Endologix's CEO Hosts Endologix Investor Meeting (Transcript)

| About: Endologix Inc (ELGX)

Endologix, Inc. (NASDAQ:ELGX)

Endologix Investor Meeting (Transcript)

November 20, 2013 05:30 PM ET


John McDermott - President and CEO

Benjamin Starnes - Chief of the Vascular Surgery Division, Harborview Medical Center

Andrew Holden - Director of Interventional Services at Auckland City Hospital

Matt Thompson - Vascular Surgeon, St. George’s Hospital, London


Brooks West - Piper Jaffray

Jason Mills - Canaccord Genuity

Joanne Wuensch - BMO Capital Markets

Steve Lichtman - Oppenheimer & Co.

Chris Cooley - Stephens

John McDermott

All right well good evening everybody. I am John McDermott, CEO of Endologix. I’m going to apologize upfront for my voice, which is leading me for some reason it picks of all night tonight, but I’ll do my best. Tonight presentations will be recorded and broadcast live on our website and there will be a transcript following tonight.

The objective here tonight is to provide an overview of the company, new product pipeline, the markets, our clinical plans and activities and then most importantly to also give you an opportunity to hear directly from thought leading clinicians on their experience with the different technologies their perspectives on the markets.

And then when we’re done, we’ll open it up to Q&A. So you have an opportunity to ask to them questions directly. Before I drop into the slides, so there is a couple of just quick organizational announcements I want to make. One of them is fairly recently it’s been about a month ago, we brought on Board a new member to our leadership team Dr. David Deaton. Dr. Deaton is a vascular surgeon actually a thought leading vascular surgeon. He’s been in the vascular and specifically in the aortic area for well over 20 years, company got to the size where we really need a day-to-day clinical insight and input into our activities and priorities, our clinical programs and our R&D. So Dr. Deaton, has joined us as Chief Medical Officer and he’s here tonight. David if you could just stand everybody could see you.

And then on other thing we're going to take this opportunity to also announce a promotion inside the company. Many of you I think have had interactions with Bob Mitchell. Bob is our current President of International. Bob came to us a few years ago in conjunction with the Nellix acquisition just in the 2010 Bob was the CEO of Nellix. He’s been on Board and been running the international business and during his tenure has build that into very significant business. And as we look up over the next several years, our sales our marketing, our global activities and all of our clinical programs really need to be well integrated. And so we have taken the opportunity while we're all here as to announce Bob promotion to President. I am still the Chairman and CEO, but Bob will take full responsibility for sales, marketing and clinical affairs and that’s effective in January. So Bob congratulations.

So let me take you through tonight’s presentation. Again I will do my best with the voice here. Here is our Safe Harbor. Here the physicians that are going to present, just quickly Dr. Ben Stuart is going to go first, Dr. Stuart is a vascular surgeon from the University of Washington, very, very experienced thought leader specifically in aortic repair, he does all endovascular repair and all vascular beds, but has really become very highly regarded and recognized for his work in aorta and he is going to talk to about Ventana and provide his perspective on the technology as well as Fenestrated space in general.

So Dr. Stuart, he participated in the clinical trial and he is also on the steering committee which advices the company on our Ventana activities. Next you're going to hear from Dr. Andrew Holden. Dr. Holden was the first physician, did the first human implant with the Nellix device several years ago and he has also currently done more Nellix implants than any other physician in the world. So he is extremely well qualified to provide his perspective on Nellix. He has also used all of the other endovascular devices.

So, in addition to sharing with you his results and experience with Nellix, he can answer any questions to put that, that technology in perspective with other aortic devices. And then lastly, Dr. Matt Thompson from London also a very highly regarded thought leading position does treat all vascular disease, but he is also very well known for his work in the aorta, both endovascular and surgical has experienced with all of the devices, has been directly involved in many of the device development programs and is extremely well qualified to also talk to you about aorta care. He is going to be talking about Nellix, his perspective of the device and share some of his clinical experience.

So that’s the lineup. I am going to go through some information about the market, the technology and the clinical activities and then I am going to hand it over to the physicians, they will give presentations and then we’ll open it up to Q&A at the end.

So this is how we got things organized in terms of the market. The traditional infrarenal market, solutions for the complex aortic market and then we’ll go through our clinical programs.

First on the traditional infrarenal market. It’s important that we all get calibrated on the various market segments, because we have different technologies that are going to address different parts of the anatomy. So this first part will just be designed to get you calibrated. The largest segment of the infrarenal market is what we call and we are going to do this by neck length, alright. We measure everything in dimensions here in terms market segments in the aorta, the biggest part of the market is the segment of the market that is neck lengths greater than 10 and you can see from the illustration what I am talking about here. That represents 65% of the diagnosed aneurysms.

The next segment is that segment of the market between 10 and 5 that’s another 14% of the diagnosed aneurysms. And lastly that segment of the market which is less than 5 millimeters which represents another 21%. And you could see how that’s distributed on this illustration of a blood vessel over to the right. So those are the market segments and the diagnosis you can see from this illustration where you have the hash marks that represents those segments of the market that are under served or under penetrated. So the current market, the large majority of the market and the neck lengths greater than 10 millimeter is relatively well served there are still some patients that don’t get endovascular graph, those would be patients with ruptures, some patients still but younger patients may prefer open surgical repair a very, very highly angulated neck might still go there, but by and large most of this patients are treated today with EVAR.

The other two segments between 10 and 5 and less than 5 are penetrated in a very, very minor way, most of those patients still go to open repair or don’t get treated at all you can see from this illustration. So I am going to talk you about two segments the traditional market and our plans for that as well as the complex market and our plans for that.

We have got two technology platforms to address all of these market segments and I will explain as we go through this how uniquely they are positioned to treat the different aspects of the disease. The first product I want to highlight is VELA, this is a new product. You have heard me refer to this device in the past that AFX 2, so we are introducing this product at this meeting for the first time, if you go by our booth upstairs you will see it, you can get hands on demonstration.

What this device is, it’s the aortic proximal extension to AFX. And as you can see here from the slide, the device was developed to provide physicians with very precise delivery and deployment. We have already got FDA approval and are conducting limited market introduction expect to go full commercial introduction sometime in the latter part of the first quarter with this device.

So when we think about AFX and we think about VELA, the segment of the market that technology will address is this traditional segment, okay the 65% of diagnosed aneurysms.

Next Nellix, I am not going to spend a lot of time on that Dr. Holden will actually take you through some aspects of the devices, we’ll share its experiences, but as you know, many of you already know this is the only technology that really seals the entire aneurysm sack was develop to treat some of the shortcomings with existing EVAR devices.

When we think about Nellix and its applicability to these market segments, we believe that now it’s as unique and that it can actually treat a larger segment of the market. So in addition to treating the traditional 10 millimeter necks, we have clinical plans to broaden that indication down to 5 millimeter necks and I’ll talk about that as we go through.

So in addition to AFX and [VELA] we have Nellix, which will treat a larger segment and actually open up what we consider today the traditional market segment. Status of Nellix, most of you already know, we got CE Mark earlier this year. We've been running a limited market introduction. Both Dr. Holden and Dr. Thompson have been a part of that in all of our clinical activities to-date. We've done over 200 cases in Europe. We’ll start to open that up a little bit at the end of this year and continue to expand a number of centers over the course of next year.

As you can see here, we've learned a lot over the last several months about sizing that device, the sizes required for the device, our training programs, as well as future enhancements. So this time period, I know many of you’ve been anxious about us, getting more ambitious with the launch has been very useful for us to learn as much as we can about the device. We want to do it right, we want to take our time. And I feel like we’re well prepared going into 2014.

Let’s talk about the complex market segment. So as I mentioned earlier, these are the two pieces of the pie, up in the top-left quadrant. They are the least penetrated or the most underserved market segments where they are just aren’t good solutions for patients today.

One of the technology platforms that we have here is Ventana. So we developed this device several years ago. It was the first off-the-shelf fenestrated device. It was designed to provide an easier device to cannulate the renal arteries. We've continued to get that feedback, Dr. Starnes will talk more about that, provide broad applicability using the AFX platform.

Just to get you calibrated with the segments of the market that Ventana is designed to treat is this segment here. These next shorter than 10 millimeters down to no neck or what we call pararenal aneurysms. So that’s the market segment that Ventana was developed to address.

As most of you also know we made a decision earlier this year to put the trial on hold. We experienced a higher rate of renal re-interventions than anticipated in the original trial design. We have conducted a cause analysis, completed preliminary testing and expect to resume our clinical activities in 2015.

I am telling you this because this is the update that we were planning to give before the end of this year. I am not going to provide another update between now and the end of the year. We're going to meet with the FDA next month, but I don’t think it’s going to materially change our plans moving forward. So I’d like you to consider this the year-end update.

Dr. Starnes will actually provide you with the much closer look at the actual data and data that will be presented from the podium later this week. So you’re going to good look at the re-intervention rates and the safety profile of the device. So this will be the first time we've presented more detailed clinical results on Ventana.

Another technology that we have some of you have heard about this and more and more physicians are talking about this for this very complex segment of the market specifically 5 millimeters and less is the use of the Nellix technology together with branches. And you can see that illustration here on the slide.

The potential benefit of this is that it’s off-the-shelf. And it's in C2 customization, which is to say the physicians have really what they need in terms of treating these patients now. They don't have to wait for a custom device and they can adapt to the patient-specific anatomy. One of the things that you may not appreciate it, even with the current custom devices, there are a lot of limitations to those devices and still a fairly significant number of those patients don't get treated because of their adverse anatomy. This represents a potential solution to that. When you see the market segment that Nellix with branches could potentially treat, it's this segment up here in the top left. This is your 5 millimeter and less market segment.

So then when you put all these market segments together, both the traditional and the complex and the technologies I can show you how this builds. Again you've got AFX and VELA to treat the traditional market segments. You’ve got Nellix to treat the traditional, as well as the shorter neck market segments. You've got Ventana to treat everything less than 10. And then you've got Nellix to potentially treat less than 5. So what you can see from this illustration is we've actually got a dual technology opportunity.

Two different platforms to entirely treat the market which positions us very unique; I think if you look at all of our competitors, they really got a single platform, we've got two platforms to address the entire marketplace, we feel like we're uniquely positioned.

Now let's talk about our clinical programs. The first one is VELA registry. So with this new device we plan to launch a registry in the middle of this year. It’s a registry designed to capture real world clinical data. We didn’t need that for the FDA approval, but we want to gather and analyze data and supply that data to the marketplace. We also think there is opportunity to broaden indications with AFX and VELA beyond where they are today. We’ll do 250 patients in 30 centers with two year follow-up and expect to start enrolment in the middle of the year.

Next is what we call EVAS FORWARD. If you have heard EVAS that acronym stands for EndoVascular Aneurysm Sealing. This is a collection of clinical studies designed to demonstrate the safety and efficacy of the Nellix platform in a broad range of anatomies. The initial IDE trial, we don’t have formal approval yet we do have a conditional FDA approval. We’ve got a few minor questions that still need to be addressed, but we still remain hopeful and we still expect to get our final IDE by the end of this year.

In fact we are having Investigators’ Meeting while we are here at this meeting, but this study in the U.S. and a few international centers will involve 180 patients, 30 centers, 5 international, 25 in the United States, one year follow-up. The principal investigator is Dr. Jeff Carpenter. And based upon this timeline we would expect to get FDA approval in the second half of 2016.

Beyond the IDE we already announced a few weeks ago the first patient enrolled in the Nellix Global Registry. So actually the first patient was doctor with Dr. Holden. That is a 300 patient, 30 site clinical program again to gather real world clinical data on the post market registry so we can use that to broaden indication, as well as provide a robust dataset to further support the adoption of Nellix. And then you should also expect from us a series of additional clinical studies to support a broader indication for Nellix over the next few years.

I mentioned we are going to go after these short necks, these necks between 10 and 5 millimeters. We also expect to pursue Nellix in highly angulated necks. We’re interested in potentially using Nellix for ruptures. And we’re also interested in potentially using Nellix for branched that short segment that I mentioned up above.

In the way this is going to look, this is a very busy slide, but I think it is important one. As you can see from the top the Global Registry which we have started now, I wanted to give you an idea of when you could expect to see data points, when you would expect to see follow-up data at different points over the next several years. So from the Global Registry you will start to see one year follow-up in 2015, two years in ‘16 and then three year in ‘17.

Then you’ve got the IDE clinical trial which we will enrol next year. We expect to submit the PMA end of ‘15, first part of ‘16, get approval by the end of ‘16. So when we launch in the United States between the Global Registry and the U.S. IDE clinical trial, we’ll have just under 500 patients in the study. We think that’s a good robust number to enter the U.S. market and have good long-term follow-up.

In addition to those two clinical programs, we have [won] arms of the Nellix IDE to address these other market segments over the next several years. I can’t tell you if this is going to be the exact timing of each of these additional arms, but I want to give you a broader perspective on where we’re going to be investing and how we plan to broaden Nellix indication beyond any of the other endovascular aneurysm devices.

So just to wrap this up, in terms of these three key areas, expanding the traditional market, already showed you we've got two platforms to address the traditional aneurysm market, one of which Nellix has the potential to expand that to include Nellix shortest 5 millimeters.

We've also got two platforms to address the complex market segment, both Ventana and Nellix are promising alternatives, each has the potential, there could be some overlap, but we’ll also find to the course of our clinical work that there could be unique attributes to each system for certain patients.

And then lastly, our robust clinical data programs over the next several years, we’ll run the AFX Global registry as well as the EVAS FORWARD clinical programs.

So with that, I’m going to and again we’ll take questions at the end. What I would suggest before I -- I have Dr. Starnes come up, is if you can save your questions to the end and initially have them more focused on the clinical questions, while we have the doctors here. And then all stick around afterwards to do any business related questions, but the doctors have a more pressing time schedule than I do. So, let’s focus on the clinical questions first and then we can go to the business stuff.

So with that if you would please join me in welcoming Dr. Starnes.

Benjamin Starnes

Thank you, John. It really is my pleasure. Sorry, it must be something going around here. It is my pleasure to speak before you this evening. My portion of this presentation is only going to be about 10 or 12 minutes. I do have to say that I met John McDermott several years ago and I've been really impressed with his leadership of this company and I'll also tell you that I made fun of him a little bit at the national sales meeting because I think he looks like the new James Bond, Daniel Craig, am I the only one that think that I am he’s certainly got those bright blue eyes and it’s really intense but anyway.

So I am going to share with you a little bit about my experience. I work at Harborview Medical Center in Seattle and I serve as Chief of the Division of Vascular Surgery there in Seattle and Harborview sees more ruptured aortic aneurysms than any hospital in the country and probably most hospitals in the world, we see between 30 and 50 ruptures a year, most hospitals will see only one or two ruptures in a year, most community hospitals.

The whole reason we are here tonight is to try and conquer this aneurismal disease and to prevent death from rupture of the aneurysm. My interest in some of these proximal aortic neck deficiencies began with implementing a protocol for managing patients with ruptured AAA using endovascular techniques and we were able to cut the mortality rate in half by using EVAR to treat rupture AAA, that was dramatic.

Most of the patients who are not candidates for endovascular repair were not candidates because of these challenges and so I've been involved in trying to conquer some of these challenges over time and this is what we're talking about, we're talking about proximal aortic neck deficiencies. So these necks between 1 and 8 millimeters where there is no parallel wall or as you see in the bottom right corner there is no neck for sealing of a conventional stent graft and this is why Ventana was created to be an off-the-shelf solution for managing these patients.

I will share with you our experience over a five-year period from 2007 to 2011, 352 patients with aneurysms and this nears the data that John presented showing that two-thirds of those patients can be treated with conventional technologies, but about a third will require some other form of therapy to manage juxtarenal aneurysms.

We've had fenestrated devices for a number of years, a custom fenestrated devices where a graft can be ordered and manufactured that usually have the time delay of about six weeks before those grafts can get to the provider, but that doesn't really help you in the case of symptomatic aneurysms or rapture. Those not calling [chimney] techniques, I'm not a big fan of those types of parallel stent graft technologies. And then back table or surgeon modifications of the graft for which I was the first physician in the United States to attend an investigator sponsored IDE for physician modification of stent graft.

As I stated earlier these custom fenestrated devices take 4 to 6 weeks to manufacture, they take intensive planning, they have to be an expert in planning for these types of devices. Again they are not available for urgent or emergent cases. There is high turndown rate, about half of these cases can be turn down because of the limitations of creating fenestrations with the available stent grafts. And there is a potential for aneurysms remodelling in rapture. These particular grafts are limited to approximal neck length of less than 4 millimeters.

There are also implant procedure challenges. There is significant scale required in placing these stent grafts. They can potentially have long operative times, long fluoroscopy times and a high amount of contrast usage. When we look at the outcomes of some of these commercial devices, they are actually quite good. We have about 10 years of experience looking at fenestrated repair and the technical success rate is 93%, 30-day mortality rate under 3%, the 12 month vessel patency is high and those patients who go on to require dialysis or reintervention is low.

So the durability of fenestrated repair actually remains a challenge. This is a paper that was published by (inaudible) out of the Cleveland Clinic and some of the contributing factors to ---- some of these challenges for fenestrated repair involve disease progression or actually placing a dilating process or a stent graft that has outward force into a dilating disease and there are some challenging dynamics of the perivisceral aorta and branch vessels and also some interesting challenges with device design.

I will share with you some of the early data from our investigational device exemption looking at 26 patients, we’ve now enrolled nearly 50 patients into this IDE and these are the grafts that are modified by the surgeon, the graft manufacture time on averages take about an hour to make. The operative time is respectable at just under 3 hours. Short fluoroscopy times low contrast usage and low estimated blood loss, technical success is high at a 100%, lower 30-day mortality, low migration and conversion rates and also low type 3, type 1 [embolic] and sac enlargement rates.

So this is Ventana and Ventana meets a clinical need that we have right now, it’s an off-the-shelf solution to manage these proximal aortic neck deficiencies. It’s a proximal extension with a bifurcated unibody and anatomic fixation on the aortic bifurcation. You can see that these fenestrations are movable within this central portion of Ventana graft and there is broad patient applicability because these fenestrations don’t need to be customized every patient. This is a graft that can be taken off-the-shelf and placed in most patients. So this is something that I was quite interested in especially for managing patients with ruptured AAA, and I can tell you from our experience having implanted several of these devices, this is an easy graft to implant compared to some of the other fenestrated devices that are out there.

The reason I say it’s easy is because if you look at the offset that is created between the delivery system here and that branch vessel, it allows a wide open space for you to be able to get your catheters out into the renal arteries and to get that graft into position, so very impressed with this device.

Let’s look at the two trials that gave us the confidence to proceed with the United States Investigational Device Exemption. This was Dr. Holden’s pilot study and the CE study by William (inaudible) there were nine centers involved in the early feasibility studies for this device. A small numbers of patients but very high technical success rate for Ventana, very respectable 30-day major adverse event rates and zero percent 30-day mortality. The stent graft integrity was 100% and 97%, there is an asterisk next to 97% because that was the single patient who was treated way outside the instructions for use for the device on a compassionate use, and that patient had stent graph integrity issues.

And also you can see that the reintervention rates are comparable with many of the other technologies that are on the market.

So looking at the U.S. investigational device exemption study the objective of this study was to look at the safety and the effectiveness of the Ventana device for treating juxtarenal and pararenal aneurysms, multi-center prospective single-arm study up to 25 centers. And we actually enrolled 76 patients at 22 centers by May of this past year.

The end points that we looked at were major adverse event rate at one month continuing after five years. And effectiveness was described as treatment success at one year. And we’re also following these patients after five years. The actual median to follow-up was seven months. These are all results at one year and you can see that the technical success is extremely high, 74 out of 76 patients, zero aneurysm ruptures, one conversion to open repair, one patient that had aneurysm sac expansion that was treated with a simple reintervention, one patient with clinically significant migration. And then if you look in the red box below, you’ll see the secondary interventions and renal interventions, these were higher, they are somewhat low, but they are higher than currently available Fenestrated Stent Graft technologies. And so they were higher than we had anticipated and that's why the trial is put on hold.

When we look at the complications and did a thorough root cause analysis of some of these device failures, we found two things. One was lateral displacement of the graft in the mid section that could lead to complications and those complications were renal stent graft fractures, Ventana wire fractures and graft material ware and perforations. So this whole concept of lateral displacement of a graft happening out to two years from initial implant was something that we noticed would require device enhancement, so an opportunity for redesign or improvement in the device design.

The second thing that we noticed as a complication or as part of this root cause analysis was the technique of implanting the device itself. There were various different techniques done by various different providers and we felt as if some of these techniques led to renal occlusions and renal interventions. And as part of the steering committee and the Medical Advisory Board for this company talking on multiple occasions with many of the thought leaders around the world we feel as if technique does matter and so we've learned some lessons.

In summary, I think this is a technology that’s here to stay. The advantages of the Ventana device so that it is an off the shelf design with broad anatomical applicability, it’s easy to put in, very simple to cannulate renal arteries and offers a very high technical success. And there is a very, very good initial safety profile. This is a good device. The limitations are that we do notice a reduced tolerance to lateral movement in the aorta. And with the design having two fenestrations in a single scallop I think we've got some opportunity for device enhancement. And I am actually excited that Dr. Deaton is now the Chief Medical Officer. He’s a very experience vascular surgeon and I think with some of his leadership he’s got to help guide the device in the right direction.

So in conclusion I think we've noticed that with custom fenestrated repair there is good short and mid-term results with progressive loss of therapy success overtime. There are some recognized limitations of complexity of the planning for the procedure, the conduct of the procedure and the wait times about the six weeks to get the device. As far as the Ventana design, this is the first program to advance the practice of fenestrated aneurysm repair in three to five years, with this off-the-shelf design. I think it's broadly applicable, has a good safety profile, a high level of acute success, across a broad range of experienced users. And the future plans are for device enhancements, rigorous testing and then resuming the clinical trial with a better device. That's going to have better results.

I'm happy to take your questions at the end of the session and I thank you for your time.

And one more thing I wanted to give you this, if you look at these slides carefully. In the top left part of the slide is our actual logo from the University of Washington. And if you look at it very closely it says Constantia Comes Victoriae, which means in Latin with persistence, comes victory. And I think that's the model of every vascular surgeon in the nation, because you have to be persistent in some of these difficult cases. The Wright Brothers did not come up with a perfect Airplane, the first time they set out the device a winged aircraft, but they eventually got to it.

So I'm happy to answer your questions at the end. Thank you very much

Andrew Holden

Thanks very much. So, it's a pleasure offer to address you, Andrew Holden from Auckland, New Zealand. And I have been very fortunate to be involved really at the front end with both Ventana and with Nellix and I want to really share some of our experience with Nellix. And Matt Thompson from London will also share his experience with this device. We want to focus on. I know John has touched on this in terms of what is the opportunity for Nellix and what is our experience.

Both of those couple of speakers have spoken about the anatomical limitations of current devices and stated that our current infrarenal technologies can treat roughly 65% at current aneurysm anatomies. And that is true.

So the question is why would you use Nellix for that group of patients. It’s true that you can get an acute seal with aneurysms with current technologies, but long term freedom from aneurysm rupture with all EVAR comes at a price. And this has been consistently shown in the two major randomized control trials the EVAR1 trial and the DREAM trial, but also in registries of the more recent devices have shown a secondary intervention rate to maintain freedom from aneurysm rupture and you can see this in the two trials where open repair basically patient have open repair, that’s it, I don’t need a secondary intervention. But you can see that secondary intervention rates or freedom from reintervention rates go down progressively as time goes on and it carries on overtime.

So what are these reinterventions, why are we having to reintervene on patients who get an acute seal with endoluminal repair. Well here is the kind of breakdown of what those reintervention rates were actually. So this is actually looking at a data, an FDA database which really shows that even with modern devices we see that there are still secondary interventions. So although EVAR1 and the DREAM trial were older devices, modern devices and this is an U.S. FDA registry 20% secondary intervention rate primarily due to endoleaks of various types including type 2 endoleaks, device migration and [luminal occlusion]. Now while these modern devices have clearly reduced the incidence of these type 1 and type 3 endoleaks and device migration. This only happens when the devices are being used within the company’s instructions of the use and of course because these devices are not directly treating the aneurysm sac. We still see an incidence of type 2 endoleak that is direct leading from aortic side branches because none of the current devices unlike open surgical repair directly treat the aneurysm sac.

As I mentioned, currently a lot procedures are being done outside of current instructions to use. If you look at this complication 10,000 U.S. patients in the FDA database, around half of them would be entreated outside of instructions for use. What was the major breach of instructions for use, it was a short infrarenal neck. And if you start breaking rules and treating patients outside of instructions for use, you may get an acute seal, you may think you’ve treated the patient adequately, but if you look at this publication just this year, you can see that there is a fourfold increase in developing a late pipeline endoleak that compares to the patients who have favorable neck anatomy and a nine fold increase in mortality, in aneurysms related mortality. So if we break the rules outside of instruction for use the patients in the long term will pay for it.

We also know that if you have to perform secondary interventions there is a huge impact on costs. So you can see if you follow up a patient and they have no endoleak and they don’t require secondary interventions, it’s relatively cheap to follow these patients. But if we don’t, the price skyrocket. So this also set in 2007, we should essentially be looking for devices that can reduce the incidents of endoleaks and secondary interventions, if we really want to make a cost effective impact on treatment.

Essentially the reason that current devices are really lacking in terms of long term performance in freedom from reintervention and also limitations in treating the wide range of the anatomy to really want to do is that they treat patients exactly the same way. They do not directly treat the aneurysm sac, but simply seal the aneurysm from exposure to blood by sealing at the proximal and distal attachment sides.

All the devices currently do that and so essentially they require proximal and distal anatomy that’s suitable a link of normal caliber aorta, parallel link that's not dilated or conical or aneurismal. So these short angulated and conical infrarenal necks and also short or dilated iliac arteries are problematic. And as I’ve mentioned several times, these devices do not directly address the aneurysm sac and that is why you can get a type 2 endoleak. If you could oblate the aneurysm sac, you could not get a type 2 endoleak.

Now as data say there is a lot of debate about the significance of these back bleeding endoleaks, we know that they haven’t very commonly, somewhere between 20% and 30%. And we also know that if you have a type 2 endoleak you are going to get ongoing aneurysm sac expansion. And we show this in our own review we just looked at a sub group of patients, who all have the (inaudible) product mix device. And in the patients who had a type 2 endoleak in blue over five years the aneurysm didn’t shrink at all, in fact that continues to grow. So you can imagine compared to the patients who had no type 2 endoleak, the aneurysm shrunk. And this is actually a problem. You go and see the patient in the clinic a year afterwards and you say, look your aneurysm is not shrinking in fact, it’s getting a bit bigger, we treated you for an aneurysm, it’s getting bigger, but don’t worry, and it’s also got some leaking, but don’t worry about it, we think it’s a safe thing to do. So certainly type 2 endoleaks are a major problem, a major [actually seal but] EVAR.

Really the only device currently available that does replicate the surgical approach of oblating the aneurysm sac is the Nellix endovascular system, it’s radically different to any other system we currently use.

I do want to just mentioned briefly trivascular ovation because that company will certainly promote their technology as also an aneurysm sealing technology. In fact it does use these polymer filled rings to seal the proximal attachment side. So it does appear to be pretty effective at preventing type 1 endoleaks, but it does not directly treat the aneurysms sac. If I was that company I would certainly be wanting to promote it as a sealing technology like Nellix but it’s very different. It leaves the aneurysm sac completely untreated and therefore allows type 2 endoleaks device migration problems exactly the same as any other endograft.

Let’s just go through some of the perimeters or key features of the Nellix endovascular system. Really these are two covered balloon expandable scenes, they covered by a PTFE sleeve. They are chromium cobalt balloon expandable stent, very strong radio resistive force and then the role of those stents is purely to maintain blood flow to the lower lungs. The surrounding endo bags are the devices that really do the work. They’re still with a bio-stable polymer and you can see that these compliant endo bags pull up all the [knocks and cranings] of the aneurysm as well as the proximal and distal sealing zones to complete these exclude the aneurysm for many blocks to oblate the aneurysm sac. So we can’t get device migration and we can’t get endoleaks of any type.

You can see in this cartoon that we can also treat a common iliac artery aneurysm, because we’ve got the sealing technology and we have certainly had that experience. So how do you do this procedure? It's incredibly simple. It's basically deploying two balloon expandable stents. We have an ability to perform an angiogram at the top end through nose cones to position these devices and flow the renal arteries as close as we like to the renal arteries. And we can also perform angiography through the delivery sheets to position these devices relative to iliac arteries and the hypergastric arteries. Once we're happy we're in an excellent position, we can deploy those covered stents and then we can fill the endo bags with polymer. As you can see the polymer filled endo bags take up the aneurysm blood lumen and exclude the aneurysm from any pressure.

Here is an example of a straight forward anatomy, you can see at 9:15 I'm introducing one of the stents and we're about to deploy the stents in that position at 9:32 I am removing the delivery system after we seal the aneurysm. So we have treated that aneurysm in 17 minutes, it's extremely easy with straight forward anatomy.

But this compliant endo bag technology allows us to treat some anatomy that we couldn't treat with anything other than a fenestrated device or open repair like this conical neck. You can see here that a standard endograft that relies on graft will let physician just could not oppose the conical neck and seal this patient that needs open repair or complex fenestrated repair. But the compliant endo bag and you can see the top of the endo bags here completely filled with aneurysm. And we can use this device in moderately angulated necks as well.

Now as I have mentioned several time our real appeal is that we are excluding branch artery bag filling so we don’t see type 2 endoleaks. And here you can see the inferior mesenteric artery here and it’s completely thrombosed because there is no way for it to back bleed since the aneurysm sac. If you still look at completion angiography you often see the space where the aneurysm sac was, no back filling because it’s completely oblated. And here on this movie you can see that are filling lumbar arteries and they are filling back to the aerosphere, in other devices they would back bleed into the aneurysm sac but they can’t do that in this patient because the aneurysm sac blood lumen completely filled with the endo bags.

In terms of follow up we can survey these patients with both CT and ultrasound. Here you can see the surrounding endo bags and the central stents with blood lumen on CT. And on ultrasound you can see them very nicely to the endo bags and the stents would flow on [doctor]. So we can use both our usual mortalities for surveillance.

And one of the key things and really appealing things for this device is to treat ruptured aneurysms. Now we know about 25% of patients who have treatment of aneurysms for rupture, certainly the Nellix procedure lends itself to treating ruptures. Why is that, essentially the Nellix stands for all 10 millimeters in diameters and so essentially all we need to is pull out the correct device based on its length and we don’t have to carry a huge inventory of devices to treat these.

The second thing is the procedure is incredibly simple. Two kissing stents quick and easy, we don’t need to put a device up, cannulate a short limph, extend down. As I showed you, these procedures are very quick and easy. And this such rupture procedure has been performed in several locations, here is one we did. This was a tough case, you can see that patient came in with a ruptured aneurysm, but they also had a large iliac artery aneurysms and we can take these Nellix devices up very quickly and easy deploy those stents, get the endo bags out, very quickly we have sealed the aneurysm from rupture. And to see the follow up appears in this patient, on CT the ruptures excluded by these Nellix stents.

Here is another rupture case done in Europe. Dennis Cravens, kindly leads me these slides for rupture. He treated with Nellix, again quickly and successfully. So this group of patient is very well treated with the Nellix endovascular system.

What about our experience, just we have done a number of more cases during the development phase of Nellix. but certainly using the commercial of CE mark device, 58 cases, a 100% technical success. Aneurysm related mortality not seen at all. One procedure, we all ready where we got a trending type 1, the endoleaks that we could treat, no type 2 endoleak. No other device can report that. Type 2 endoleaks rates, 25% to 30% and every other device zero percent with Nellix. The one secondary intervention was really an operator error, but there again it is extremely low.

So certainly reintervention following EVAS occurs more frequently and the longer we follow up patients with standard devices, the more often they need the secondary intervention and that is a major cost and surveillance burden.

We also know that current devices can’t treat a lot of current aneurysm morphologies and none of the current EVAR devices addresses aneurysm sac. I think I have shown you that EVAS with Nellix is very promising in treating a wide range of aneurysm anatomies, but if we can prove this freedom from secondary intervention, it may will be that we can perform Nellix discharge patients without the follow-up much the same as we do with surgical repair and really make a huge impact on the costs and quality of patient care.

Again, well thanks very much. Now Matt is going to carry on and discuss the some other aspects of Nellix and his experience.

Matt Thompson

Okay. Good evening everyone. It’s a pleasure to be here. My name is Matt Thompson. I am a vascular surgeon from St. George’s Hospital in London. So I’m going to talk a little bit about perhaps the expanding applicability that you might use an aneurysm sealing technology for beyond what might be considered a traditional endovascular aneurysm we've had.

And what I’m going to talk to you about tonight is really in two phases. I’m going to give you a little bit of a background of a study that we did that actually looked at the applicability of the EVAS system to a general patient population that you would see in a typical secondary or tertiary practice. And then having done some cases I’m going to share my thoughts with you on where we might see clinical utility for Nellix system; firstly in contemporary practice, but then actually perhaps more in expanded practice in slightly more complex diseases.

So as Andrew says, one of the attractions of the Nellix system is that it may will address some of the contemporary difficulties that we have with traditional bifurcated endografts. The surveillance program that all of us have to bind to for patients with bifurcated endograft is a huge resource, both in terms of time and personnel. So in my institution we've got about 1,500 patients on surveillance, I need to employ three full-time techs just to actually look after our surveillance program. So the attraction of Nellix in reducing perhaps the need for secondary interventions invents the need for surveillance is hugely attractive, but of course to do that you have to be able to apply the technology to your patient population.

So this is a study that we did earlier this year in my institution looking at the applicability of Nellix to a population presented in secondary care. So we looked at the morphological anatomy of the aorta in 776 patients who’d come to our institution between 2002 and 2012. We put them on a workstation, looked to their 3D aortic morphology and basically compared the anatomy of these patients to the anatomy within the instructions for use of other standard endografts.

So the IP that we use for Nellix, John has been talking about treating patients with necks up to 5 millimeters we took a more conservative approach in this particular IFU and look to patients with 10 millimeter neck length 18 to 32 millimeter diameter proximal neck and the blood lumen of less than 60 millimeters.

And these are the results really that compares the morphological applicability of the Nellix system to what you might call a traditional bifurcated endografts in practice today. And you can see that Nellix pretty much has the highest morphological applicability within the standard instructions for use and beats Medtronic (inaudible) in various degrees of percentages. You might want to just note that the main morphological criteria that precluded the use of the Nellix graft with a blood lumen greater than 60 millimeters.

So having made some comments about the applicability of the Nellix system in a standard population of patients with aneurysms, could I just share with you my thoughts on where I see Nellix in contemporary practice at our institution in London. And I'm going to talk a little bit about its applicability as an all purpose graft, but I would purpose those comments by saying the performance of the registries is going to be absolutely key in where we are going to be obviously use Nellix in the future because we do tend to see with standard endografts problems occurring from three to five to ten years on. And so quite clearly the use of Nellix as an all purpose graft is going to be predicated on long-term results.

But I think Nellix in the immediate future is going to have significant applicability in challenging anatomies particularly shortcoming iliac arteries, patients who’ve got challenging proximal neck anatomy and then a whole group of patients who have short necks complex necks and require a more complex solution.

So, what about the use of Nellix as an all purpose graft. Well, it's extremely attractive. As Andrew said, it's a relatively simple procedure although I would iterate that it’s a procedure that needs to be done with a great degree of care, because the [by lapse] options are perhaps more limited than you would see with standard bifurcated grafts, but done with certain care there is really no reason to foresee that you will need to by lapse very often.

This is a typical sort of patient who, you would put a bifurcated endograft in, but you would have some concern that the chronicity of that neck is going to lead you into surveillance problems later on. You can see that when you use a Nellix system in this particular sort of anatomy, you actually use a large proportion of the chronicle neck as your sealing zone and I think there is certainly the expectation that we are going to get good long-term results with this sort of anatomy. But again I’d reiterate, the use of Nellix as an all purpose graft is going to be somewhat dependent on long-term registry data understanding that its huge potential to reduce the need for secondary interventions and surveillance is going to be fulfilled.

So this is perhaps the most common indication why I choose Nellix over anything else in my practice at the moment. Patients with a chronicle proximal neck do badly with standard endovascular grafts. When you treat this sort of patient you’ve got to try and get a seal in that chronicle neck which means you either put a small endograft right at the renal with perhaps a 5 to 10 millimeter sealing zone or you put a very large endograft to try and fill the chronicle neck in which case you can expect the neck to dilate over subsequent years.

If you use a Nellix system in this particular sort of anatomy, you essentially convert the hole of the chronicle neck into a sealing zone, you fill it with the endobag and the polymer and actually you are able to create a seal with these much longer than you get with the standard endograft right up to the renal arteries. And I think that shows enormous clinical promise for the future.

Shortcoming iliac arteries are a real problem not necessarily in a predominantly Western population, but the shortness of the common iliac arteries in the Asian market cannot be understated is a reason why people have difficulty with endovascular repair. There is a whole load of solutions that people have tried out in China or in Japan to try and get round the very shortcoming iliac because quite clearly the shorter your common iliac is, the more difficult it is to get a very durable seal without actually losing one or other as a hypogastric arteries.

Now as Andrew said with regard to type II endoleaks system can -- about how important it is to keep your internal iliac arteries of hypogastric arteries in [circuit], but there are consequences to treating these arteries all the way from (inaudible). The Nellix system offers a solution for these patients with shortcoming iliac which may have very significant implications to use in the Asian market in the future.

Using the endobag to actually seal the aneurysm and extending just short veins to common iliac arteries gives that thing what is going to be a very durable seal in the common iliac arteries and allows preservation of the hypogastric arteries. So I think this is quite an important finding.

So what type of treatment is more complex disease, well we covered quite a lot of this territory already; if you have an aneurysm with the very short necks or perhaps between 5 and 10 millimeters or actually the pararenal aneurysms below your 5 millimeters, what our options? Well, there is somewhat limited open surgery is of course the traditional bailout the patients who are unsuitable for endovascular grafts. Open surgery in specialized centers has very good results, but if you start looking at communities results of open surgery are really quite poor and I will show you some community data from the UK in a moment.

The open label use of endografts or traditional infrarenal endografts has been done by everybody as we’ve heard approximately 50% of all bifurcation endografts across the globe put in outside of instructions to use, but we do know that if you push these indications, you will generally get poor long-term results with regard to the development of endoleaks and the need for subsequent secondary re-interventions. But indeed, late aortic rupture was one of the reasons why the randomized endovascular versus open trials showed no benefit in the long-term.

Fenestrated EVAR, Dr. Starnes has spoken about a lot, we would be lucky in Europe if we had access to custom-made fenestrated endograft for over 10 years, we now examine the results are very good when you can treat the patient with them, but in my practice about 50% of my patients will not be suitable for a fenestrated endograft due to various issues presumably access to tortuosity and angulation.

And then we came to parallel grafts, which are controversial. Like Dr. Starnes I am not a fan of parallel grafts primarily because you have to be concerned about the long-term durability. You are essentially trying to fit two circles together. You’re always going to have a gap between those two circles which will translate into an endoleak. The results of these parallel grafts have been pretty good in the short-term, but I think I like many physicians would share some concern about long-term durability.

So just some comments on open surgery, this is a population-based study. If you look at results from specialized census in the United Kingdom treating suprarenal aneurysm, everyone reports rates of about 5% in terms of mortality.

If you look at the community, you can see that the mortality rates go all the way up to 25% in certain areas of the country. And these are similar to community studies that have been produced elsewhere, so open surgery is not necessarily a great option for these difficult patients.

So how might Nellix work? Well, Nellix potentially offers a solution to complex proximal aortic neck anatomy. Quite clearly we don’t have any long-term results, but certainly in compassionate use, we've utilized Nellix in patients who have got very dilated and very angulated proximal necks. All of these patients have got a short-term seal. We've had no aortic-related problems up to six months. Clearly this is very short-term data, but undoubtedly there is a solution here that’s been used in compassionate use for patients who present with symptomatic aneurysms who have no other option.

Can you do very short necks? Well, you probably can with Nellix. This is a patient where you can see the right renal artery pretty much comes off the aneurysm sack. This patient presented with the symptomatic aneurysm and was treated with the Nellix graft trying to seal the aneurysm all the ways to the level of the renal arteries. And this is possible with the sort of technology that Nellix gives us.

We're not committed to actually putting the polymer in until we actually decide we've got the grafts in the right position. You can do a technique of pre-fill where you can fill the endobags with polymer until you’ve got the angiographic result that you desire. And this patient again has a good short-term result.

What about sealing technology in parallel grafts? Well, I think most of us who used Nellix all have the opinion that it may well offer a very reasonable solution and a better possibility of long-term durability when you’re using parallel grafts. The attraction of using the Nellix system is that the endobag filled with polymer should be able to wrap around the parallel grafts not leave a gap or a gutter between two circles and therefore potentially offer a more durable solution.

This is the [silver] thing that you see on the bench, this is a plastic model essentially with two renal stents and to Nellix grafts. You can see the endobags filled with polymer and the polymer is actually insinuating itself around the [chimneys].

We've done a couple of patients like this, this is a patient who essentially has got a no neck aneurysm presented with a 9 centimeter aneurysm was turned down for fenestrated solution on the basis of both access on tortuosity and angulation of the renal arteries. He was treated with a single right renal chimney and a Nellix graft and actually has had extremely good short-term result with sealing of the aneurysm sack from preservation of the renal function. One pretends here that I know the long-term results of these, but actually things seem to offer theoretically a much more durable solution than using chimneys with conventional grafts.

So, it's just somewhat been in terms of where I see Nellix and its potentially in complex patients. There is the potential for the sealing systems overcome the limitations associated with conventional bifurcated endografts particularly with regard to the requirement for surveillance and re-intervention.

I think there is an opportunity again using the Nellix system to expand endovascular options in complex proximal neck anatomies and also short common iliac anatomies that are not easily addressed with traditional endografts.

We do have the use of a potential chimney solution for an off-the-shelf solution to treat patients with both juxtarenal and pararenal aneurysms and the ability to take these grafts off-the-shelf is important. However I predicate all the results by saying we do need mid and long-term outcomes. Thank you.

Unidentified Company Representative

Okay. Thanks guys. We’ve got a little bit of time, I’m going to probably lose a couple of these guys, but I'm happy to start to take questions. Brooks?

Question-and-Answer Session

Brooks West - Piper Jaffray

Thanks. I had a question for Dr. Starnes on the thought that you presented.

Okay. Sorry, I'm Brooks West from Piper Jaffray. For Dr. Starnes and John I don’t know if we can bring those slides back up, but I was trying to relate the root cause analysis to the secondary interventions that he talked about. And specifically and what I am trying to teed out is what’s kind of device and what’s technique, but how do we relate the root cause analysis to the, be at the renal or the all secondary interventions that are on those lines?

Benjamin Starnes

Yeah. So I think I can speak to your question. So the actual slide deck for this hearing committee is about 85 slides in length and goes into very detailed analysis. As far as technical considerations, if you understand the Ventana device and I think we brought some for you to hold and touch, but the central portion of that device is essentially a baggy material that where the fenestrations are very movable. And one of the things that you can do is actually push the fenestration marker way out into the renal artery.

And if you are used to doing other fenestrated techniques, you would typically line up your renal stents with that fenestration marker which in other stent grafts is the graft fabric edge itself that’s the edge of the aortic wall. And we believe that some of these providers were pushing the renal stents too far out into the renal arteries and there was too much baggy material in the proximal portion of that renal stent graft. So that’s the technical portion of it all.

The lateral displacement we haven’t figured out yet. We don’t know why the stent graft itself is moved in some of these patients is moving in that lateral direction. But what that’s causing is unlike the other fenestrated technologies that’s causing that fabric to exert here on those renal stents and you just you can’t do that because renal stents don’t tolerate sheer stress very well and you get stent graft fractures in the renal stents themselves. That’s a bad problem because patients can lose a kidney potentially need to go on dialysis et cetera.

Brooks West - Piper Jaffray

Do you sense that that’s a device issue or is that all some technique issue?

Benjamin Starnes

We think one of these main issues is a device-related issue and one of the technique issue confronting a device. But it’s a solid concept. The overall concept is in off-the-shelf design to treat these proximal neck deficiencies.

Brooks West - Piper Jaffray

Maybe two quick follow-ups if I could. John you’ve got about a year delay built in between meeting with the FDA and starting clinical again, could you kind of go over what’s happening during that timeframe? Secondly how do we think about the timeframe to CE Mark?

John McDermott

Yeah. I’ll address first because I don’t have any answer to the second one, but as we, and I am so sorry about my voice. As we got into the redesigned efforts, what became pretty clear as Dr. Starnes was talking about, we thought we could make some interim changes that would work, but honestly we weren’t really satisfied with the fact that we were still going to end up with the device that only could treat half of the patients.

You’ve heard that to major limitation with all the fenestrated devices. And our decision was if we are going to redesign the device, let’s redesign it in a way to extend the patient population dramatically, that’s what led to longer time to return to the clinic.

So that’s why we are going to meet with the FDA next month, but we are probably going to broaden the scope of the development effort to expand the applicability of the technology to wider range patients. I can’t tell you today what I think that CE Mark timeline will look like at, because we got to do some more development work. But we’ve done our basic timelines and we think we can enter the clinic in 2015, that's what I can tell you.

Jason Mills - Canaccord Genuity

Thank you. Jason Mills, Canaccord Genuity. Two questions one on Ventana and to follow-up on Brook’s question, one on Nellix, first on Ventana. Just curious how are these patients doing that had, to have you go through the secondary and/or renal interventions and how challenging are the sorts of interventions that you have is deal, just trying to get a sense for, you mentioned I think a little bit how challenging that could be? I’ll ask the follow-up second.

Unidentified Company Representative

So these re-interventions have ranged from a simple outpatient procedure where a renal stent is used to extend for an edge stenosis so we take a self expanding stent and put that inside the balloon expandable stent to smooth out a kink, so that's been part of the re-interventions, but some of these re-interventions have involved major surgery to include a hepatorenal bypass in a patient that lost a renal artery stent on one side and was worried about losing his other side. So we actually did an elective bypass procedure to avoid that complication.

Jason Mills - Canaccord Genuity

Thank you. And then John on Nellix, I think in one of the slides, it was mentioned that approximately 25% of the aneurysm that you see are sort of the difficult variety slides, I can’t remember which slide it was, I think it was one of Dr. Holden’s slides. Do you think a relatively big piece of population that could benefit from ruptured aneurysm, I think it was rupture aneurysms.

Given the size, the potential market opportunity for that segment, difficult segment, have you contemplated or will you perhaps contemplate will you discuss with the FDA the potential for instead of a separate trial maybe a nested registry within the original trial. Does that make sense at all to do to try to get maybe that approval or indication earlier?

John McDermott

Yeah. We're interested in the rupture, but I want to get the first IDE approved and running, it’s in traction and then we’ll go back and start to explore not only rupture but some of these other broader indications.

Joanne Wuensch - BMO Capital Markets

Joanne Wuensch from BMO Capital Markets. It’s a question for Dr. Thompson. In the UK Nellix been there for good nine months now. Can you talk a little bit about -- you talked about your response but the people around, the physicians around uptake the level of interest, the training required and when the product goes live next year in a more meaningful way, how do you think that disseminates throughout the rest of the year in the country? Thank you.

Matt Thompson

Okay, thanks for your questions. So we're in a reasonably limited market release at the moment and at present there would probably be only two centers in the UK who got a significant experience of Nellix at the present time. So I think we've got two sites running and probably five about to launch or have done a handful of cases. So that’s the experience.

The anticipation expectation and interest level is extremely high. So Nellix is potentially disruptive technology, it’s a different way of looking at aneurysm repair, so the level of interest is extraordinary high. And I would probably share with you that I have a number of colleagues who look at me with green eyes of (inaudible). So I think the level of interest is very high.

How would it roll out in, in terms of training? I think it’s true to say that as we've got more experience with it, there is a learning curve to the implantation of any new endovascular device. I think that's to a bifurcated grafts as well as the Nellix system, but the Nellix system is very different. I think there has been a lot of learning issues. I think the procedure is technically easy, but you need to do it with studious attention to detail, because actually the by lab options are reasonably limited.

The training issues therefore are going to be important. And I think a formalized training program with probably some degree of (inaudible) is going to be important to make sure that the results stay as good as they are when it's rolled out in a more widespread basis.

Steve Lichtman - Oppenheimer & Co.

Thanks. Steve Lichtman from Oppenheimer. First question on Nellix in juxtarenal. Perhaps could you talk about how you're going to formalize that protocol or that plan but perhaps in Europe over the next couple of years in terms of using Nellix in conjunction with chimney technique? What sort of plan should we be thinking about there or what's going to be required next?

Matt Thompson

Yeah. So as you saw some cases have been done already, but what we like to do is do more development and bench work to make sure that we don't get surprised. So we're doing a series of flow dynamic work. We're also looking at different designs to really optimize the system for that, it wasn't originally design for that. It can be used for that, but we want to make sure that we just don't get surprised in clinic. So there will be over the course of this year additional bench and development work to really validate the concept when we would start to consider the clinical activity.

Steve Lichtman - Oppenheimer & Co.

Okay, great. And then on [VELA], looks like a little bit earlier launch next year than you previously talked about, John talk a little bit more about the benefits that you see of [VELA] and then will this -- do you see this as a premium option and premium price product for you guys as you roll out next year?

John McDermott

Yeah, the big advantage with the [VELA] is really the precision of the placement. As you saw just by the illustration the importance of the neck length really is a critical variable and with our current system, I would give it a B, maybe a B minus in terms of the level of precision. So that’s been an improvement opportunity for us for some time and I think with [VELA] I give it an A. So the docs will be able to put the device precisely where they wanted to go every time. So, so far the feedback has been very positive. As it relates to a premium we will charge us a slight premium, but the cost is a little bit higher so it won’t be material as it relates to gross margins. Other questions. Brooks?

Steve Lichtman - Oppenheimer & Co.

Just from a business standpoint, how long do you keep two horses in the juxtarenal race, I mean at what point do you pick either Nullex or Ventana?

John McDermott

Yeah, I think you do that when you have got good clinical data on both platforms and we also collaborate with the clinicians to gather experience in both, my experience with these things is that they never turnout just like you think they are going to and you learn whether it’s anatomical issues or patient factors, but if you can afford to have two platforms going after one problem, I think you are going to ultimately win from a commercial perspective. And I think we are probably a couple of years away from deciding if we are going to go one or the other or end up with both. We want to take them both into chronic, because I think you are going to find, excuse me we will find, there are going to be some patients that are better treated with one alternative over the other, I just can’t tell you exactly what those are today. Any other questions?

Chris Cooley - Stephens

Thanks. Chris Cooley at Stephens. A question for Dr. Thompson and Holden, you’ve had the longest probably experience with Nellix device of the panel. Help us to think about what type of long-term data you view as sufficient. We’ve heard from some commission there is a question as to positively the sac slows and you might see remodeling longer term and as that remodeling occurs does that alter the efficacy of the graft itself? Maybe if you talk, have you seen that and if you think you would see that, when in fact that would occur, at what point in the duration? Thank you.

Andrew Holden

Some great questions. In terms of remodeling what we have seen is that aneurysm sac can actually shrink because there is absorption thrombosis and the aneurysm but it’s now not under pressure, but it will only shrink down to size of [inner bag], so the endpoints we look at and other devices that is aneurysm shrinkage, we don’t expect to see with Nellix and we haven’t seen that.

In terms of any other remodeling and are probably the biggest criticism of long term follow up with Nellix or concern, I think is what you are addressing and say at what side is chronic change in the neck is in [collar] patient of the neck and you then start getting flow into aneurysm space around the Nellix devices, some sort of morphological change and some light complications.

And I would say that that concern is born out from people who haven’t made the paradigm shift is the fact that you actually fill the entire aneurysm. If we look at the lows of rupture risk in terms of circle area exposed to pressure, the rupture risk of some little contain leak is much, much lower than a tight one (inaudible) traditionally in the graft where the entire disease aorta was exposed to pressure.

And so having said, it’s likely that the paradigm will be very different. What I can say is that we’re lucky enough to what we did to our first Nelix five years ago, and allow the devices as dramatically changed in terms of ease of use and some of the other features it’s essentially the device we used years ago. So we had long-term follow-up on patients after five years and we've seen none of those changes at all.

So I think we do need to match the data sets, they are very smaller, we need to get much broader data and I think the kind of timeframe the Matt was talking about redesign that this is disruptive in terms of really taking the market of improving aorta aneurysm by storm and capturing the vast majority of the market would like to see at least two year follow-up and possibly a little longer.

Matt Thompson

Yeah. I mean I would echo those, I mean I think in terms of what data we’re going to see and when we asked and know that this is truly disruptive, I think you are looking at two time lines, so I think there is a timeline for the morphology because our experience of looking at the bifurcated systems is that the clinical end points tend to come later than morphological changes. So you would generally tend to know if something is going to work by looking at morphological data early. So actually from a personal perspective, I would be reassured by positive morphological data at a year in terms of true disruption. Yeah, we’re going to need two, three years follow-up in a substantive number of patients.

Jason Mills - Canaccord Genuity

Thanks John for taking the follow-up. It’s Jason Mills from Canaccord. Have you interested just as more general question about your practices and also not just your practices but the number of physicians that you’re training as folks that are on podiums that consider KOLs or we hear from folks like that such as yourselves that you’re getting more of the complex case, you also may not be seen as much growth in your EVAR practices as some newer physicians.

Just curious on two fronts, one your practice -- your growth in EVAR procedures from your perspective, how Nellix and some of these new technologies could contribute to growth and what you’re seeing in terms of the number of physicians that are doing EVAR procedures, what that could mean to market growth and also what that could mean to outcomes if you’re concerned at all about some more physicians entering the frame, be interested in your thoughts on all that, sorry about part question?

John McDermott

I'll take that first, but I am the last person to ask a question about market growth because I am a doctor and I know nothing about money. But what I'll tell you is that we do train the next generation of vascular surgeons and we see these technologies as game changers in our own practice, I mean even for the straight forward stuff. When we have a ruptured aneurysm come in if I am able to put a Nellix device in 17 minutes and the blood rate that sac I think that’s going to dramatically change mortality rate especially for those that half of patients that coming with a ruptured aneurysm and no good seal zone for a conventional graft.

I think that as far as market growth, I think we're going to as we see more and more, so we're in a interesting period right now where we have these minimal invasive technologies available to treat a broader number of patients who otherwise would have never been offered anything in the past. And we have the highest percentage of our population that is expanding right now are those over the age of 80 years old and the baby boomers are retiring. So we're seeing with those two factors we have a retiring baby boomer generation and you have a very high growing rate of octogenarians and these technologies they can treat more and more patients that's resulting in a volume explosion.

I do think however that some of these more complicated procedures are going to be done in volumes, in high volume centers and they are going to be centralized to those locations. So the need for every vascular trainee to go out and do these complex fenestrated repairs is probably not going to be there.

Unidentified Company Representative

Yeah. I think in terms of true growth and in terms of [Eva], I think there will be growth in terms of replacing open repair even more so than it’s done now for the reasons I think we've clearly outlined particularly with Nellix. In terms of my own feeling on the position of the Nellix in the market and in terms of the existing aortic market, as Matt is very as his simple times and I'll reiterate this is all predicated on showing some longer term durability.

But to give you inside and to outside, so prior to we do maybe (inaudible) to about the year, prior to us using Nellix, it was a mixture of guar coke, [endurant] and some other things including innovation from TriVascular. In terms of that practice now to about 90% Nellix for the regions that we've outlined and around the country, our country everyone is desperate to get their hands on it, because that seeing the result. So I think in terms of the real growth is taking a major portion of the current market share.

Unidentified Company Representative

I have got very little to add. I mean I wouldn’t comment on the doctors issue because I think that’s very much a health systems difference. I got to tell you we started off looking at Nellix as a potential interesting solution to some difficult aneurysms and being a typical conservative (inaudible) either a randomized trial or a 500 patient data before we dived into it and started using it, our practice which is about 120 (inaudible) aneurysms a year is now probably 60% Nellix.

John McDermott

Any other questions. Okay well thanks very much for coming tonight. I will be around if you have any questions for me or the teams and please join me in thanking the doctors for coming out tonight.

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