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Executives

Lasse Glassen – IR, Financial Relations Board

Fred Moll – Co-Founder and Executive Chairman

Bruce Barclay – President and CEO

Peter Osborne – Interim CFO

Analysts

Chris Pasquale – JP Morgan

Bill Carlisle – Morgan Stanley

Tim Lee – Piper Jaffray

Hansen Medical, Inc. (HNSN) Q2 2010 Earnings Call Transcript August 4, 2010 5:00 PM ET

Operator

Good evening, ladies and gentlemen, thank you for standing by. Welcome to the Hansen Medical second quarter 2010 results conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator instructions) This conference is being recorded today, Wednesday, August 4th of 2010. And I would now like to turn the conference over to Lasse Glassen from Financial Relations Board. Please go ahead, sir.

Lasse Glassen

Thank you. Good afternoon everyone. Welcome to Hansen Medical’s 2010 second quarter results conference call. With us today are Hansen Medical’s Co-Founder and Executive Chairman, Fred Moll; President and CEO, Bruce Barclay; and the company’s interim Chief Financial Officer, Peter Osborne.

Before I turn the call over to management please remember that our prepared remarks and responses to questions will contain forward-looking statements. Words such as may, will, should, could, expects, believes, estimates, targets, plans, projects, goals, opportunity, outlook, and variations of these words and similar expressions are intended to identify forward-looking statements that are subject to a number of risks and uncertainties. Examples of such statements include statements about our expected operational and financial results, the expected number of Sensei systems to be sold and recognition of revenue on systems, the timing and results of our clinical studies, the receipt and timing of future regulatory approvals, the expected results of our cost reduction initiatives and the timing of future product introductions.

Actual results may differ materially from those set forth in these statements due to the risks and uncertainties inherent in our business, including enrollment, delays and uncertain timelines, costs and results of clinical studies and of developing new products, potential safety and regulatory issues that could slow or suspend sales, the rate of adoption of our system and the rate of the use of our catheters at customers that have purchased our systems, our ability to successfully manage our manufacturing and operating expenses, the scope and validity of intellectual property rights applicable to our products, competition from other companies, the effect of credit, financial and general economic conditions on capital spending by potential purchasers of our systems, additional cost and resources necessary to address existing and potential claims and proceedings related to the restatement of our financial statements, our ability to remediate material weakness in internal controls over financial reporting and other risks detailed in the Risk Factors section of our periodic SEC filings, including our quarterly report on Form 10-Q for the three months ended March 31, 2010 as filed with the SEC on May 10, 2010.

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

With that, it’s now my pleasure to turn the call over to Hansen Medical’s Executive Chairman of the Board, Fred Moll. Fred?

Fred Moll

Thank you, Lasse. Good afternoon everyone and thank you for joining us for our second quarter conference call. As you know, on June 9, Bruce Barclay joined the company as President and CEO, and I transitioned to the role of Executive Chairman of the Board.

Before I hand the call over to Bruce, I would like to make a few introductory remarks indicating why our board with my strong support determined that Bruce is the absolute right choice to lead Hansen Medical going forward. As a result of the vision, creativity and hard work of all our employees, thousands of patients have access to a better way of delivering medical care and many more exciting Hansen products and procedures are coming down the road.

With that said, the company has evolved rapidly in the past couple of years, and the time is right to bring in new leadership that can take the company to the next level of commercial success. The board sought out Bruce Barclay specifically as the right executive to lead the company going forward. Bruce has more than 30 years of experience in the healthcare industry with most of that experience in companies focused on the development and sale of products to treat vascular disease.

He has spent over 10 years of experience leading companies in this industry, most recently at SurModics, where he was President and CEO. He has been on the job at Hansen almost 2 months and the transition is going well. As those of you who have had the pleasure of meeting and working with Bruce will already know he is an experienced and talented executive. Beyond that there are a number of attributes that he brings to Hansen that made his recruitment a priority here.

First, Bruce is a natural leader, a credible voice of the company to the industry, and all of our stakeholders and you, our analysts and shareholders. He also shares our passion for the potential of Hansen’s technology. Secondly, in his last position Bruce led the company in sales growth and diversification, while maintaining financial discipline. This required making tough decision at times understanding the need to distinguish good science from good business.

Third, he knows the markets for treating coronary and peripheral vascular disease well, having significant experience in this area and finally he has a proven ability to partner with top medical technology firms in joint development and commercial programs. As you know, Hansen has several key partnerships with leading companies. Bruce has the skills to make sure that those programs move forward on schedule and thrive [ph], and the ability to identify and create new partnerships.

We believe Bruce is ideally suited to help take Hansen Medical to the next level of growth and generate long-term shareholder value.

With that, I will turn it over to Bruce for his introductory remarks, and an overview of our second quarter results. Bruce.

Bruce Barclay

Thank you, Fred. As Fred mentioned, June 9 was my first day at Hansen Medical, and I’m very happy to be here. I share Fred’s enthusiasm and vision for Hansen Medical’s flexible robotic technology, and its clinical and economic value to patients, physicians and payers alike. I also look forward to Fred’s collaboration and assistance in addition to his new role as executive Chairman of the Board; he will primarily support our clinical advances, and help to drive innovation as the company expands its technology in both the electrophysiology and vascular markets.

When I was approached about taking the CEO role at Hansen, my first reactions were mixed. Coming from the industry, I had a keen appreciation for the paradigm changing technology that resided here, or Hansen’s team and for what has been accomplished in a few short years. On the other hand, stock chart [ph] and the comments of many of the analysts on today’s call reflected the lack of faith that often occurs when scheduled are delayed, and commercial success does not mirror expectations.

So why uproot my family move out West and take the chance on Hansen? Of course, there are many complicated factors, but ultimately it came down to straight forward economics, much like the investment decision we are asking you to make each day. Simply stated, under the right stewardship, I believe that the technology, products and intellectual technology assets at Hansen Medical have tremendous upside to the current valuation.

I believe I’m the right steward, and I’m here to chart the right course with my senior team. I am going to ask you all to take a step back and reassess the value that exists here today. I fully expect you to measure me and the company by the milestones that we establish and meet and watch as we perform the hard work necessary to drive towards commercial success, which does mirror those earlier expectations.

Since joining hands, I have been actively working to get to know the needs of our patients, as well as our employees, customers and alliance partners, and I understand the opportunities and issues facing the company. I’m learning a lot and I have a lot to learn. But what I have found is an engaged and talented group of employees, and a number of customers and alliance partners that are excited about our technology, and committed to our mutual success.

There is much work to be done at the company in order to realize its full potential and it will not occur overnight. My focus will be on improving on our execution, and meeting our commitments. That said, I’m optimistic about our ability to achieve success. Based on what I recognized coming into the organization, and what I’ve learnt in a couple of months of hard work, I have identified three main strategic and operational priorities. First, growing our business in EP, second, developing and commercializing our vascular platform, and third, achieving operational excellence, including growing our margins, reducing our cash burn, and eliminating non-value add activities.

To establish those initiatives in a reasonable amount of time, we have established a number of goals or critical success factors as we call them here. Execution against these goals in 2010 will begin the process of realizing the long-term shareholder value I alluded to earlier. Some of these goals include first, meeting our system shipment goals, second, launching new products in electrophysiology, third, obtaining final approval from FDA and enrolling patients in our AFib clinical trial, four, completing the first in man study with the vascular platform, five, filing for approval of our vascular platform in the US and in Europe, and six, prioritizing our expenses to focus on the programs that create the most value for our company.

You have my commitment that we will refine these timelines and update you on our progress against these and other goals over the next several months. Now it is important that we outline the goals for the company that we believe will create value, and know that we will be measured by what we do and not what we say, and that is the way it should be.

Turning now to the second quarter results, we recognized revenue on seven Sensei systems along with 555 Artisan catheters. Three Sensei systems were shipped to customers in the quarter. I will discuss these results in more depth in a few minutes, but I want to first note the company’s continuing progress on several key initiatives as we look to improve our business in 2010 and beyond.

During the second quarter, we received conditional IDE approval from the FDA, and commenced the clinical trial using our Sensei X System for the treatment of atrial fibrillation. I will update you on that trial in a few minutes. We also announced an agreement with Siemens Healthcare during the quarter. This is the latest of several partnerships we have with leading imaging companies that we believe will lead to the launch of new products for the EP market. Outside of EP, our technical teams continue to make good progress in the development of our vascular platform, which we believe will open up significant new markets for Hansen in 2011 and beyond.

And finally, while the company has successfully raised $29.8 million of capital early in the second quarter, we are continuing to take a hard look at operating expenses with an eye towards reducing our cash burn going forward, while making sure we are adequately resourcing our most important projects and initiatives.

As I mentioned earlier, we recognized revenue on 7 Sensei systems and shipped three systems during the quarter, two of those systems were in the US and one was in Europe. On a cumulative basis, through the end of the second quarter, we have shipped a total of 91 systems worldwide, and recognized revenue on a total of 77 systems. We continue to experience a 6 to 18 month sales cycle for our Sensei systems. However, we believe that conditions are slowly improving, and given the visibility we have to our current deal pipeline, and where those transactions fit in this 6 to 18 month sales cycle, we expect to ship more systems in the second half of 2010 compared to the first-half of 2010.

To help drive demand, we continue to highlight the growing luminary support for our system, as well as the system’s ability to provide meaningful benefits to clinicians and hospitals. For example, we have hospital customers, where physicians that ordinarily perform no more than two cases per day manually, now perform three cases per day using the Sensei system, in part as a result of faster procedure times and less physician fatigue.

Clearly commercial metrics have not met expectations since our initial product launch in 2007. Despite the headwinds that have faced our industry in the past couple of years, I’m not going to chart it all up to the challenges based on external factors. I’m currently leading a thorough review of our commercial strategies, tactics and operations, and I look forward to communicating changes in the near term.

Looking now at recurring revenues, as mentioned earlier we sold 555 catheters in the quarter. In addition, through the second quarter, we have now converted a total of 60 customers to extended service agreements up from 54 at the end of the first quarter. We continue to see positive utilization trends, and during the first half of the year, procedures performed by our Sensei systems increased by over 50% as compared to procedures performed with our products in the first half of 2009.

Increasing procedure volume and improving utilization rates are key objectives for the company, as recurring revenue is a critical driver of margin expansion and longer-term business value. As mentioned earlier, during the second quarter we received conditional IDE approval from the FDA for the Artisan AF trial, a clinical trial to investigate the use of the Sensei and Artisan control catheter for the treatment of atrial fibrillation.

Since receipt of this conditional IDE approval, our first case in the clinical trial was completed by Dr. Joseph Gallinghouse at the Texas Cardiac Arrhythmia Institute at St. David's Medical Center. Goals of this trial are to move to a new label for our Sensei X in electrophysiology, as well as to provide important data to clinicians regarding the utility of our technology in the ablation of AFib.

While we’re pleased to have commenced this clinical trial, enrolment has been slowed due to additional minor questions recently raised by FDA subsequent to their conditional approval to start. And we believe we are near resolving those questions, and once we do, we would expect enrolment to pick up given that we have a minimum of seven and up to 14 investigative sites worldwide to enroll 300 patients.

Initially, we had expected to complete enrolment by the end of 2010, but based on what we know now enrolment will likely extend well into 2011. Once the conditional IDE approval is finalized, we expect to be in a better position to provide updates on enrolment, submission and expected clearance timelines.

To help bring new products to the EP market, during the second quarter we announced joint development agreements with Siemens Healthcare to co develop integrated products designed to help simplify complex cardiac procedures for the diagnosis and treatment of heart arrhythmias. A specific goal of our partnership is to improve visualization and instinctive driving with 3-D anatomical models in order to improve catheter navigation and contact well inside the patient’s heart. We are very excited about this agreement, and we will keep you apprised of our progress going forward.

I will now update you on progress relating to our new vascular platform. We believe that introducing a new Hansen robot and catheters for use in the arterial vascular system will open up a large new market for our technology. In June, we announced the successful completion of a preclinical in-vivo study evaluating our new vascular robot. The study was performed under guidance of Dr. Alan Lumsden and Dr. Jean Bismuth from the DeBakey Heart & Vascular Center at Methodist Hospital in Houston.

The results were presented at The Society for Vascular Surgery's 2010 Vascular Annual Meeting in Boston. The study found that our vascular robot demonstrated improvements in catheter navigation, reductions in vessel trauma during catheter manipulation, and improvements in access time for some vessels, as compared to manual catheter manipulation during intravascular procedures.

The results also showed that our vascular robot has the potential to standardize catheter navigation, which may lead to more predictable procedures. Suffice to say we are very encouraged by the results of this study. As we move forward towards the commercial launch of the vascular platform, we believe our previously announced joint development agreement with Philips Medical Systems is on track. Under this agreement, Philips is partially funding development costs of our vascular platform, based upon our achievement of certain development milestones.

We received the first payment from Philips under the joint development agreement early in the second quarter. We recently completed our second milestone, and we expect to receive the corresponding milestone payment in this third quarter. In terms of the timing of other important upcoming vascular milestones, we remain on target for a first in man study during the second half of 2010. Once we complete our first in man study as planned, we expect to receive our third payment from Philips as defined in the agreement.

On the regulatory front, we expect to file this year for US and European approval, and are now targeting receipt of an FDA clearance for the vascular platform in the US sometime in mid-2011.

Before I finish my prepared remarks, I like to comment on comment on our cost structure. Having completed the recent capital raise, we intend to continue to be vigilant in controlling costs and reducing our cash burn taking a hard look at every dollar spent. Although this process is ongoing, our goal is to achieve cost savings and reduce our cash requirements during the second half of 2010. Importantly, we must find ways to achieve these savings without materially affecting our ability to deliver on our EP and vascular initiatives, and as importantly, without impacting our customer related activities such as sales, clinical support and field service. I expect to be in a better position to provide more specific details on these initiatives on a future conference call.

Now, regarding our outlook for 2010, with selling conditions gradually improving and based on our current pipeline of potential customers and the stage of those potential transactions in this typical 6 to 18 month sales cycle, we expect system shipments in the second half of the year to be higher than the first half of the year. However, with only 10 systems shipped through the first-half of 2010, we’re withdrawing the company’s previously provided guidance.

Instead of providing updated guidance now, I have decided to hold off on giving a specific range of guidance on this until I have completed my review of our commercial strategies, tactics and operations. I appreciate your patience, and I expect to be able to provide you with some reasonable metrics in a few months.

In summary, while there is much work to be done in building our EP business, developing the vascular opportunity, and achieving operational excellence in all that we do, I am optimistic about the talent we have assembled here, and their focus on our eventual success.

With that, I will now turn the call over to Peter Osborne, for a closer look at our second quarter financial results. Peter?

Peter Osborne

Thank you, Bruce. Let us begin with some additional insights into our second quarter income statement. We have recorded quarterly revenue of $7 million, primarily on the sale of seven Sensei systems and 555 Artisan Control Catheters. Second-quarter revenues increased 135% compared to the $2.9 million of revenue in the same period in 2009, where we sold two Sensei systems and 576 Artisan catheters.

Contributing to second quarter revenue was one system that was shipped in the second quarter, and six systems from deferred revenue that had been shipped in prior quarters. As of June 30, 2010, the company had a total deferred revenue balance of $10.3 million. The company has shipped 14 Sensei systems that have not been recognized as revenue. As Bruce mentioned in his remarks, we shipped a total of three Sensei systems during the quarter, one of which was recognized as revenue and consistent with our revenue recognition policies, revenues will be recognized on the remaining two systems as they are installed and physicians are trained, which we expect will occur during 2010.

The average selling price, inclusive of maintenance, of the three systems shipped in the quarter was approximately $658,000. This compares to an ASP of approximately $690,000 in the previous quarter, and approximately $529,000 in the same quarter last year. The sequential quarterly decline in ASP was due primarily to sales in the quarter to a distributor. Our average selling prices of Sensei systems in the second quarter of 2010, when compared to the same period last year was higher primarily due to the product introduction of our Sensei X platform at the beginning of 2010.

Our new Sensei X product, which carries a higher ASP than the previous generation Sensei systems supports increased reach, flexibility and navigation properties of Artisan Extend Control Catheter. The Artisan Control Catheters sold in the quarter had an average selling price of approximately $1600, similar to the $1650 in the previous quarter, and $1600 in the second quarter last year.

Gross profit was $2.5 million, or 35.7% of second-quarter revenues, compared to gross profit of $300,000 or 9.7% of revenues in the same quarter last year. We expect that the cost of goods sold both as a percentage of revenue, and on a dollar basis will continue to vary quarter-to-quarter as manufacturing levels fluctuate, and as revenues fluctuate due to changes in product mix, the timing of revenue recognition on shipped systems and average sales prices per system and per catheter.

Total operating expenses $13.3 million in the second quarter compared to $14.9 million in the second quarter last year. The decrease was primarily due to a lower selling, general and administrative expenses, partially offset by higher R&D expense. During the rest of the year, operating expenses are expected to decline from 2009 level, primarily due to lower projected legal and restatement related expenses, and other cost reduction activities we expect to implement in the second half of 2010.

These reductions will be partially offset by higher R&D expense due to the ongoing development of the vascular platform that a further clinical study sponsored by the company and engineering activities to support the fiber-optic shape sensing and localization technology under our Luna Innovations development agreement.

At the bottom line, net loss for the second quarter of 2010, including total non-cash stock compensation expense of $1 million was $10.9 million, or a loss of $0.22 per basic and diluted share based on average basic and diluted shares outstanding of 50.1 million shares.

In comparison, the net loss for the second quarter of 2009 included non-cash stock compensation expense of $1.9 million, was $14.7 million, or a loss of $0.32 per basic and fully diluted share based on average basic and diluted shares outstanding on 35.2 million shares.

Turning to the balance sheet, we have $10.3 million of deferred revenue on the balance sheet, which include systems which we have shipped, but have not yet completed the revenue recognition process. As a result of our initiatives on post sales activities, we achieved better cycle times in installing and training our physician customers in the second quarter. This resulted in four systems from this quarter’s shipments being recognized as revenue in our second quarter.

The majority of the systems currently classified as deferred revenue are with international distributors, with whom we cooperate. However, the ultimate timing of revenue recognition is based on their efforts in placing the system with end-users.

Cash, cash equivalents, and short term investments as of June 30, 2010, were $44.2 million compared to $28.3 million as of December 31st, 2009. The higher cash balance is due primarily to the net proceeds of approximately $29.8 million raised from the public offering completed on April 2010, partially offset by the company’s operating expenses during the quarter.

We have an existing debt facility with Silicon Valley Bank that converted to installment debt in 2009. During the second quarter, we paid down the debt by approximately $900,000 leaving a total balance of approximately $8 million as of the end of the second quarter.

During the second quarter, our cash used by operations was approximately $8.1 million in the quarter compared to approximately $6.6 million in the first quarter of 2010. Cash used by operations increased in the second quarter compared to the previous quarter, primarily due to the fact that we shipped fewer systems in the latest period. That said, we continue to actively challenge all our operating expenses in order to control costs and reduce our cash burn, while maintaining our ability to deliver on our EP and vascular initiatives without impacting our customer facing related activities in sales, clinical support and field service.

That concludes our prepared remarks. Thank you for your attention and at this time, we'd like to open the call to questions. Operator?

Question-and-Answer Session

Operator

(Operator instructions) And our first question comes from the line of Chris Pasquale with JP Morgan. Please go ahead.

Chris Pasquale – JP Morgan

Thanks guys. And Bruce, congratulations on the new position.

Bruce Barclay

Thanks Chris. Thanks for calling in.

Chris Pasquale – JP Morgan

So, first of all on the Philips collaboration can you give us what the size of the milestone payment was in 2Q, and some guidance on what to expect for the remaining milestone so we can better model the cash burn over the balance of the year.

Peter Osborne

Chris, this is Peter Osborne here. I think as we have mentioned in prior calls, our arrangement with Philips has a confidentiality clause in it that makes us reticent to give measurable numerical numbers to the actual level of funding from Philips. And so we kind of contribute from contractual terms, I think in the past the company has guided the Street that the payments are on the kind of the million, in the single millions range.

Chris Pasquale – JP Morgan

Okay. When we see the Q files, presumably that will be broken out in the cash flow statement though, right?

Peter Osborne

It is part of accounts receivable.

Chris Pasquale – JP Morgan

Okay.

Peter Osborne

It is not separately highlighted specifically.

Chris Pasquale – JP Morgan

Well, moving on to a different topic then, can you talk a little bit about you mentioned the procedure volume being up 50% in the first half of the year despite the fact that catheter sales recognized were roughly flat. I know you had a big stocking order in 2Q09 that was about 100 units, but even adjusting for that that seems like a pretty big disconnect. Can you just talk a little bit about what is happening with utilization, and how we should try to bridge those two?

Peter Osborne

Sure, I would be happy to try that Chris. Now, looking at the first six months as we said, procedure volume was up substantially, and we consider this a very encouraging trend. Utilization is a very important metric going forward. And you know, really what you are talking about relative to catheter sales really I think goes to inventory. We have a number of variables at play here. We have a number of growing – growing number of sites in the US with the system. They all need inventory, of course, and coming out of the business [ph], the adage is you never miss a case because once you do it is gone for ever. So you need to make sure that your customers have sufficient inventory on their shelves, and so we try to gain as much visibility as we can on that going forward.

And that is easier to do in the US than outside the US. As you know, we’re direct in some places, and through distributors in the other. And we have much less visibility on inventory at our distributors, and so we encourage them to keep them up, and also to keep them up on our customers’ shelves. It is a long way of saying, but in Q2 we did have more procedures than catheters sold. We think that the trend for increasing utilization and the procedures is a good one that will continue going forward at least in the near term. And so we will try to track those metrics for you going forward as we did in our press release.

Chris Pasquale – JP Morgan

And Bruce another company has been working on internally getting a better handle on procedure numbers and utilization through some tracking software, when you think you will be ready to start disclosing those numbers with some granularity, so that systemic utilization becomes more transparent?

Bruce Barclay

Yes, I think we’re looking at all the metrics that we have given in the past and what we will give going forward. So, I won’t comment on that specific other than just to say that we will take that back with us and consider that among the other things that we are looking at going forward.

Chris Pasquale – JP Morgan

Okay, great. Thank you.

Bruce Barclay

Thanks for the call.

Operator

Thank you. And our next question comes from the line of David Lewis with Morgan Stanley. Please go ahead.

Bill Carlisle – Morgan Stanley

Hi, hello guys. This is Bill Carlisle on for David Lewis. Thanks for taking the question.

Bruce Barclay

Hi Bill.

Peter Osborne

Hi Bill.

Bill Carlisle – Morgan Stanley

When it relates to the Artisan AF trial and the delays you guys have experienced, you said that are some minor questions from the FDA, could you give us some idea of what those questions were regarding, or how we could view that?

Bruce Barclay

Sure. I will be happy to. And just as a reminder, we did comment early on that this was a conditional FDA approval. It did allow us to begin the study in some sites, and as we commented, we were very pleased that we initiated the enrolment in May with our first patient. Since that time, the FDA did raise what we would consider minor questions, clarified a protocol relative through to the mapping system being used, and we are very close to resolving those questions. There is absolutely no suggestion of lengthening or changing the trial at all. We’re just continuing it in any respect. We are in very active dialogue, we really can’t comment on details of it. To say that we are near resolution, and once we have that, we will certainly expect our enrolment to pick up.

Bill Carlisle – Morgan Stanley

Okay. Thank you very much.

Bruce Barclay

Thanks for the call.

Operator

Thank you. (Operator instructions) Our next question comes from the line of Tim Lee with Piper Jaffray. Please go ahead.

Tim Lee – Piper Jaffray

Gentlemen, good afternoon.

Bruce Barclay

Hi, Tim.

Tim Lee – Piper Jaffray

Bruce, if I can start with you if I may, and can you just, I know you have been on the job for 8 weeks now. It is not a long time, but just kind of gives us your initial impressions, what surprised you on the upside, what’s surprising on the downside, or any color on that front?

Bruce Barclay

Sure, I would be happy to. And I referred to this somewhat in my prepared remarks; I’m incredibly impressed with the level of talent here. There is an incredible brain trust [ph] intellectual capital in this organization that is truly impressive, and it is exciting frankly to be around folks on the scientific side, and even the folks that are not on the scientific side, there is a tremendous amount of talent, sincere desire to do well, hard work and significant focus.

And that excites me, because at the end of the day it is the people outside of this room that will make our success, and so I think that is important. You know, on the downside I would say, I studied this hard and long before I came in to the organization. I can’t say that I have discovered anything that I didn’t anticipate coming into the organization, you know, as I say, I’m eight weeks on-the-job, I’m learning a lot and have a lot to learn. It is still very factual, but I’m very encouraged by what I see.

Tim Lee – Piper Jaffray

Got it. Fair enough. And if I can segway to Fred here, I mean, it is my sense that you are going to be as engaged as ever in your new role here. So, I know Bruce kind of just outlined that his priorities in his projects that he is going to be working on, and can you just share with us some of the things that you are going to be focusing on now that you won’t be looking at some of the day to day operational issues.

Fred Moll

Yes, I think Tim this is – I think we’ve talked about, this gives me opportunity to really focus on more forward looking objectives of the company and do everything I can to assist Bruce in the organization to push the technology in the direction that is going to be most clinically successful, and obviously the big target we have is vascular, and it is I think a very, very exciting opportunity, but like all new product introductions, the more you understand about the procedures that you are addressing and the clinical issues and the customer needs, I think the better we are going to do. And so, I’m very excited about spending more time with clinicians on the vascular side, and also engaging more deeply with other existing customers with electric physiology.

There is, you know, – I feel like we have been in electrophysiology for a while now, but there certainly is an enormous opportunity there to take what we’ve learnt from the group of individuals that we characterize as our super users, and extract it as successful way as we can, and work with the organization to disseminate the knowledge, the learning, and then the specific capabilities that they have developed and can teach to others, and then, getting more involved in that, and transmitting the learning that has gone on that has made the Sensei systems successful in these group of users, and I think again it is extraordinarily important cash for the entire company, and as I have this new role that gives me incremental ability to do that.

And so, I think pushing as hard as we can on procedure development at EP and obviously being very involved in the formulation of the most exciting, most clinically relevant vascular platform we can introduce next year are the two things that are going to take most of my time.

Tim Lee – Piper Jaffray

And then one last one if I may here, back to Bruce again, I know that you had mentioned that you are reviewing the commercial strategy and I assume you are probably evaluating your team and everything else. So is this a one-month process or two month process, should we get the update on the Q3 conference call, just could you give us a sense of when we could get some resolution or some visibility on the timing of this. Thank you.

Bruce Barclay

Sure, and thanks for the call. It is a high priority for me, so it is going on now. It will continue for a while. It is difficult to put a timeframe on it Tim, other than just to say that it is high priority, it is obviously multifaceted, and I want to make sure we take the time and do it correctly before we implement some changes there, but hopefully as soon as we can get it done, we will let everyone know.

Tim Lee – Piper Jaffray

Great. Thank you.

Bruce Barclay

Thanks again.

Operator

Thank you. (Operator instructions) There are no further questions in the queue. I would like to turn the call back to management for any closing remarks at this time.

Fred Moll

Thanks, operator. Let me thank everybody again for joining us today on our Q2 conference call, and for your support of the company. We look forward to updating you on all of our progress against our initiatives, new programs and directions, and evidence of a new focus that will serve the company well in this environment. I look forward to talking with you all again in a few months to review our Q3 results.

Operator

Thank you. Ladies and gentlemen, that concludes the Hansen Medical second quarter 2010 results conference call. If you would like to listen to a replay of today’s conference, please dial 303-590-3030 or 1-800-406-7325 and enter the access code of 4333050 followed by the pound sign. We thank you for your participation. You may now disconnect.

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