HeartWare does have a trial that concluded in the destination therapy category and they are obviously hoping that at some point they will be able get reimbursement for that indication as well.

Jake King - PropThink

Right. Right. Also Dave considering that balloon and catheter precision is the new mechanism actually faced you. There is some concern that it could have an adverse effect on the aorta wall. Notably one patient in the feasibility study that you guys rendered died from aortic rupture, although it was related to the surgical procedure for reputed infection. So can you talk a little bit about that death and then this impersonate you that investors can look to regarding like a repeat pressure on the aorta?

David Rosa

Yeah. So, first of all, really our technology is based on an adaptation of what refer to is intraaortic balloon pump and they have been around for about 50 years. I mean what we have done is we basically taking it outside of the aorta, balloon pumps are placed inside and inflate and deflate and come in contact with the inside of the aorta whereas we find the outside of the aorta.

Jake King - PropThink

Yeah.

David Rosa

So the physiology has been around for awhile and the science has been around awhile, but not external to the aorta.

Jake King - PropThink

Right.

David Rosa

So for any patients in our pilot trial that was transplanted. There were two physicians that actually took samples. They took tissue samples right underneath the balloon and then they took samples 1 centimeter to the right to cuff and 1 centimeter to the left. And they compared the result of that tissue and founded they were no differences.

So I mean we always said that, we have not seen any issues in the absence of infection. So I’ll talk about infection for a second. But one of the things that we are trying to do is get a paper out on the data. It’s not our data, it’s actually physician, two physician data. Its shows the impact is really negligible on the aorta.

And I think that was transplanted after longest period of time on our device was about 2.5, 2 and 3.25 years, so that’s pretty substantial amount of inflection and deflations on the aorta. Hopefully, now that we have a Chief Medical Officer in place, he can help facilitate that article, so we can get that data out there.

Jake King - PropThink

All right.

David Rosa

So in the absence of an infection, the risk aorta disruption just seems minimal if any. However, in the presence of an infection, whether its external infection which was the case of that patient, or bacteria that gets travel from the exit site up to the aorta.

It’s left untreated for period of time. It can damage the aorta and you can imagine, bacteria can erode the aorta and having anything against there could really have detrimental impact. So really the situation with us is no different from anywhere else. It’s got to dry line coming to the skin or that has device.

In our case, our technology is really intended to be through small incision and not going through the breast bone and I think you will see more of those cases being done that way or the majority of them in the pilot trail. So that should minimize any risk of external infection.

But in terms of exit sites, those exit site infection, you need to make sure that they don’t travel to the aorta and there is diagnostic technology to evaluate that. But in any instance where you have that bacteria on the sternum or the aorta that has to be treated any other infection, just like they do for any device.

And if it successfully treated in the short period of time then you can continue with treatment, if its not then what all device manufacturer recommend is that the device be removed and the infection be treated.

And the device can always be placed again. But what we did do in the future to try to minimize is from occurring is we actually formed an infection control committee and that was really done to help minimize with any infection issues moving forward.

Jake King - PropThink

Interesting. So we may have -- we may see that study here in the, sorry, that article in the year.

David Rosa

Oh! I…

Jake King - PropThink

Six months.

David Rosa

I hope it wouldn’t take as long as year, I mean I’d love to see something in the next four months, three to four months, by the end of the year, possible.

Jake King - PropThink

Great. Yeah.

David Rosa

The data is there. So just ask the some text written and then either a presentation or publication.

Jake King - PropThink

Okay. So what is the aorta calcification, is that an issue given that’s not common in heart failure patients?

David Rosa

Yeah. So it is an issue in that, if we see it, we won’t treat those patients, but the reality is.

Jake King - PropThink

Yeah.

David Rosa

The calcification typically is on the descending aorta and not the ascending aorta.

Jake King - PropThink

Okay.

David Rosa

Its one of the reason why our founder Dr. Will Peters chose to place the device on the ascending aorta side. Literature, last time I look, there was about 20% of patients you would expect to see calcification on the descending aorta and I think it was somewhere between 5% and 10% on the ascending side.

The reality is we’ve screened about 37 patients to date, I think its 37 and we’ve only seen three patients that had a presence of it and one on the ascending side and it’s been literally a dot of calcium, which was a millimeter or less in terms of size.

So you really don’t see it, a lot of that has to do with that you had much more turbulent flow on the descending side then you do the ascending side. So it’s not something that I expect that we are going to see a lot of.

Jake King - PropThink

Yeah. So I guess now you initiated, two, like you said registration trial COUNTER HF U.S. and then OPTIONS HF in Europe. So can you talk about those two studies and those in relation to the feasibility study? Certainly, we have those end point compared, yeah, with the protocol as suppose for the COUNTER HF?

David Rosa

Sure. So if you go back to the pilot trial, really the whole purpose of doing the pilot trial for the FDA is that you want to demonstrate basic device safety. Before the FDA allows you into a large trial they are not going to just allow you to go ahead and plan bunch of patients before you show some relative signs of safety.

And then also you have to show signs of efficacy, but it’s not really design or powered to demonstrate efficacy. So the trial that we did the pilot trial was completed a few years ago and late last year we presented our one-year follow data on it, which show that patients showed improvement over our six-month publish data.

The safety data that we measured and there were many things. So they were stroke, pulse, bleeding, death, got a number of, just a number of different end points. Any sort of neurologic issues were evaluated in that as well.

And really when you look at safety the biggest thing that came back was exit site infections, which as I mentioned earlier, pretty common for this but that was really cause by allowing patient disconnect and the friction from pulling on the dried line really cause that rate to be higher than we hoped. And again, this is one of the reasons why we formed an infection control committee and made some basic changes to the technology.

But in terms of efficacy, the FDA wanted to see how we demonstrated any improvement at six months in terms of reduction of heart failure class are being able to show that we can take the patient safe for example from Class III down to II or I, or even IV to I. We also had provided a questioner that’s known as the Minnesota Living with Heart Failure questionnaire to all patients. And they filled out the questioner before they got the device and then all the follow up periods.

Basically, the results of that indicated whether or not a patients life, quality of life had improved and the barrier for that was, you had to be able to show a reduction of 7 points in that study during that questioner. To be able to say that the device had improved the patient quality of life and we were excited when we saw a 21 plus point reduction and then even a bit higher 12 months indicating that patients did really feel like their quality of life is improved.

And then six minute walk was one of the other efficacy endpoints that the FDA wanted to see and while we showed what I felt was just an okay improvement in six months. We showed a much greater on 12 and what we learned. And again this is why you pilot trials. You learn what you need to do in your pivotal trial to ensure that it’s more successful and we learn that we really needed to change the way we did our six minute walk. And I’ll give you the one of the things that had the most dramatic impact.

If you think about it, our patient spend on average about six hours in the hospital going through all these tests for follow up while they are in trial. And if you are patient and you come in and do your six minutes walk is the first test of the day. You would imagine that you would probably do better then if you did that test six hours later after you’d been going from department to department, doing a trade mill test, people are generally exhausted and actually me talking about it makes it exhausted, thinking about what they have to go through.

So one of the things that, one of our investigators told us was that we really need to do that as the first test of the day. And when you do simple little things like that, I mean, our six minute walk results doubled from where they were at six months.

So what we learn from the pilot trial was we felt the device was relatively safe. We saw some signs efficacy and then we went back to the FDA and had a discussion on the primary endpoint for the COUNTER HF trial.

And heart failure is a difficult area because you can never get physicians to agree on what the most critical endpoint is and what I feel the mention is that we probably measured another 25 to 30 both objective and subjective endpoint of this trial.

The problem that getting the medical community as well as the FDA to agree on which one is the most important or two that are most important. It’s not like cancer where you can take what test and show that there is fewer cancer cells or the same number of cancer cells are more.

What doctors do in heart failure is they look at the totality of the data. They look at all the test, both objective and subjective, and then ask the patient, how they are doing, because there isn’t one data point that is really more important than any other.

So we got to rehospitalization or reduction in rehospitalization for worsening heart failure for a number of reasons. One, we feel its an economic and an efficacy endpoint or many people will say, gosh, you may have a great technology, you may show that you can help people but the governments never going to pay for it, because there is no cost savings to them.

About a year ago, maybe a little bit year ago the U.S. government came out and said, the three indications that have the highest rates of rehospitalization are heart failure that has a 30-day rehospitalization rate of almost 25% and then it was heart attack and pneumonia.

So what they said was under the Obamacare and the Affordable Care Act is that, if hospitals at the end of this year have a higher 30-day rehospitalization rate for worsening heart failure that’s greater than 25%. They are going to get penalized the following year. This is really going to impact financially impact hospitals if they can’t keep patients out of the hospital due to worsening heart failure.

Number one, its one of the things that we really feel we can do with our device, patients generally like, they showed in their quality of life questioners feel better after they get the device. It’s one of the benefits. It removes that congestion that shortness of breath that patient has when performing normal daily activities.

So that’s the reason why we really focused on rehospitalization and the FDA has approved this endpoint in previous trials. The other part of the endpoint is also. So it’s a combined reduction and rehospitalization due to worsening heart failure, and heart failure related debt.

Every other company that’s done a clinical in the U.S. just had to look and had to evaluate any death. So if you died from cancer and you were in the device arm that would count against you.

In our discussions with the FDA, they agreed that we should really evaluate heart failure related death not just any death.

So I feel that actually give us an advantage because you just never know what somebody is going to die from. We had a gentlemen die from a mass that he had in his lung that had nothing to do. There was breathing or pulmonary issue he had, had nothing to do with heart failure or our device, yet under the -- under the way, the FDA used to look at this, that would have counted against us. Now that will no longer count against us.

So that’s kind of how we arrived at rehospitalization as an endpoint. We’re still going to measure other endpoints or secondary endpoints, things like six minute walk. But it was the one that we felt indicated that the therapy was providing a value for the patient. If you were able to keep them out of the hospital and there is also a strong economic tied to this.

I mean, when you think of the billions of dollars that you hear the government spends on rehospitalization and -- excuse me the penalties that hospitals are going to have to face, it really made sense to target this once, that’s the main difference. And then we’re still going to have to monitor all the safety end points that we discussed before.

Jake King - PropThink

Sure. So you touched briefly on the respiratory issue. Do you mind elaborating on that a little bit? I think I have seen few questions recently about that up in the investing community, respiratory related to that?

David Rosa

Yeah. So the pulmonary issue was, there was a guy that was -- who got our device, who was doing very well. He was in physical therapy and he literally just died right while he was in the midst of the therapy. And the feedback, the reports that came back from the physician -- I forget the actual terminology that they use. So you will have to apologize when I say this.

But the doctor basically said it was a lung snot. It was a mass that just got stuck in the lungs that caused the pulmonary issue and that’s why he died. So it wasn’t a blood clotting or anything like that. It was just a mass that formed in his lung that he referred to as a, just a lung snot which I quite honestly had never even heard of.

Jake King - PropThink

And so that was determined not to be blamed for device?

David Rosa

Correct. That was -- that was quite a while ago. He was kind of unfortunate because he was one of the guy that really was doing extremely well with the therapy and we kind of add auto through him. Before I forget, you also mentioned the options, heart failure trial in Europe.

Jake King - PropThink

Right.

David Rosa

And just so people understand, it’s very difficult to be able to give investors. When you’re not really generating a high amount of revenue, it’s hard for investors to get an understanding of what’s going to drive interest in the company.

With the ability to go back and do an interim analysis of the U.S. trial but you really not going to able to say anything about the data other than to say that based on the interim analysis, you’re going to continue with the trial. So in the end, what we thought would be better was do a smaller scale trial in Europe that will allow us to really communicate the results, how these patients are doing, using the same inclusion, exclusion criteria and do it on and as frequent basis as we so chose.

Because of that, the options trial is not part of the U.S. trial but it really is designed to give the market as well as us an idea of how the technology is perfoming in the U.S. trial. In addition to that, I think we’ve talked about publicly in the past reimbursement in places like Germany and Europe. And the only reason why we returned down for reimbursement when we submitted last year was we had don’t any cases in Germany.

So this is also going to help us apply for reimbursement at the end of October for Germany this year and also generate some continued interest just in the company because in fact our first release of results is going to be at the TCT meeting in October. And I think it is, I believe, it’s October 28. When are we going to announcing those results and while we are on the call, I’ll find out what time but we’ve already got a slide presentation. [Dr. Jean Schmidto] from Hanover in Germany is going to be doing the initial presentation.

Jake King - PropThink

Right. And that will include the weaning protocol. Is that right?

David Rosa

No. So that started on separate discussions.

Jake King - PropThink

Okay. Every year at TCT, we’ve had an investor/analyst breakfast session. And last year, we presented our one-year data there and also had a discussion about the fully implantable system trial. We had two different doctors do those presentations.

And this year the one that will have during the course of the day at the heart-failure session will be [Dr. Schmidto] and then we’re planning on doing is including him also at the investor session and having a second and maybe third meeting. The second talk would be on weaning progress and then the third one, could be on any of the results of our fully implantable system. We’re going to be some acute trial before we start the chronic trial in Q4. So there maybe three, when all set and done.

Jake King - PropThink

Okay. So with the European trial, can you give us an update as there has been -- I think last conference call you had implanted four patients. Is that right?

David Rosa

I’m sorry. Can you repeat that again?

Jake King - PropThink

I think on your last conference call, you mentioned that in European trial four, patients have been implanted. Can you give us an update on that?

David Rosa

And so I think about the European trial, the last quarterly call, I went through and talked about the first four patients in detail. Normally, I wouldn’t do that. My comment was that we’re going to do this. More so on a quarterly basis or at select regions because otherwise you're constantly giving -- giving updates. So I prefer to save that until that until October 28. By the way, it’s at 10:39 our time but it’s at 10:39 a.m. in the morning. So if I prefer not to give any more updates on Europe until that presentation.

Jake King - PropThink

Sure. So in your last conference call, you also mentioned the slower than expected enrollment in the U.S. trial. We’re going to talk about that a little bit. And maybe where is the competition coming from?

David Rosa

There is really four companies, I shouldn’t say four companies. There is four things I mentioned. The three companies that are conducting trial Thoratec has a 100 patient pilot trial. So that’s the company that actually has approval for class IIIB heart failure but no reimbursement

We’re now doing a 100 patient randomized pilot trial for class IIIB patients, not all of class III, just IIIB. And they read a number of same sites we are and I would say that for sure, their name comes up a lot in the discussions.

CardioKinetix is another company and they have a 400 plus patient trial. It’s for a really a different segment of heart failure. It’s considered only -- it's really for only patients that have had a previous heart attack and the heart attack has to occur in the -- what's referred to as the LAD region. There's a big artery down the center of the heart that’s called the LAD or left anterior descending.

And that device the advantage is that’s placed percutaneously. And when I was talking about passive and active technologies, this would be considered more of a passive one. And if you’ve ever seen one of the little martini umbrellas, that’s what they place in the ventricle to limit the amount of blood that can go into the left ventricle.

CircuLite is another company. They have a mini pump technology that’s placed minimally invasively but they’ve announced that they are going to be basically not starting their pilot trial. It was a 20 patient, U.S. pilot trial because they had some device issues. That’s going to really cause them. They have to redesign it.

And then sites I’ve talked about different stem cell studies. They are really going on. I mean, the one comment I would make is, sure it’s -- it can delay you when you got a -- go into one of these accounts, maybe you’ve already committed to one or two of these studies and convince them why your study is one they should participate in. But I think what it’s doing is, in general, it’s creating a greater awareness. And that for me is really the greatest competition we have as people knowing what we do and how we do it and convincing doctors that they should do something different in class III.

So the more company is talking about it and creating more awareness, the better it is. In Sunshine Heart, I think we always had at least when I came to the company and I still feel today. In some cases, I constantly am looking to increase our awareness in the public eye.

I remember when I started years ago, I have to laugh. Our Australian investors used to email me and complain that when they google Sunshine Heart, the first thing that would show up was a name of a hotel. So I actually googled and find out that they were right, a hotel would come up.

And now when you go in to google Sunshine Heart, you don’t see that, any reference to that hotel. There is a number of things about the company. And we go from that point, ringing the bell on Nasdaq, I mean, that’s quite a big difference from where we were three years ago.

So these competitive studies are causing us what I consider to be minor delays but I think again the greatest competition for us is awareness. And the more awareness, there is a Class III, the better it’s going to be for us.

Jake King - PropThink

Right. And so can you put a number on total expense for the, I guess, for both trials that are currently ongoing. I don’t know if you said that publicly at this point?

David Rosa

Well, we haven’t but what we’ve said before and I have been part of some of these trials is that, trials that are in this general range of 300 to a400 patients in Class III heart failure, even Class IV. They have cost in the range of $30 million to $35 million. So I think that’s probably a ballpark number, you could use.

The trial that we’re doing in Europe is really quite frankly the cost is negligible. There are some centers that are actually paying together the data themselves through hospital grants. But when you look at really what the completely overall cost was, it’s -- because it’s such a small study, it doesn’t really have much of an impact whatsoever but in terms of cost. But I think it has a great impact in terms of getting the word out, getting more data out regarding the technology.

Jake King - PropThink

Right. So can you give us a number for 2013 cash use, have you discussed that obviously as well?

David Rosa

Yeah. What we talked about is during our Q2 call, we gave what the overall cash burn was. And then we also realized a tax credit back from Australia. I won’t get into much detail on that but the Australian government affords you the ability to get back some of the money that you have invested in research and development cost. So we were able to realize about a million dollars coming back from the Australian government for that.

But when you look at it, it was basically little over $1.4 million a month in terms of burn rate. And at that time, we also said at the end of Q2, that we had -- it was about $21.5 million in cash in the bank. But that we had another $25 million from a credit line with Aspire Capital. And even if we didn’t touch the credit line, we said we would have cash well under latter half of 2014. And that’s we’re still confident in that number.

Jake King - PropThink

Okay.

David Rosa

If you do the math, you can kind of figure out what the burn is from there?

Jake King - PropThink

Right. I mean, your share has more than doubled since your last raise. Do you think you’ll exhaust that avenue, the Aspire Capital, the common stock purchase agreements there. You know what it’s like to have a raise before exhausting that I suppose?

David Rosa

I mean, I really think we got a number of options that are available to us. I mean, number one, you just mentioned that credit line with Aspire. We never talked about putting an ATM in effect. I mean, we’re -- since we do have a shelf in place, we could easily and quickly put an ATM into effect.

During our public offering in August, we had three interest corporated -- three interested corporates in o US distribution. And you know, if we would have accepted any of that, that would have been non-dilutive financing.

And then you actually got all the traditional ways of raising money. I think when your share price goes up, your options go up as opposed to share prices was stagnating or serious decline.

I mean, when I started, I used to pass around the hat for contributions and beg for money. Now, we got a number of various institutions that have approached us to invest. Kind of reminds me of a comment that I heard long time ago, actually when I first started in the company.

I could understand why it was so tough to raise money other than what you traditionally hear about markets, the timing of the markets but I can’t really who was but what they told me was if you need money, there is no one that wants to give it to you. And when you have money, everybody wants to give it to you which is counterintuitive. But its exactly what happened.

I mean, the reality is that every time we have a board meeting, the board discusses, the company’s finances. And I’m sure it’s going to evaluated again at the next meeting but I have to laugh. I have had a number of encouraging comments from investors. Our investors don’t like dilution yet I can tell you honestly that this is one-time where I have had a numbers of messages from investors saying you guys should be taking more money now. You know, it’s your price where it is. So I appreciate all those comments.

Jake King - PropThink

We wonder why didn’t you mention some parties interested in distribution. If you can talk about getting an interest from a large device manufacturers because of course everyone is thinking about an acquisition but maybe partnership are you thinking about that at this point?

David Rosa

Well, in terms of partnerships, if you’re talking about distribution, I’ll tell you my own personal opinion and I can’t say it’s with -- whether or not the board would agree with this or not because that again a decision like that is really something that gets discussed at the board level. My own personal philosophy is you control your own fate.

I think when you’re dealing with a technology that I’ll categorize them as commodity technology. So you’ve got a better widget or smaller widget whatever than the other guy. And you can go to a maybe a larger player in the space. Hand them your widget. They are already selling different type and they get it.

So the risk is them kind of screwing things up as much less and if you’ve got breakthrough technology which I feel we have that requires market development. The companies don’t always do well at market development technologies. They usually do well with technologies that have an established market. And they throw just a bunch of people at it to increase the amount of revenue.

So personally I like having control of my own fate in my hands rather than giving it to some one else that determines. Look my job is to keep the larger strategic players well informed of what our progress is. I think when your stock price jumps, the people start to hear that you’re making progress. There is always more eyes that follow you. So in the end, I think the question is will the strategic still be interested in distribution because again I think one of the decision that you have to weigh is what’s the value of that.

Somebody came in and wrote your check with $50 million. You’d say wow, that’s all non-dilutive, would it make sense to do some thing like that. So those are decisions again that will get discussed at the board level but there was interest by three companies dating way back to August of last year.

And I think the more -- the other reason too I felt Europe was a great market to continue to generate data that I thought we need to generate some momentum in Europe not just U.S. but in Europe as well. And I think when you do that, again people start -- company start to look at you a little differently and they realize wow, now there is some interest, you got thought leaders that were backing you in some of these key countries. You become a lot more attractive or interesting.

Jake King - PropThink

Right. So David, one last question, we haven’t discussed this fully implantable version of the device at this point. And you have slated to start animal study yet for the end of the year, right?

David Rosa

Actually, we have a number -- we have some acute, which are really like short term up to 24 hour trials and then chronic, which are typically 30 days longer. So we’re going to be doing -- we have said publicly as we’re going to do, that we will have started, maybe even completed the chronic by the end of the year but before that in the next 30 to 60 days, more than likely we’ll be doing the acute trials.

Jake King - PropThink

Right. Okay. We are going to go ahead and open up the call to some questions.

David Rosa

You know what one thing -- there is one other thing I wanted to mention about fully implantable before we do that. And it’s not something that I’ve talked about before and I -- even though I always had a fair amount of enthusiasm about this, when I look at Sunshine Heart, we get device for Class III ambulatory, Class IV heart failure.

And I have always felt that there were other applications. At times, I have even mentioned them but I think the biggest one that really came to my attention at an early stage was unstable angina. So these are patients that -- I mean, it’s a serious condition but patients that have chest pain at certain times.

And it’s due to a lack of blood flow. So you’ll have some heart failure patients that get unstable angina but you also have others that maybe have arteries that are starting to close or that have closed that will get these intermittent chest pain. Have a nice (inaudible) talk early on about the technology, doctors would only say to me, gosh! you really should look at your device. As a therapy for unstable angina, I’ve got a connotations, that I think would be appropriate for this.

And again, if the issue is getting more blood flow, we’ve shown clinically that we can increase blood flow by 67% through the coronary arteries to the heart when the devices are on. And conservatively the number of patients that you hear about that are new every year about a million a year. So physicians already have an interest in this but I never felt that it was a realistic market for us with the existing technology because I didn’t believe patients would come in, have a surgery, have a drive line coming out for condition that’s really intermittent.

So if you have a fully implantable system with nothing going through the skin, it’s more or less like a pacemaker in a model where he pacemaker gets put in. And when your heart goes out of rhythm, it functions. Ours could work the same way with the fully implantable. You put our pump in and when the patient begins to generate chest pain, there is an external power source that they could turn on and that would help get more blood through the coronaries.

So same kind of idea, same kind of concept but it really opens us up to another large market by using this fully implantable design. So just to mention that. Sorry for interrupting you.

Question-and-Answer Session

Jake King - PropThink

Absolutely. Yeah. We’ll open the call now with some questions. (Operator Instructions) [Suraj Rajpatel] I believe. Raj, your line should be open.

Unidentified Analyst

Hi. Can you hear me?

Jake King - PropThink

Absolutely. Hi Raj. Thanks.

Unidentified Analyst

Hi. First of all, thanks David for taking the time to do this call and to -- for taking questions from us. So, I just wanted to understand couple of things regarding the feasibility study and compared to the study that’s going on now for the U.S. I noticed that like the V02 was used as an endpoint in the feasibility study but I really haven’t seen it discussed in the presentations after that and I’m not sure sort of why that is. So could you talk about that end point and where it stands and is there something you’re looking at in the pivotal trial?

David Rosa

Sure. So V02 is listed as a secondary endpoint in the pivotal trial but it’s only the V02 has been kind of a puzzling one. The data that we had was all over the board. Some patients did very well. Maybe I rephrase it a different way. Most of the data, when you’re looking at all the end points that we measure, it pretty well correlates with each other.

So if you have a patient where we were able to demonstrate the size of the heart get smaller. The six minute walks got longer. They dropped down a heart failure class Their ejection fractions were higher. They all correlated very very well. The one that didn’t was -- I'm sorry was V02. So we had cases where patients did very, very well and their V02 was not very good. It was poor.

The others that stayed in the same class of heart failure and showed great improvement in V02. So the general consensus was initially V02 was considered a very important endpoint for the FDA. In the last trial that I’m aware of, that looked to V02 was trials done by Paracor which showed negative results for V02 even though patients said that in essence they felt better.

So with the FDA analysis to do, we went to them and said look, we had incomplete data in V02. We could even get all the patients in the pilot trial, step on the treadmill to do the V02 test. And the reason for that is, they were afraid they were going to have a heart attack. I mean, they again were sick patients. They said gosh, we don’t want to get on the treadmill and take this test.

You can’t force patient to do it. So we had limited data. And if you do any literature searches, what you’ll find is that the medical community feels that in general, that the six minute walk, I was just reading an article over this weekend, six minute walk is more appropriate test than doing V02 to measure endurance or tolerance. So that’s why we don’t talk about it much because it’s not -- if you look at all the trials that are being done today.

You really don’t hear about it. You did a lot when pacemakers, these pacemaker clinical trials were being conducted and you did see improvement in V02. But it’s been one of those things that’s really been hard to get a consistent read on or to show consistent improvement or decline on, just hasn’t correlated very well with the results of some our other patients.

Now, all that being said, we told the FDA that we would still evaluate it. It was considered to be a secondary endpoint. And then in the end, with the FDA agreed with us was that it wouldn’t be an endpoint but what we would do is we would go to a small number of sites that really do the V02 testing on a regular basis. So five to 10 centers and have them just do a small sample size just to see if centers that have great expertise in doing this showed more consistent results.

So that’s the issue with V02. There is variations between equipment from what I have been told and when we had our advisory board, that’s made up a heart failure cardiologist and surgeons to discuss it. And then eventually once the FDA with our PIs, the FDA actually agreed that it did not need to be an endpoint in our trial.

Unidentified Analyst

Okay. And so just that you mentioned sort of that six minute walk is perhaps some more appropriate test and was there any kind of clear signal there for the six-minute walk and their feasibility study and is that something that …

David Rosa

Yeah. See that’s the thing. I mean, how can you show great improvement in six-minute walk and show negative values or results in V02. It just didn’t make sense. So I mentioned earlier that we did a six-minute walk and at six months I really was disappointed in the results. I thought they should have been better based on patient feedback.

And I mentioned one of the things that one of our doctors, it was Mark Slaughter who is a very well known [health ad] supporter. I said to him that I was really disappointed in the results and he said well you shouldn’t be because the test needs to change the way you conducted it. And I said what do we need to change and he said three things.

He said number one, what you did was you did require the patients being in physical therapy. So he said that many of the LVAD companies when they do trials one of the things these patients do is they are in physical therapy. So his comment was you can imagine if, let’s just take an older patient. You have a 65, 70-year-old patient who get the device, they probably not that mobile to begin with.

And then what you wind up doing is you don’t tell them that they have to go through any physical therapy. So they are active when they need to be. Go to the grocery store, maybe take a walk. If you ask that guy to be in physical therapy two or three times a week, he would more than likely do better at a six-minute walk than someone who didn’t. And so none of our patients -- there was no requirements for physical therapy and we weren’t aware that any we’re in physical therapy.

So he said that. That was your first mistake. He said your second one was he listed his own facility as a great example. He said I have critical coordinators that will sit there and press the stopwatch, say go, and drink a cup of coffee. I have others who are pushing the patient, who are more vocal with them saying you can do better than this. They are really encouraging them and pushing them to do better.

So you would imagine that those patients that have more forceful or more encouraging clinical coordinators should do better. And then, you know, the third thing was what I mentioned and that is you need to be more consistent with the time of day that you do this test. So if you are going to do it at the end of the day needs to be the end of the day for everyone and they are going to do less well or -- that could be a walk as far these patients who did it at the beginning of the day.

So I think there is some standardization that we just weren’t aware off when we went into that test and when we went back and said, look we really need you guys doing this test first not at all these different times. We saw a dramatic -- dramatic improvement in the results at 12 months.

Unidentified Analyst

So now what is sort of the rate limiting step for the enrollment for the U.S. trial?

David Rosa

Well, I mean, we used in our model a rate of one patient for every two months. So we said look we think it is going to take about four months -- three to four months to get a site -- and when I say to get a site through the process, we are talking about for each site to go through their own internal process to get approved.

And then after they are approved, we will give them two months to find the first patient and then every two months they need to enroll one patient. And I have been criticized for this on both sides of the coin. Some people have said it is too aggressive. Others have said it hasn’t but if you look at the facts, LVAD companies, what they have done is basically shown around three quarters of the patient per site per month in their clinical trials.

And again, while maybe that market isn’t as developed as coronary stents, it’s use of least technology in this space unlike what we are doing. When I was at St. Jude a number of our cardiac surgery trials also enrolled in about half a patient per site per month. I didn’t want to do anything that was too aggressive when I am building an operating model because you are not cash flow positive. You miss those dates, you wind up -- it winds up costing you money.

So I really believe that one patient every two months once they get up and running is an appropriate number. I think we are going to learn a lot more about that as we begin to enroll these patients but the biggest thing working against us is we have to make sure that they get passed in our inclusion-exclusion criteria. Once we have convinced the site to participate, it’s all about making sure we enroll the right patients.

We had challenges even in the pilot trial, was making sure that we don't get patients that are too sick. We have patients that will one when presented with an LVAD or our device will see and understand the benefits of our device. I mean, if you said to someone look you ought to take these drugs and short procedure. It’s a 3-inch incision. You don’t have to worry about stroke and blood clots, and bleeding and you are going to be in the hospital for a week versus, you know, I don't know close to three weeks.

You can disconnect with this one, you can't with that one. People are going to generally, first of all, go for the smaller incision and then go for the one that they feel may offer them the greatest quality life which is really…

Unidentified Analyst

Right. Did we lose, David?

Jake King - PropThink

Looks like we lost, David. We will give him a minute here to see if he reconnects.

Unidentified Analyst

He may not even know that he is disconnected.

Jake King - PropThink

Could be. Looks like David was dropped from the call somehow. So let’s give him one minute to see if he connects. Looks like Dave is calling back in. So give him one second here. We do appreciate on dialing in. We have to do more calls like this in the future to provide more access to company management that the retail community doesn’t often see.

David Rosa

Hello. Sorry about that, my phone went dead.

Jake King - PropThink

That’s all right. Go ahead, [Raj], did you have your question answered?

Unidentified Analyst

Yeah. Yeah. Pretty much. I just want to give other people a chance to -- I just want to say from an investor perspective, I know you mentioned a ATM facility and I -- we at Red Acre would much rather see a secondary than an ATM. That’s just an opinion but what it’s worth, but -- and I want to jump out of the queue there and give someone else a chance now.

David Rosa

No problem. Like I said I have got plenty of voicemails, emails in our just little mailbox on suggestions. But thanks for asking.

Jake King - PropThink

(Operator Instructions) We are now glad to open the call to our second caller here. And your line should be open now.

Unidentified Analyst

Hi, this is Jeff and I am a heart failure cardiologist.

David Rosa

Yeah.

Unidentified Analyst

The question I have is the prior trial had infectious risk with some of the cases, what’s being done to minimize that infectious risk either surgically or equipment wise? I know we are a few years away from the wireless technology.

David Rosa

Yeah. So good question. So there is two different things here. There is the sternal infection. The one that occurred and then there is the exit side infections which they were 8 out of 20 patients. So on the sternal side, when I got to the company the thought process was to place this device through a full sternotomy and the founder of the company is a cardiac surgeon and when you talk to cardiac surgeons they will tell you what sternotomy is.

It’s a well tolerated procedure which it is but my background is more interventional than it is surgery. And I didn’t know any heart failure cardiologists or interventional cardiologist who are fond of full sternotomies. So, many of the comments that have come back really from I would say heart failure cardiologists and really surgeons know that well, if you are going through the sternum you are going through the ribs.

The likelihood now of having that type of infection is reduced. Secondarily, the issue for us, and it was kind of an interesting one, when we went to FDA, they said look, looking at your data everything was fine except your exit site infections. You have got a smaller drive line and LVAD why would your rate be 40%?

So if you are familiar with the old days of LVADs, where the technologies were post styled, there was constant movement at the exit site and that caused the irritation which eventually led to exit site infections. With our device, again, I will use Mark Slaughter, I will pick on him because he was at the FDA with us. He said you know the companies, one of the company’s advantages is also a disadvantage.

We let people unplug from the device. So it constantly pulling it apart, plugging it back together again. And we have similar to LVADs fabric on the drive line that’s inside the body and that allows tissue to form around there to give you a nice secure non-moving line but if you let people constantly pull it apart and plug it back in, you are going to disrupt that tissue, you are going to get friction.

So all the exit site infection you can clearly see driveline movement meaning that tissue has been disrupted. So what we did was two things. One was we developed our own securement patch which quite frankly is very similar to what you see LVADs use for these ostomy patches that have been around the industry for a while. But the biggest thing was we didn’t have any stress relief for the cable coming out of the body.

So the plug in essence was maybe, gosh an inch, the external plug was an inch from the exit site. So people had to reach all the way back down to pull in and plug together again. So what we did in the short term was we took the same cable and we were able to get another inch in terms of length, to give a little bit more stress relief. But ideally as Mark Slaughter said the company needs to bring the plug further away from the body to really reduce the likelihood that that’s going to occur. So we have got that we plan on submitting next quarter, a 5 inch longer cable that will provide stress relief at the exit site and eliminate the issue of pulling, pulling that cable apart so close to the patient’s skin.

And then the last think is, we put together an infection control committee that literally takes a look at every single exit site infection that comes in. So and I actually incorrectly said on my quarterly call that we had one in Germany that was resolved through antibiotics. It actually turned out that it wasn’t an exit site infection. So, we haven’t had any since we made these changes. They are still going to happen. We just hope that they are not occurring at a 40% rate like they did in the pilot trial.

Unidentified Analyst

Okay. Thanks. And just one more quick question, do you see a role with this device for a sicker Class IV patients, who for instance can tolerate blood donors with the other VADs on the market?

David Rosa

Yes. A great question, I mean, I got asked by Class IV all the time. The biggest issue for our technology is that it is an augmentation device. So we are not taking over the entire function of the left ventricle because we can't, the LVADs got a function.

When you get down to a patient that’s got -- that's really true Class IV patient that maybe has 10%, 5% EF, you really need to put a VAD in him because, I mean, a VAD, as you know, VADs can pump up to a 11 liters of blood which is more than the left heart is ever going to see.

We really can’t support those kind of patients and its -- I think it is great risk for us to even attempt it and that is why I am always -- it is really one of the main reasons why I brought in Chief Medical Officer because I wanted to make sure that we are getting the right patients for our device and not patients that are too sick or really too healthy. But now I mean, one, they are in bed and or in the hospital and they can’t get out of bed. They are not a good candidate for us.

Unidentified Analyst

Okay. Thank you very much.

David Rosa

Sure. Thank you.

Unidentified Analyst

Thank you, Jake

Jake King - PropThink

We will take one more question here and then see if we can squeeze in one more final question. Your line should be open.

Unidentified Analyst

Yeah. Thanks for taking the call and thanks for making the time today. Just wanted to real quick understand the difference between your technology in Paracor and what you have learned from their failure? Thanks a lot.

David Rosa

Yes. So Paracor is an interesting case. So here what I call passive technology and actually their principal investigator was Dr. Bill Abraham who is our principal investigator. So Paracor hired them, it was a technology called Acorn which used the mesh fabric and what they did was that they put the fabric around the left heart and they put internal pressure with the goal of trying to reduce the size of left heart because all these patients have an enlarged left heart.

And the trial was done as part of the dominant procedure meaning they had to have another something else surgically done and I believe it was a valve replacement at that time.

So when that trial ended, there was a lot of concern over design, because people said, well, these patients improve because of the valve or because of the actual mesh. And it’s hard to determine and company felt the FDA, that was really with the FDA who wanted to see and in the end they had issues getting funding and went away. That technology was put into a full sternotomy.

What Paracor did was take the same concept but they used a (inaudible) a metal framework and they did it minimally invasively. And they actually showed some positive results. They did Class II patients, Class III patients. I don’t remember what the split was, but I think they were Class II than Class III in their trial and patients generally felt better. They were able to get size of the heart down. So the primary endpoint was V02 and they failed that primary endpoint.

So I think when you are private company in today’s environment and I’ll leave it upon the public company and you have a failed pivotal trial. Specially on the private side, I think venture capitalist in general they look at the cost of getting the device through the first time through FDA and thinking about, they are going to have to go through this for a second time, I mean, it’s painful and it’s very difficult for them to get financing.

So, I talked to Bill about this and said, Bill these passive technologies, what’s your thought. And it’s not just Bill, the heart failure cardiologist that have done heart failure trials have generally said to me that they feel passive technologies work better for less sick patients and when you get to a later stage, the sick Class III, Class IV patients you need to really provide active assistance for the ventricle that they don’t have, they don’t provide enough support and that shrinking the ventricle down by itself just as -- just is not enough.

Jake King - PropThink

Do we have a caller on the line?

Unidentified Analyst

Yeah. Great. Thanks a lot and I appreciate it.

David Rosa

Sure. Thank you.

Jake King - PropThink

We will take one more caller here. Question here we have. The line should be open.

Jake King - PropThink

Hello.

David Rosa

Hello.

Jake King - PropThink

Hello. Do I have you there?

David Rosa

That was me.

Jake King - PropThink

Dave, sorry. It should be open.

Unidentified Analyst

I had a question you had mentioned something about that the German presentation at the end of October, and then also a submission for reimbursement at the same time. Is that correct?

David Rosa

Yes. So, yes, that’s correct.

Unidentified Analyst

And how long do you think it will take to hear back from the Health Ministry?

David Rosa

Sure. So I was waiting for your question because I won’t answer something that you weren’t asking. But in Germany you have to file for what’s called an NUB, and the German government will take applications in October and you have to get the application by the end of October and they will not inform you until some time in February.

So last year, let’s say, yeah, it was last year we submitted and one of the components to the submission is that you have to include support from local centers in Germany. That’s why they feel that therapy is required and last year we had 11 centers support the application, although we never had -- we had not done any implants in Germany at that time.

And our consultants in Europe actually encouraged us to submit the application, but they told us upfront, they said look, while things like having CE Mark and having patients done in Germany is not a listed requirement for reimbursement. We have never seen a company that’s actually been able to get reimbursement without having those.

Now, we have CE Mark but we haven’t done a case. So my comment was why should we split that? And they said that because you will get the response back with an explanation as to why they are rejecting it and you may find your delinquent in some other area.

So we did submit it in October and the only thing they came back was that we had no data in Germany per se even though we had the vast data, there wasn’t experience in Germany.

So that’s one of the reasons why we went to Germany as one of the first places to start our clinical trial. So we are going to go through the same process. Again, we are going to resubmit with the data that we have by the end of October and we expect to hear back some time in the month of February of 2014 and that’s kind of we were operating plan showed.

We did not include any revenue this year because we were concerned that we weren’t going to get reimbursement, so we put it off a year until, we were able to submit data with the application.

Unidentified Analyst

So, I mean, will you have a sufficient number of patients at that time to submit the data that was kind of where it was heading?

David Rosa

Yes. So the consultants have advised us that you need to have at least five patients submit for reimbursement and we feel we are confident that we will have that.

Unidentified Analyst

All right. Thank you.

David Rosa

Sure.

Jake King - PropThink

Great. (Operator Instructions) Dave, this might actually be a good time for you to clarify what reimbursement looks like in the U.S. trials, well, how that impacts the balance sheet?

David Rosa

Yeah. So the -- in the pilot trial the FDA allowed us to charge for the device and what you allowed to charge for is really the cost of what it takes to develop the technology you are not supposed to profit from it.

So we -- when I came on board, we had already communicated to the sites that we were charging $54,000 a device and the sites in turn were able to use established LVAD goes to reimbursement. So in the pivotal trial the same discussion came up. The FDA again granted us the ability to charge in hospitals to get reimbursed and just to be clear we are going to be charging $59,000 a device for any center that gets reimbursed. Most of the states private insurance will reimburse if CMS does.

And we have had confirmation from the initial sites that have come onboard that the regional CMS providers have already approved reimbursement and according to the LVAD companies, I think the number that gets tossed around the most for the procedure reimbursement is $210,000 a case.

So, in essence, every time a Medicare patient comes in they -- and our device is in plan, this is not for the arm that is being managed under pharmacology but they would be get -- they would be able to file for reimbursement somewhere in the area of about $210,000 and we would make $59,000.

And what we have done is, we have gone back and just to be conservative, we are going to assume that we get paid in 70% of the cases. We think it is going to be higher than that based on our pilot trial. But again I try to be a little bit more conservative. So, we are assuming that we will get paid in 70% of 194 patients, our patients -- our trial size is 388 in terms of number of patients but only have get device. So you can do some quick math and see that what we were talking close to $10 million.

Jake King - PropThink

Right. David we are not showing any more calls. So we are going to have go ahead and conclude. I want to thank you very much for joining us.

David Rosa

Well, thanks again for the opportunity and for everyone for participating. Thanks again.

Jake King - PropThink

Absolutely. I want to remind you that just stay up to date on our latest trades and insights at propthink.com. I also invite investors to try our free 30-day trial of our premium subscription PropThink Premium under the link propthink.com/premium. Likewise, you can also sign up for our free weekly newsletter at propthink.com. We do expect run calls like this in the future and you can watch for updates on our website or follow us on twitter at @propthink. We should have a transcript of this call posted within a week. Great afternoon and thanks for dialing in.

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

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

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