Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Aimee Genzler - Manager, Corporate Communication

Mike Minogue - Chairman, President and CEO

Bob Bowen - Chief Financial Officer

Analysts

Matthew O'Brien - William Blair

Chris Cooley - Stephens

Anthony Petrone - Jefferies Group

Steve Beuchaw - Morgan Stanley

Jayson Bedford - Raymond James

Brooks West - Piper Jaffray

Erica Layon - Benchmark

James Terwilliger - Wunderlich Securities

ABIOMED, Inc. (ABMD) F3Q 2014 Results Earnings Call January 30, 2014 8:00 AM ET

Operator

Good day, ladies and gentlemen. And welcome to the ABIOMED Third Quarter 2014 -- ABIOMED Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions)

As a reminder, this call maybe recorded. I’ll now introduce your host for today’s conference Aimee Genzler, you may begin.

Aimee Genzler

Thanks, Ashley. Good morning. And thank you everyone for joining us for the ABIOMED third quarter fiscal 2014 conference call. I am Aimee Genzler, Manager of Corporate Communication and I’m joined today by Mike Minogue, Chairman, President and CEO; and Bob Bowen, Chief Financial Officer of ABIOMED.

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

Before we begin discussing the third quarter fiscal 2014 results, it is necessary to remind you that during the course of this call we will be making forward-looking statements, including statements regarding development of ABIOMED’s existing and new products, the company’s progress toward commercial growth and future opportunities and expanded regulatory approval.

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

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

Also we remind our participants that the products discussed on this call, including the Impella 2.5, Impella 5.0 and Impella CP are 510(k) cleared for partial to full circulatory support for periods less than six hours and during clinical procedures that do not acquire cardiopulmonary bypass. Other products discussed including the Impella RP, Symphony and Impella pediatric are currently investigational devices and are limited to investigational use.

Lastly, comparative references made financially in this call to revenue, expenses, gross margin or other increases or decreases will be indicated by references to third quarter of fiscal 2014, as compared to the third quarter of fiscal 2013 or third quarter of fiscal 2014 as compared to the second quarter of fiscal 2014.

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

Mike Minogue

Thanks Aimee. Good morning, everyone. ABIOMED delivered another solid quarter with 21% increase in total revenue to a new all-time high of $46.2 million and a 25% increase in Impella revenue to $42 million.

This quarter ABIOMED received additional approvals on commercial insurance coverage and achieved new all-time quarterly records on Impella utilization for the highest reported patients treated in a month, week and day.

We have grown topline revenue double digits for 17 straight quarter’s year-over-year, achieved profitability and accumulated $107 million in cash without incurring debt. Impella is now in over 800 U.S. hospitals with over 2,000 physicians trained and the demand for Impella CP is evident in the results.

We believe our continued growth is driven by a combination of factors. First, Impella is a breakthrough patented product platform with existing reimbursement for hospitals and physicians.

Second, Impella serves an unmet clinical need for percutaneous circulatory support for minimally invasive procedures to treat a growing population of high risk patients. These trends will likely only grow greater overtime.

And finally, ABIOMED is capitalizing on the opportunity to increase revenue, complete the regulatory requirements and become the new standard of care.

On today’s call, we will cover three of our four fiscal year goals and provide specific updates relative to our progress, starting with our second goal, achieving significant patient and revenue growth.

This quarter overall company and Impella revenue growth exceeded 20%, as a percentage of total case mix, prophylactic and emergency circulatory support represented 48% and 42%, respectively, with 10% in all other categories of total usage. We are pleased that all three patient categories grew double digits year-over-year.

We also continued to preserve our discipline in the U.S. to limit quarterly new site openings and maintain low customer inventory levels. One interesting European trend is that since the publication of the intra-aortic balloon Shock II study from Germany, Impella sales in Germany have ramped on average 200% year-over-year for the last three quarters.

Our third goal is supporting the medical community to publish manuscripts on hemodynamic support, patient outcomes and cost effectiveness. This quarter the study called the current use of Impella 2.5 in acute myocardial infarction complicated by cardiogenic shock results from the USpella registry was published in the Journal of Interventional Cardiology based on the analyses of 154 consecutive patients from our U.S. registry.

Although, subject to certain limitations inherent in the retrospective registry study, the abstract conclusion stated, the results of our study suggest that early initiation of hemodynamic support prior to PCI with Impella 2.5 is associated more complete revascularization and improve survival in the setting of refractory cardiogenic shock complicating in AMI.

Additionally, the published multivariate analysis reports that initiation of Impella 2.5 support prior to PCI was an independent predictor of in-hospital survival, especially for women.

We encourage all of our investors to read this important publication in its entirety and note that in ACC, AHA, SKY, PCI guideline already exists with the Class I recommendation for PCI and hemodynamic support for patients with cardiogenic shock requiring stabilization.

Overall, in Q3 there were over 10 public new articles published referencing Impella. We believe our focus on clinical publications along with cost effectiveness data differentiates the Impella platform. We believe it is unique for product to altogether have the potential to enable the minimally invasive treatment options, improved outcomes and reduce costs.

This is likely a contributor to positive reimbursement coverage for many major private insurance carriers as well as CMS. Our fourth and final goal is executing on our clinical and regulatory processes in order to achieve approvals in Japan and United States.

To remind everyone, the FDA modular submission is summarized by a PMA show which outlines the modules, provides the table of contents and identifies information necessary to support the filing and approval of a specific Class III product. The FDA has approved our PMA show which outlined our components of pre-clinical and testing, manufacturing and quality in clinical data.

We are on schedule for our clinical summary and plan to submit our fifth and final module for the PMA in February as planned. The other four modules have already been submitted in prior quarters, which utilize information from our prior FDA 510(k) clearances.

The Impella 2.5 PMA being filed as part of the 515 process, provides the FDA access to data on multiple FDA studies, registry publications over 1800 patients and five years of real world U.S. clinical experience and medical device reporting or MDR safety records. Until the 515 process is completed, ABIOMED will operate under existing five 510(k) clearances from 2008 to 2012.

With respect to our Impella RP study to support a Humanitarian Device Exemption, or HDE submission, we have enrolled 24 of the 30 patients and are 80% completed. We are currently preparing to submit for a CAP approval or continuous access protocol for the approved 15 RP sites in order to continue enrolling patients after the 30th patient. We anticipate in Impella RP CE Mark later this year and FDA approval by February 2015.

The Impella RP operates under the same AIC console and will be introduced into our established hospital installed base. As a reminder, there is no other product like the Impella RP and for the first time, it enables percutaneous biventricular support for heart failure patients.

Now I would like to provide an update on Japan. We are anticipating the PMDA approval of Impella in Japan by the summer. This slight delay from previous communication is due to our internal prioritization and allocation of resources in order to complete the FDA PMA submission.

However reimbursement is anticipated to be completed earlier than communicated and follow within six to nine months from approval. Our Japan hybrid distribution strategy is progressing as we complete the regulatory approvals independently and make plans to manage and support the top 20 heart hospitals and key opinion leaders. The responses from the potential partners on our Japan RP are currently being evaluated by our team.

Today ABIOMED is announcing that we recently received CFDA approval in China for Impella 2.5, Impella 5.0 and the original MPC console. We will submit a new application in the future for the AIC console and Impella CP.

As a result, we will conduct a limited launch at 5 to 10 key hospitals next year in 2015. Once we select our strategic partner to cover the rest of Japan, we plan to expand to China and India under similar model. After we establish our footprint in Asia with the Impella platform, we intend to commercialize and launch Symphony there first because of the enormous demand for our low cost, minimally invasive, implantable heart pump with unique potential to remodel or recover the left ventricle in chronic hearts.

In summary, ABIOMED is growing consistently by double digits, is profitable and is innovating new products. We're on track to transform into a PMA and PMDA company and offer biventricular percutaneous heart support to our expanding global install base.

From a strategic perspective, as we complete Q4 poised for another record year in patients and revenue, we are even more excited to enter the next phase of growth with two pending regulatory approvals and a new product introduction on the way. As always, we want to thank all our stakeholders for their support and all our employees for their hard work and dedication to our mission.

I will now turn the call over to Bob Bowen, our CFO.

Bob Bowen

Thank you, Mike and good morning everyone. As noted in this morning’s full earnings release, fiscal third quarter revenue was a record $46.2 million and increased by $7.9 million or 21% from the prior year. Worldwide Impella product revenue grew 25% which was the highest worldwide Impella growth rates since the second quarter of fiscal 2013.

In the U.S., Impella revenue grew 21% to $37.7 million. The primary components of U.S. Impella revenue include U.S. Impella reorder revenue in Q3 totaled $31.4 million, an increase of 16% from the prior year.

Reorder revenue growth in the quarter was slightly higher than reported patient use growth in the quarter, up 14% due mostly to the increasing mix of the higher priced Impella CP. Revenue of $3.8 million from the initial purchase of Impella CP by 75 hospitals, compared to revenue of $2 million in the initial -- from the initial purchase of Impella CP by 34 hospitals in the prior year and revenue of $2.5 million from 31 new Impella 2.5 site openings compared to revenue of $1.9 million from 23 new Impella 2.5 site openings in the prior year.

Reported patient use again exceeded unit reorders. Total U.S. Impella 2.5 and Impella CP unit reorders were approximately 92% of reported patient use. Essentially what we have experienced in each of the past three quarters and in line with our current expectations during the rollout of the Impella CP. Hospital unit inventory levels of Impella 2.5 and Impella CP remain lean and combined, totaled 2.5 units per hospital compared to 2.4 units per hospital in the prior sequential quarter.

We will not be surprised to see the average climb toward three units per site as we expect many sites to settle on an inventory level of at least two Impella CP units and one Impella 2.5 units. 37% of U.S. customers now have the Impella CP. 41% of reported patient use was with the Impella CP. And 47% of U.S. Impella revenue was from the Impella CP. This reflects the continued strong demand for this higher flow device along with growing emerging patient use.

Outside the U.S., we had another strong quarter of Impella growth. Our U.S. Impella revenue totaled $4.3 million, an increase of 76%, again as a result of growing Impella revenue in Europe, particularly in Germany.

Worldwide service revenue grew 15% to $2.7 million as a result of the increased installed base of Impella AIC consoles and related service contracts. Legacy product revenue, which is largely the 85,000 product, totaled $1.4 million in the most recent quarter. We expect to experience continued declines in legacy product revenue due in part to cannibalization from the Impella CP and 5.0.

Gross margin for the quarter was 79.5%, compared to 78.7% in the year ago period. The gross margin improvement of 80 basis points was largely due to higher production volumes and improved yields, offsetting the margin impact of placing 178 Impella consoles in Q3, compared to 149 in the prior year.

Approximately, 80% of Impella sites in the U.S. now have the AIC console. For the foreseeable future, I think it is reasonable to assume that console placements per quarter will continue at approximately this level to complete the conversion from MPC units to AIC units to support increased site needs and to support growth outside the US.

R&D expense of $7.8 million grew $1.5 million compared to the prior year, largely due to expenditures to support ongoing product development and clinical initiatives, including the Impella RP trial, as well as to support regulatory filings in the U.S. and Japan.

SG&A expense of $24.4 million grew $3.5 million, compared to the prior year. Of the $3.5 million increase, $3.2 million was related to our continued investment, sales, marketing and our 24/7 customer support center, most of which is headcount related investment and all of which is focused on maximizing customer satisfaction and the patient management experience.

We also incurred $0.7 million of medical device tax for which there was no counterpart in the prior year. GAAP net income for the fiscal third quarter was $4.4 million, or $0.11 per diluted share, compared to GAAP net income in the prior year of $2.7 million or $0.07 per diluted share.

At this stage of our growth curve, our primary focus is on activities that optimize patient outcomes and the pathway to establish an improved standard of care. But we also take great pride in our earnings and cash generation performance, particularly for a medical device company of our size.

The balance sheet remains in excellent shape and we continue to prudently manage working capital, which is reflected in our growing cash position. Both accounts receivable and inventory levels are little changed from the start of the year and are growing revenue base. We ended the quarter with cash, short and long-term marketable securities of nearly $107.4 million, up $19.2 million from the start of the fiscal year and we have no debt.

Turning to guidance, as noted in our press release, we are reiterating our full year revenue guidance in the range of $180 million to $185 million, with Impella growth expected to be approximately 20% for the year. Although we do not provide quarterly guidance, we recognize that this quarter's guidance essentially provides fourth quarter as well as total year guidance.

I would remind investors that last year's fiscal fourth quarter was very strong, which makes this coming quarter a tougher year-over-year comparable. The fourth quarter year-over-year quarterly growth rate will likely be lower than the third quarter growth, which was still achieving our annual guidance.

Through nine months, income from operations was 3.5% of revenue. As indicated in our last call, we believe income from operations for the year, excluding any one-time charges will be in the range of breakeven to 5%. We do expect to incur higher operating expenses in fiscal Q4 due to the timing of product development expenditures, higher SG&A expenses, including higher stock compensation expense and cost to complete the document submission phase of the DOJ subpoena.

Through nine months, we've incurred $4.9 million of outside legal cost related to the DOJ subpoena and shareholder litigation. And we expect the total will be approximately $6.2 million for the fiscal year.

In summary, the team delivered another great quarter of execution and we look forward to another record year of Impella performance. We will now open the call to questions. Operator, would you please open the line?

Question-and-Answer Session

Operator

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

Matthew O'Brien - William Blair

Good morning. Thanks for taking the question. I was hoping we could start with Japan first and commentary about timing there. It looks like net-net, given what you are saying about reimbursement timing that we are just probably looking at something around March 2015 to be selling that product. So even though you are getting delayed a bit in terms of the approval, the actual timing of commercialization is about the same. And then if you could help us understand the decision to reallocate some expenses over towards the FDA submission here in the U.S. versus Japan, because I do think the SG&A number in the quarter went down pretty meaningfully.

Mike Minogue

So, Matt, just real quick on the Japan question, if that's correct it's probably net-net around the three months provided that everything else goes as planned. And then on the -- moving to resources, part of that just had to do with -- we are finishing up and filing and responding to question in Japan, some of that time and those resources were moved so we could complete the FDA. And as far as the cost side, Bob?

Bob Bowen

Yeah, Matt, we did allocate resources to the U.S. FDA regulatory process. But the real reason for the downtick in the SG&A expense sequentially, was the result of a lower spend on the legal fees related the DOJ submission process and that is just timing of their submitting documents to complete the process and so little bit of that money is shifted into fiscal Q4.

So the DOJ actually in Q3 was $700,000 and in the prior quarter was a $7 million, so it was down $1 million on those legal fees. And then the other piece was stock comp, was lower in Q3 than it was in Q2, was about a $1 million one lower and that's basically just a function of how our grants work and when performance milestones get met and that tends to be a little bit lumpy. And that’s going to probably tick back up in Q4, which is why one of the reasons our expenses will go back up in Q4 and the DOJ will tick back up in Q4 will also.

Matthew O'Brien - William Blair

Okay. That’s all very helpful. Secondly, on the international side of things, growth there obviously very strong again. Is that all driven by Germany and then you are going to be coming up against a difficult comparison here in a couple of quarters. Just how should we think about the international business going forward?

Mike Minogue

So, I think, Matt, the question on international is we look at that as Europe and Europe is primarily driven by Germany where we have invested some additional heads in leaderships and they've been executing and doing a great job. And so we continue to see that and have views that that will continue to grow, as well as the rest of the Europe is also expanding. It's been positive across the Board. As far as outside of that it's really been preparing for the Japanese market and we don’t -- as you know we don't expect to have any revenue from that in this fiscal year.

Matthew O'Brien - William Blair

Okay. And one last one from me, if I may, on the RP cap, can you just talk a little bit more about the some of the timing there? And then I'm assuming you're going to be getting paid for those products, is it reasonable to think that could be over the course of the year a several million dollar opportunity?

Mike Minogue

No. The way the cap works, the percentage you continue to submit for chunks of basically 20 to 30 patients at a time. It's more about us collecting more data than driving revenue and we do expect to have -- we're at 80% now complete, we expect to hopefully wrap this up over the next two months, the final patients.

Matthew O'Brien - William Blair

Great. Thank you.

Mike Minogue

Thanks, Matt.

Operator

Thank you. Our next question comes from Chris Cooley of Stephens. Your line is open.

Chris Cooley - Stephens

Thank you. Good morning. Appreciate you taking the questions. Could you maybe just elaborate a little bit, Mike, on the Symphony plans? A little surprised to hear you talking about Asia first, I understand strong demand, but I'm curious if you can utilize that data in the U.S., I haven't seen much out of Asia accepted here in the U.S. I've seen European data accepted in the past. So just curious about the thought process there then I have one quick follow-up? Thanks so much.

Mike Minogue

Sure. So the thought process on the Symphony is that, it is a completely unique idea. It's patented as well. And it's the only device in development that can be put in in less than an hour, does not require sternotomy or any physical touching of the heart itself. It's put in somewhere at the pacemaker pocket where you sow this 30 cc pump into the subclavian. It's timed with the heart.

And these are for patients that, they're frequent fliers and then many of the countries in outside the U.S. they really don't afford devices or destination therapy, there is no destination therapy and in some case it's not really a bridge transplant culture as well.

So starting with a more developed one is, Japan has expressed interest in this device, specifically, because they do have a incredibly heart failure market. They have -- physically they're small in size and the intent of the Symphony is that, when you put it in you're eventually going to take it out.

If you go to places like China and also India, again there's a large heart-failure population but there's really not a lot when you try to go from the drugs to the next step it's really you kind of have to completely jump in and you're going for a transplant and over there, there is lots of limitations on transplant.

So does it mean we won't pursue the U.S. and won't come in to the U.S. either but what it also means is, as you said, Chris, we will collect lots of data, clinical data, and when we come to the U.S., we'll be coming armed with lots of publications and lots of clinical results. But we definitely see the Symphony as kind of a universal product because it's so easy to put in, minimal invasive and we plan to price it at a very low price point and lease the drivers of the consoles so that you really just have the disposable item.

Chris Cooley - Stephens

Super. And then, one, maybe just for Bob and yourself, on the guidance, clearly, business looks like it's doing well here through the first nine months of the fiscal year. You're ramping up utilization as well on those installed base sites, maintaining guidance for the full year and in particular Impella growth guidance of approximately 20% consensus that they can applies a little above that. I realize that's been your guidance throughout the fiscal year 20%.

But just kind of I just want to press, is it an approximation of 20% and you're trying to be a little bit more conservative here with just a few months left in the fiscal year or are you trying to signal maybe a little bit choppier utilization or some uncertainty there, just want to be clear about that? Thanks.

Bob Bowen

I think, Chris, for the year we're going to be pretty close to 20% on Impella growth, that's we've been pretty consistent on that and I think the numbers we look at suggest that's exactly where we're headed. I think we will see a downtick as we have seen continued downticks on the legacy side of business.

Chris Cooley - Stephens

Understood. Thanks much.

Mike Minogue

There's one other point to that, Chris is that, we also maintain the process to try to keep a set number of new sites and so we don't look at this as a quarterly projection and we don't give quarterly guidance, we give yearly guidance, but we want to make sure that we're opening up a reasonable number of sites per quarter, so that we can have the training and ensure patient quality and a good positive experience for the customers.

Chris Cooley - Stephens

Thank you.

Operator

Thank you. Our next question comes from Anthony Petrone of Jefferies Group. Your line is open.

Anthony Petrone - Jefferies Group

Yeah. Thanks and good morning. Maybe, Bob, just to, maybe take the guidance question in a different direction and then a couple for Mike. You mentioned that catheter when pushed, can go to three per site. I'm wondering is that more of a fiscal '15 target or as you look into the next quarter could you actually be at three catheters per site. Because that in and of itself would suggest a certain amount of growth based on the increase in the number of hospitals that you've had from last year and it seems like that number is going up well too. So just a question on -- do you get the three per site next quarter or is that more of a fiscal '15 sort of target?

Bob Bowen

Yeah. No. Anthony, this is something that's going to happen over a series of quarters. I think that, I do think that many hospitals are going to end up there, but it's been nudging up about a 10th of a point per quarter at most over the last several quarters. So this is a journey, this is not something that's going to happen in one quarter's time.

Mike Minogue

And Anthony, to put that into context, if you have one patient on Impella support, usually they want to have a -- another one as backup, what it means that if any other patient comes in, they'll want to have another one.

We're also flexible, there will be sites that take inventory and leave it down at two and we'll continue to be flexible and bring pumps in on an emergency basis because it's something that they expect from us from us for a full service company. So we're going to work with them. And again, I think some will go that way, some might even go higher that have more of a busy practice, but there are others that will continue to stay at two.

Anthony Petrone - Jefferies Group

And then just the new sites, are they still taking on three catheters upfront once there are new sites that's opened?

Mike Minogue

They are.

Anthony Petrone - Jefferies Group

Okay. And then couple for you, Mike on Germany. Obviously, that's trending well with Shock II seems to be driving share toward Impella away from balloons. Can you just size the German opportunity, how many balloons are being used today and maybe in terms of volume and have you sized that market in terms of dollars.

Mike Minogue

We haven't sized Germany's specifically in dollars, it's -- it is the third largest med-tech market, but there's certainly if you look at all of Europe, there's -- the projections of any on which reports you read, range from 50,000 to 80,000 in balloon pumps for Europe. So that's the scale of Europe.

Anthony Petrone - Jefferies Group

Great. And then just last one on the FDA and the PMA modular submission. I'm just wondering at this point, how much USpella registry data has been submitted to the FDA and would you care to give maybe a look as to what that data looks like in terms of reducing major adverse events cost, et cetera? That would be helpful. Thanks a lot.

Mike Minogue

So we obviously can't get into the details of the submission but what we've said is that this is really the totality of the data and we've had three FDA studies that have been already published that was 262 patients in the IDE. We've now had the registry publications from Europe, the U.S. and then recently on the emergency patients from the U.S. There are over 200 publications already in prints, which is almost 2,000 patients collected in that. And we certainly have an active U.S. Impella registry that’s growing and so we will be continuing to take out certain amount of data that we can scrub and it can be adjudicated through the CEC and through the process with the hospitals.

But we'll continue to publish. You’ll see these also most recently, which just came online was two more publications off of the PROTECT II. One is the atherectomy subset, the other is the learning curve. And again, we'll continue to publish off of PROTECT II the data base as well.

Anthony Petrone - Jefferies Group

All right. Thanks.

Mike Minogue

Thanks Anthony.

Operator

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

Steve Beuchaw - Morgan Stanley

Thanks for taking the questions and good morning. It's Steve here for David. I'm wondering Mike, if you could take a step back to the 10,000 foot view of the base business with Impella. We're focused on a lot of moving parts here with the guidance for the fourth quarter in the inventory. Given everything that’s going on the pipeline you published, it’s been a little less time than normal.

You are talking about what you're seeing in the base business. I think it's a good question, because you really stabilized here, you're telling us that, you can grow something like 20% in the fourth quarter even against the pretty healthy comp. So as you take a step back at a very higher level, what do you think the sustainable growth rate of that business is? Are we at a stable level as you look at the funnel in terms of new centers that can come online and what you're seeing in terms of sequential utilization trends?

Mike Minogue

So Steve, that’s a good question and we don't give guidance for the next fiscal year, but I'll give color on that. It mean that this is our coming Q4 and then the following earnings call will give that guidance for the year. But just as a high level view, we look at it as we are in the existing sites that we're at. We’re a little less than 10% penetrated with Impella.

So just that the sites that we're at, we're continuing to grow with training more doctors, using getting more applications and ease of use is a big piece of that because what drives growth is training and data. So training is the thing that we work with our hospitals on, make sure they have good experience in data. It's really all these publications. But the last component of that is just time. It takes its time and we are building our infrastructure or distribution so there is 10 year that accounts in the field, but we feel very good about just continuing to go deeper at the existing sites we have.

And what you're seeing is that there is really great demand for the Impella CP and it really appears that it hits the sweet spot of what folks want which is a percutaneous insertion as well as higher flow for their patients whether they are larger or they need emergency support. So we feel very confident in the positioning of that product.

We also continue to see utilization of the Impella 2.5 for some of those elective cases where they're not necessarily at hemodynamically challenged and we think that gives us the ability to have two price points. And we also know and encourage all of you to do your surveys on the Impella RP that this rightsize device is a huge demand and is really going to impact the clinical treatment of these patients.

Bob Bowen

Hi, Steve. I just wanted to ask, because if I miss spoke, I just wanted the clarify that I didn't mean to suggest that Impella would grow 20% year-over-year in the quarter. Our guidance has been consistently that we would grow 20% Impella for the year. And I think if you walk through the numbers, you'll see that for the quarter that's more like a mid-to-high teens growth rate for Impella in the quarter and 20% still for the year.

Steve Beuchaw

Got it. Sorry, if I may (inaudible) Bob. And then one more question, I wonder if you could take the discussion around the FDA in the 515 process to the next step. You’ve been really helpful giving us a series of sign posts for the first 12 to 18 months in that process. Could you give us a sense for what the milestones would be for the next 12 months, any update on whether you might have a panel and what should we be on the lookout for? Thanks so much.

Mike Minogue

Sure Steve. So our expectation today is we're going to panel and we remain on track as I stated for filing the clinical submission is February. After we submit, the agency has 180 days to review the filing and if there is no advisory panel, that’s it. There is no advisory panel but again we expect to have one which means those 320 days in that process.

As far as kind of the next step for us is our main goal here is to get the PMA, but then Phase II of this is, we'd like to expand new labels and look at things like biventricular support or bridge to recovery which we have on our surgical devices. And for that we're talking to the agency about either bridge to recovery study which is a single arm. You're comparing to a performance criteria or potentially an audited independent registry which we believe the decision and the choice up to the FDA, we’ll work with them on whatever the preference is.

But I do want to remind all our investors that we're currently in five guidelines and if you look back, it was one in 2011. It was one -- another one in 2012 and there have been three in 2013 and I would argue that our strongest publications have come out in the last six months and will be coming out again in the next six months.

And on top of all those clinical publication, you're seeing cost effect into this data that comes out that’s really purchase kind of in the top tier as far as being cost effective relative to incremental cost affecting the stores or even being dominant in some of the publications where we have the ability to improved outcomes and lower overall costs.

Steve Beuchaw

Great. Thanks so much everyone.

Operator

Thank you. Our next question comes from Jayson Bedford of Raymond James. Your line is open.

Jayson Bedford - Raymond James

Good morning and thanks for taking the questions. Just I guess to follow-up on that last question. How long we'll it take after you get a approval for the 2.5 to get approval for CP and what do you think will be required to get CP approved?

Mike Minogue

So Jason, the CP is a supplement to the 2.5. So once we get the PMA on the 2.5, we’ll be doing the supplement. And what it likely will -- the first of all, so everything remains under the five intake clearances until its formally transition. And then well likely will be and we're in the discussion now on the PMA for the 2.5 and that's the priority, but it will likely be just collection of data or some other agreement with the FDA on making sure that the supplement meaning the Impella CP has an update to show reasonably assurance in safety and effectiveness.

But again, we've done well over a thousand patients, might even be over 2,000 patients now in the U.S. on the Impella CP. And you again will see some publications coming out from the U.S. Impella on that as well.

Jayson Bedford - Raymond James

In terms of driving growth, you mentioned training. Can you just may update us on the size of the sales team and maybe how that splits between reps and any clinical specialists you have?

Mike Minogue

Sure. So at the end of the quarter, we had about a 143 people in the field and that includes management. We're going to continue to add four to six people in the distribution per quarter for the foreseeable future. Two-thirds of those are really clinical folks that have that depth and experience. But everyone is expected to and is trained to provide support in the cath lab, they’re in scrubs and we really have become kind of a full service organization. So when you buy Impella, you get a heart pump made under a microscope and what you get on site is some people who are trained and are experts in helping to support these types of patients as well as we've invested in our call center which is 24x7, which has seven dedicated people who have on-hand experience and been with the company in some of our tenured folks. And that way we can provide the real support in the intensive care unit to help the new nurses or the new users get the best outcomes they can get.

Jayson Bedford - Raymond James

In terms of CP, start-ups came in a little higher than we expected. Is this kind of the new level you anticipate going forward?

Mike Minogue

It’s not necessarily a new level, there is significant demand. We still are requesting all the new center start with 2.5. We may make some exceptions moving forward on that because some of these sites really want to start or have that device as they get started. So, I think, you’ll see a little-bit of what you’ve seen in the past. Some quarters are below-more, some quarters down little more.

Jayson Bedford - Raymond James

Okay. And then last one from me. You kind of have given us some good detail on the international growth. But what’s the true source of the strength? Is it new geographies or is it new centers? If you kind of look at where the growth is coming from, how would you separate it between either, again new countries, new centers or just kind of existing centers ramping in the utilization?

Mike Minogue

Jason, it’s primarily the centers in Germany doing more patients. It's pure patient growth in Germany and the teams done a great job there and again, the tenure there has increased as we’ve added more heads. But it's really been a very successful execution on their part with the new console, the AIC console and the Impella CP.

Jayson Bedford - Raymond James

Okay. Thank you.

Operator

Thank you. Our next question comes from Brooks West of Piper Jaffray. Your line is open.

Brooks West - Piper Jaffray

Hi. Thanks for taking the question. Mike, do you have a sense for the therapeutic mix with CP? I mean, you kind of got to that in an earlier question. But are you seeing CP used primarily for emergent patients and then 2.5 is going to prophylactic?

Mike Minogue

That’s usually the trend books. Although, some people will use it for maybe larger patients if it's more than elective, that tends to be the trend.

Brooks West - Piper Jaffray

And can you give us the reason ASP trends for those two devices kind of where you’re seeing 2.5 CP come out for the quarter?

Bob Bowen

Sure. Yes, I mean the actual pricing for the 2.5 and the CP individually, are relatively stable. We’ve said that 2.5 on average is about 22.5 and the CP is 25 and those numbers have been very stable over time. The mix is shifting to the CP, so that on a total average capital basis folks worldwide. On a quarterly basis, the average prices were up 1.9% and on a year-to-date basis, they were up 0.8%.

Brooks West - Piper Jaffray

Okay. Thanks, Bob. And then just one, I’ve got a couple questions from people just during the call, Mike on the FDA. You’re shifting some resources to that process. You’re still guiding for the February submission. Is there anything to kind of read into that, shift the resources or just you're coming down to the entering, you feel like you needed a little bit of extra push?

Mike Minogue

Nothing to read into.

Brooks West - Piper Jaffray

Okay. Thanks, guys.

Operator

Thank you. Our next question comes from Jan Wald with Benchmark. Your line is open.

Erica Layon - Benchmark

Thank you for taking the question. This is actually Erica Layon in for Jan. There have been a lot of great questions already on the call. So, hopefully, you don’t mind if I dig a little deeper scenario. Can you talk about new sites that are waiting for starting up or is this more of a regulatory versus the growth milestone?

Mike Minogue

Yes, Erica, that’s a good question. Most of our sites don't actually understand or even aware of whether we have a 510(k) or PMA and they’ve usually never heard of the 5.15 process. So for them, they are focused on what the guidelines state in treating patients.

Erica Layon - Benchmark

That is actually helpful. So that is something that probably creates a lot more focused on than any of the potential clients. In a sense, it sounds like there is also a stronger amount of clinical data coming out. Is this just a continuing of the tied of data, or are there any particular study or publications that you think are going to be a lot more notable than the rest that should be left in Q4.

Mike Minogue

So we highlight -- we have over 10 per quarter on average but I try to highlight one. So the recent one on the emergency patients, I would encourage every investor to read that because it really shows something that the guidelines have stated for a long time as a class one recommendation that for emergency patients there is that benefit of PCI. And that you should use hemodynamic support for patients, they get worse. And I think it's a very insightful paper. It also talks about the impact of initiation of support, how it impacts survival as well as what’s the impact to women. So, I think that's a very interesting paper.

Also, if you look at the cost-effectiveness data on the emergent settings, you'll see that we have what’s call the dominant profile, which means that you actually get better outcomes at lower costs. And I think that's a unique feature in the space for medical devices. And then last is learning curve paper and the atherectomy paper have been put now online and accepted. And it really largely will go deep into the Protect II and look at all the data and look at the subsets and understand where additional hemodynamic support benefits the most.

Erica Layon - Benchmark

That’s very helpful. So we should just keep looking at -- strong evidence as opposed to trying to keep an eye on one particular application.

Mike Minogue

Correct. Obviously the Protect II dataset isn't FDA IRP process, so I think we’re going to continue to publish many papers over the next several years on that dataset.

Erica Layon - Benchmark

And which should be definitely a great plan. Thank you very much and definitely a strong quarter. Thank you.

Mike Minogue

Thank you, Erica.

Operator

Thank you. Our next question comes from James Terwilliger of Wunderlich Securities. Your line is open.

James Terwilliger - Wunderlich Securities

Thanks, guys for taking my questions. Congratulations on a nice quarter and I have been juggling between call and so I think I missed something that you had said earlier. Could you just -- I apologize for this, could you just update more on the Impella RP and the HDE process?

Mike Minogue

Sure. So the Impella RP, we’re at 24 to 30 patients in, so 80%. We hope to have the enrollment complete over the next two months and HDE processes monitoring device exemption will be submitting for that approval. The criteria for that is safety and probable benefit and then while we're submitting and waiting, and we had anticipated approval in February of 2015, we will also want to get approval from the FDA to allow the existing 15 sites that have been in the study to continue to treat patients.

We routinely got request for emergency support or compassionate use, which at this time we were not able to do that because we are in this study. But the FDA support on this study has been outstanding. They have given us fast turnaround and is probably been one of the most productive and supportive of studies we’ve done.

James Terwilliger - Wunderlich Securities

And just -- and thank you. And just lastly in terms of sales and distribution, this would just be with your current sales force, correct?

Mike Minogue

Correct. The nice thing about the Impella RP is it’s the same customers. It’s going to run on the same AIC consoles that they have. It's really and in many cases, it’s going to augment what we are already doing or we will also treat some new patients. There is great demand for it, for multiple types of patients. It’s not a market that is a million patients. It's a smaller patient population. But for many of these patients, if you don't provide some support on the right side and they are too sick to go through some of the surgical procedures, many of these patients will terminate.

James Terwilliger - Wunderlich Securities

And then lastly, any type of pricing strategies associated with this device?

Mike Minogue

We have and we’ll get further into the details but you can -- you can anticipate we’re going to price it around the lines of the Impella 2.5. The reimbursement will probably similar to the Impella 2.5. And than as always, we -- we work with people to be flexible based on their volume of use, their independent level and those that are promoting and trying to get great outcomes and put their time and energy into training.

James Terwilliger - Wunderlich Securities

Thanks for taking my question guys and congratulations on a nice quarter. Thank you.

Mike Minogue

Thanks James.

Operator

Thank you our next question is from Anthony Petrone of Jefferies Group. Your line is open.

Anthony Petrone - Jefferies Group

Mike thanks. Just a follow-up on China, just wondering if you can give a little bit of details there, why the decision to maybe go at with just a handful of sites and then timing on that for 15. Is that just a matter of resources and then on that as well, can you sort of size the opportunity there? Thanks.

Mike Minogue

Anthony, the Japanese market is really our next big market that we’re building out the resources and making investment now. We have the ability to get the direct approval in our names in Japan, and that's what we're doing. We will want to have that intimacy with customers and we already have a Japanese advisory board, the top 10 to 15 or 20 centers will be kind of our training centers. And then an interesting fact in Japan is there is more cath labs in Japan than the United States.

And what we want to ensure is that the quality and control is their, so we’ll focus on the top centers but we want a partner with resources to ensure that we really expand and get the good outcomes of the outline centers. Because of the size of that market, we’ll make the investment and then from there the secondary markets and timing will be China and India and the reason that we’re going to go at it this way is to again we want to control the quality of the training and basically maximize the management experience of the patients.

So that we can get those great outcomes and then what we -- our model is also to collect data and then publish as we enter each of the country just like we did in Europe and the U.S, kind of, like a Japanese registry, a Chinese registry. And then eventually European or an Indian registry so that we can really show the outcomes and get better and have an evidence-based metric for each of the countries.

Anthony Petrone - Jefferies Group

Thank you.

Operator

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

Mike Minogue

Great. We appreciate your time today. If there is any follow-up questions, please feel free to follow up with us directly. Have a good day.

Operator

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

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!

Source: ABIOMED's CEO Discusses F3Q 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts