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Heartware International, Inc. (NASDAQ:HTWR)

Q2 2014 Earnings Conference Call

July 31, 2014 08:00 ET

Executives

Chris Taylor - Vice President, Investor Relations

Doug Godshall - President and Chief Executive Officer

Peter McAree - Chief Financial Officer

Analysts

Chris Pasquale - JPMorgan

Matthew Taylor - Barclays

Jason Mills - Canaccord Genuity

Jason Bedford - Raymond James

Larry Biegelsen - Wells Fargo

Kayla Crum - William Blair

Bruce Nudell - Credit Suisse

Steve Lichtman - Oppenheimer

Chris Hammond - Goldman Sachs

Suraj Kalia - Northland Securities

Danielle Antalffy - Leerink Partners

Operator

Greetings and welcome to the HeartWare International Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

At this time, I would like to turn the floor over to the HeartWare International management team. Thank you. You may begin.

Chris Taylor

Thank you, operator, and thank you all for joining us for the HeartWare International conference call and webcast to review the results for the second quarter of 2014. During the course of this conference call, the company will make forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality compliance, development pipeline and business trends. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

A detailed discussion of the risks and uncertainties that affect the company’s business and qualify the forward-looking statements made on this call is contained in HeartWare’s filings with the SEC, particularly under the heading Risk Factors described in the company’s Annual Report on Form 10-K and contained within the other filings of the company makes from time-to-time with the SEC.

Copies of HeartWare’s SEC filings and the news release for this earnings call are available online from the SEC or by clicking on Investor Relations on the HeartWare website. Any forward-looking statements that are based on judgment, assumptions, estimates and other factors that are subject to change and therefore these statements speak only as of the date they are given. The company does not undertake an obligation to update any forward-looking statements.

Participating on the call today HeartWare’s CEO and President, Doug Godshall; and Chief Financial Officer, Peter McAree, each will provide commentary on the company’s second quarter financial results as well as a corporate update. Those prepared comments will be followed by a question-and-answer session. In the interest of time and with the goal of allowing as many of you to propose questions as possible, we respectfully ask you to limit yourself to one question and one concise follow-up and then please feel free to return to the queue. Thanks very much.

And now, I would like to turn the call over to Doug Godshall. Good morning, Doug.

Doug Godshall

Thanks, Chris. The first six months of 2014 have been remarkable in so many ways for HeartWare. We have been blessed by extraordinary support of our clinical partners, but we have also had a series of events this year, which led us to embark upon an upgrade of our quality system. We have always focused on our customers and their patience and this has helped inspire our innovation and defines our long-term direction. At the same time, field actions and a warning letter made it quite apparent that we needed to do a bit of structural reinforcement to ensure that our performance lives up to their expectations of our customers.

On the subject of the warning letter, from the moment it arrived, it became our highest priority. We immediately began to shift energy attention and resources to address the observations. In the weeks’ sense, we have made meaningful progress in reorganizing our leadership team and commencing the upgrades of our processes. We have completed program assessments to understand how this new, more rigorous approach will impact our core pipeline projects and we have infused our team with seasoned external experts to help supplement our skills and expedite the mitigation process.

This week, we will be submitting our first report to the FDA, which we will do every other month. The amount of work we have ahead of us is considerable, but I am confident in our ability to improve our systems and capabilities to achieve a higher level of performance. Trying to speculate as to how long it will take before our capabilities and performance removal of the warning letter is not really prudent, but we expect that the time required will be measured more in fiscal quarters than in weeks or months.

I realized this is a non-standard opening to our call and that I have yet to even mention what an encouraging quarter we had in the market or how well our team is executing in the field. But I wanted to begin our call with the backdrop of our cleanup effort, so it is clear to everyone where our focus is at this time. We obviously did not do as good a job as we have should have been ensuring that our quality system kept pace with the rapid growth and the increasing complexity of our business. But once we are on the other side of this process, we believe HeartWare will be a substantially stronger, more efficient company than we are today.

I will provide more color on the business after Peter discusses the financials. Peter?

Peter McAree

Thank you, Doug. We are pleased to report another solid performance for the second quarter of 2014 highlighted by strong revenue growth, continued gross margin improvement and improved bottom line and positive operating cash flows. Our team generated sales of 674 HVAD systems during the quarter compared to 523 systems in the second quarter of 2013. The unit sales were split roughly evenly between the U.S. and international markets with 338 HVADs sold in the U.S. and 336 HVADs sold internationally during the second quarter. This represents another new record high for unit sales in the quarter exceeding our Q1 mark of 665 units.

We posted worldwide revenue of $70.1 million in the second quarter, a 38% increase from $50.8 million in the second quarter of 2013, which includes 3 percentage points from favorable currency changes. U.S. revenue during the second quarter was $36.9 million, which represents a 47% increase from $25.1 million in the second quarter of 2013. There were 36 supplemental destination therapy trial units sold during the second quarter, a slight increase from Q1 and we added four new sites in the U.S. during the second quarter.

International revenue during the second quarter was $33.2 million, a 29% increase from $25.7 million in the second quarter 2013. Providing a little color, compared to the second quarter of 2013 revenues from international markets excluding Germany grew at 31%, which modestly outpaced the growth in Germany at 27%. During the quarter we added 12 new international customers. We have realized an improvement in gross margin percentage to 67.3% in the second quarter compared to 65.5% in the first quarter of 2014 and 62.9% in the second quarter of 2013. The improvement compared to the second quarter 2013 of 4.4 percentage points are primarily the result of manufacturing efficiencies tied to higher volumes. Whereas the sequential improvement compared to Q1 was primarily the result of an increase in the average selling price along with minor variable cost improvements.

This morning we announced the plan to replace certain older batteries in the field as an expansion of the field correction we implemented in April. As a result of this voluntary recall, we have recognized $1.7 million charge in the second quarter, which is reflected in cost of revenue. Operating expenses in the second quarter of 2014 decreased to $34.2 million compared to $60 million in the first quarter 2014 and $41.4 million in the second quarter of 2013. Total operating expenses declined sequentially due to $13.7 million reduction in the estimated fair value of the contingent consideration related to the CircuLite acquisition. This non-recurring benefit was also the primary factor resulting in positive GAAP net income in the second quarter 2014. The basis for the $13.7 million reduction in fair value of our contingent obligation is the increased probability of not meeting the first milestone payment given the increased likelihood of a critical study prior to the relaunch of the SYNERGY system in Europe.

As a reminder we carry liability for the fair value of the contingent milestone payments that maybe payable over 10 year period in connection with our acquisition. This calculation is adjusted each quarter for accretion related to the passage of time and for changes in the probability of achieving each potential milestone as additional information becomes available. The contingent liability was valued at approximately $56 million at June 30 compared to $70 million at March 31 and $67 million at the end of 2013. The maximum amount of aggregate milestone and success based payments could be up to $320 million in total.

As with recent quarters we have provided a non-GAAP reconciliation to supplement our GAAP financial reporting by excluding items such as fair value adjustments associated with the contingent milestone payments I previously mentioned. The purpose of these reconciliations is to enhance comparability of the current financial statements to prior periods. SG&A expenses decreased by approximately $3.3 million to $20.9 million in the second quarter from $24.2 million in the first quarter 2014, this sequential decrease was primarily a result of CircuLite restructuring costs incurred in the first quarter of approximately $3 million principally related to the closure of the former New Jersey headquarters.

We expect our selling, general and administrative expenses to increase periodically as we continue to expand our commercial sales and distribution capabilities globally as well as enhance our administrative infrastructure to support our ongoing growth. Research and development expense decreased by approximately $5.7 million to $26.9 million in the second quarter from $32.6 million in the first quarter of 2014, Q2 sequential decrease was primarily the result of reduced consumable spending and lower project costs. We expect to see R&D spending go up in Q3 and Q4 more closely in line with Q1 spending levels. We expect that R&D expenses will continue to represent a significant portion of our operating expenses for the foreseeable future as we continue to enhance our pipeline and perform ongoing clinical trials. As Doug mentioned addressing the improvement needs highlighted by the warning letter will undoubtedly impact certain areas of spending although it’s too early for us to quantify the impact of these perspective investment needs.

Moving to the bottom line, net income on a GAAP basis for the second quarter of 2014 was positive $8.4 million or $0.48 per diluted share as compared to a net loss of $12.9 million or $0.79 per basic and diluted share in the second quarter of 2013. There were approximately 17 million shares outstanding at the end of the second quarter and weighted average shares outstanding for the purposes of computing basic and diluted earnings per share were 17 million and 17.3 million shares respectively for the second quarter.

Our non-GAAP net loss for the second quarter of 2014, which is perhaps the more informative comparison was $4.9 million or $0.29 per basic and diluted share compared to a net loss of $12.9 million or $0.79 per basic and diluted share in the second quarter of 2013. Please refer to the supplemental non-GAAP tables within our earnings release to fully understand these non-GAAP measures.

As of June 30, we had approximately $184 million in cash and investments, an increase from $181 million on hand at the end of last quarter. During the second quarter, we generated $5 million of positive operating cash flows, primarily as a result of AR collections boosted by strong preceding quarter sales. We had investing cash uses in Q2 of approximately $2 million for property, plant and equipment in IP investments and had nominal proceeds from option exercises. We are not yet in a position that we can expect positive operating cash flows on a routine basis and we generally expect to utilize cash for operations in coming quarters as we continue to invest in growing the business.

In summary, financial results for the second quarter were quite solid. And while we always caution about variability on a quarter-to-quarter basis, it feels like we are in a good position as we move into the back half of the year. Thanks for your time this morning and welcome your questions when we move to Q&A. And back to Doug.

Doug Godshall

Thanks Peter. Clearly, we are benefiting from strong global support for the HVAD and we are working hard to continue to find ways to further enhance its performance in the clinic. One such effort is the second arm of our ENDURANCE destination therapy study. And while profit enrollment was a bit slower than anticipated in the second quarter, we began picking up in June and July and we currently find ourselves with 150 patients enrolled, representing nearly one-third of the study. Our principal investigators have engaged aggressively and they are working closely with us to help accelerate and complete this important arm of the trial. At this juncture, we believe we are on track to complete enrollment in the first or second quarter of next year depending on whether the recent ramp is sustained.

Looking at the commercial market in the U.S., we are certainly encouraged by the results generated in the second quarter, especially following such a positive first quarter. The addition of four new U.S. centers tracks with our expectations that we will add approximately three to five new customers in the U.S. each quarter. Our team remains focused on being responsive to each of our existing customers and ensuring that they have the support and training needed to provide optimal patient outcomes. We are confident that we will continue to add new sites steadily over time as long as existing customers continue to share positive reports of their experiences with HVAD.

22 U.S. sites conducted thoracotomies in the quarter and the number of thoracotomies performed increased for the fifth straight quarter, both in the U.S. and internationally. The numbers have basically quadrupled in the past year. The feedback we hear from the market continues to suggest that there is a positive bias towards thoracotomy in sites that are using the technique and those who plan to use it in the future. This potential, along with other positive HVAD attributes, seems to be helping drive continued adoption at new and exiting sites.

While on the subject of thoracotomy, we just recently confirmed our direction with the FDA on this topic. Currently, our label describes HVAD implantation via median sternotomy rather than through the less invasive thoracotomy technique. We received full approval to commence an IDE study in the second quarter, but we are encouraged by the agency to consider a less burdensome strategy for approval using existing data to support the approval. Based on their feedback, we proposed the plan to utilize existing INTERMACS data to accelerate a label change.

From a business perspective, we are always torn about using retrospective data as it might give us a faster label change, but we would have no ability to structure a prospective study nor share best practices with the clinical community. In a conversation with the agency last week, it became evident that the IDE trial is the one that they were more comfortable with despite their prior encouragement to consider a different path. The agency suggests that we consider using a performance goal versus an active control arm, which does reduce the sample size. So, we are drafting an amended protocol, which should lead to approximately 120 patients in the study.

Now, that the strategy is settled, we are beginning to select sites, create a training plan and spooling up all the activities required to kick off the trial which should commence in early fourth quarter. We are delighted to finally have firm path forward and we now have the ability to generate the interest and momentum that a trial often produces and demonstrate a clear prospective understanding of the benefits of this less invasive surgical technique.

We continue to be encouraged by the expansion of VAD therapy in international markets and enthusiasm for each HVAD remains quite high. We are proud of our team’s work as we added 12 new implanting sites in the second quarter, impressively matching what they achieved in the first quarter and well ahead of our expectations. Our team facilitated initial HVAD implants in three new countries during the second quarter, expanding our global footprint to 40 countries in which a patient has received an HVAD system as a treatment for their advanced heart failure. Today we are pleased to report that more than 6000 advanced heart failure patients worldwide have received an HVAD. The longest of whom has been on support for more than seven years. In order to build on this momentum, we need to improve our performance so we can focus on growing our business and helping more patients. An important step in this direction is to make sure we have the right people in the right positions to succeed.

As I mentioned in my opening comments we have undergone a few organizational changes recently which we feel will be beneficial both in near and long-term. First, we are quite pleased to announce today that we have named Dr. (Catherine Ludley) as Chief Medical Officer for HeartWare. Catherine brings to HeartWare extensive strategic leadership with more than 15 years of clinical and regulatory experience working at both small and large device firms including Boston Scientific and most recently (indiscernible) where she spent the last three years as Chief Medical Officer leading the company’s clinical, regulatory and scientific and medical activities. She has a wealth of clinical program management experience, has built relationships with many of our key customers and works collaboratively with many of the same regulators we work with today. Catherine will be able to partner with Dr. Dan Burkhoff who joined us via the CircuLite acquisition and is recognized as a global thought leader in the heart failure and VAD communities. David Hathaway who assembled a very strong team here at HeartWare has decided to retire and we thank him for his leadership and contributions of the past six years.

We also recently promoted Mark Strong to Senior Vice President of our Research and Development and Quality Affairs. Mark joined us last year as Vice President of R&D after tenure of over 20 years in quality and R&D at Guidant. For those of you who have heard me speak about Mark, you know how impressed we have been with his intensity, rigor and execution excellence. These attributes have resulted in a transformation in the integrity of our R&D performance over the past nine months. His background and ability to make an immediate impact made him the ideal choice to take on this added responsibility.

Enthusiasm for the MVAD remains incredibly high as we witnessed in an international investigators call held earlier this week. The performance of the system continues to impress and we are eager to enter the clinic to demonstrate all the assumed advantages of the system prove out in patients. That said, we spoke last month of the need to step back and assess if any impact the warning letter would have on the MVAD program. It was imperative that we confirm that the sorts of issues that concern the agency were not present in our MVAD, since the last thing we can afford to do is to make the same mistakes twice. Unfortunately we did discover that we have some additional work to do and it will delay the submission to commence our CE trial. It now appears that the submission will occur towards the end of this year or early next versus the summer as we had been planning.

We also have decided to focus all of our efforts on our two approval trials CE Mark and IDE versus trying to get into Canada earlier via a special access has had been our initial thought. We hope to include Canadian sites in our FDA trial or conduct a standalone smaller Canadian study. We plan to submit in the U.S. soon after we submit internationally assuming we receive positive feedback from the FDA on our study design.

While the company’s clear number one objective is to address the warning letter as expeditiously as possible. The MVAD is a very close number two in terms of organizational attention and commitment. Clearly no one is excited about moving the MVAD start out a few months, but it would be intolerability regulatory risks in the program particularly in light of our current status.

On the subject of quality activities, you likely recall in April of this year we implemented a device correction that provided information to assist patients and clinicians on how to best manage the power system for the HVAD. Historically we have experienced a higher battery related complaint rate in Germany than in other territories and following correspondence with German regulators regarding the field action we decided to expand our field safety correction to include a voluntary recall of certain older batteries and replace them with new batteries, which have gone through additional screening tests that were implemented last year. Once we came to the decision to conduct this replacement in Germany, we determined that we should adopt the same policy in all countries. Existing HVAD patients with batteries built basically a year or longer ago will simply replace them with newer batteries when they visit their physicians during their next routine visit.

We anticipate it will take a few months to complete the replacement of those older batteries. As we progress and the thousands of implants and ever-lengthening patient support times, we will continue to learn more about how to make our system better and how to manage it better. We remain committed to make improvements to enhance product performance and communicating information that maybe helpful to our customers and their patients to ensure best possible outcomes.

Just to touch briefly on a couple other ongoing clinical efforts to expand access to HVAD in terms of new geographies and new indications. In our Japan bridge-to-transplant study, we are pleased to report that all five of our centers have received IRB approval, which should enable them all to have at least one implant in the trial. Thus far, four of the six patients have been implanted at three of the centers, with the final site clearing IRB recently the last two cases have been scheduled for August. If everything goes according to plan, we will be on schedule for the last patient to complete follow-up in February. So, we should be in a position to file for approval in the middle of next year.

Given the growth of the VAD market in Japan, we are quite pleased that the leading sites in that important country will have an opportunity to gain experience with HVAD and move us forward in the regulatory process. With a dozen or so BiVADs performed each quarter around the world, it is clear many more would be used were reimbursement in place. We have been in dialogue with our notified body about our international trial design and we are hopeful that we can commence a BiVAD clinical trial later this year with the aim of generating the data that secures approval for rate heart support and creates a much more viable reimbursement path for surgeons wishing to utilize an HVAD on both the left and right ventricles of some of their sickest heart failure patients.

And finally, on the topic of the SYNERGY partial assist platform, which we added to our pipeline through the acquisition of CircuLite in December. Last quarter, we discussed plans regarding enhancements that we are making to improve the stability of the inflow cannula and modifications to the pump itself to reduce sheer stress and thrombogenecity of the system. Our initial pump tests have produced very encouraging results and we are commencing tests this week that will enable us to identify the final impeller geometry. If things continued to progress as well as they have thus far, we should see a similar kind of sheer and efficiency improvement in CircuLite as we witnessed in our revised MVAD impeller.

We expect that sometime later this year we will be able to have a conversation with the European regulators about how to return to market most efficiently. Given test requirements and regulatory timelines, we expect to return to clinic next year with some form of trial to generate clean data with a meaningfully improved pump and cannula design that would then lead to a re-launch of the product. It continues to amaze me how enthusiastic clinicians are about the potential of this system for a broad spectrum of patient populations. We look forward to updating you regarding our progress regarding SYNERGY as we move forward to reinitiating a clinical effort for both surgical and endovascular systems.

Thank you very much for your time, attention and support. We are fortunate to have such tremendous support from our customers as well as shareholders as we build a meaningfully stronger organization that will be capable of capitalizing on a significant opportunity that is present in our pipeline. That concludes our prepared commentary. So, operator, at this time, you could now open the call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question is coming from the line of Chris Pasquale with JPMorgan. Please proceed with your question.

Chris Pasquale - JPMorgan

Thanks. Good morning.

Doug Godshall

Hi, Chris.

Chris Pasquale - JPMorgan

Doug, I just want to circle back on MVAD for a minute, so what aspects of the warning letter impact MVAD specifically and can you be a little bit more granular about what the revised timeline now looks like in both Europe and the U.S.? When do you expect to file the study protocols and what would that mean for the likely start of implants?

Doug Godshall

Thanks, Chris. So, as you walk through the four main categories of the warning letter validation, capitas, etcetera, one of the areas is that – is the software validation work that you have to do on your – on the equipment that used to – not on the system itself, but on the equipment they used to build the system, the product. And that is a fairly pervasive request by the agency and we want to make sure that everything that we used to test and validate MVAD is up to standard. And we also have done a full review of all the other documentation and testing that we have done and we just want to make sure that there is no question about the integrity of the test reports that we have in-house. And so we are actively buttoning all that up as well. So sort of incremental to the warning letter we want to make sure that we are bullet proof when we submit and they don’t suggest that there was looseness whether it’s in test reports or validation work.

In terms of the timing, our expectation is later in the fourth quarter or early first depending on sort of when the last documents are produced that we would be submitting to common authorities in Europe. And in between there, we will be reviewing our protocol with the agency to confirm that we would be able to start in the U.S. sort of contemporaneous with Europe rather than waiting for European data, which is our current plan. So, we would likely have a gap of a month or so before we submitted in the U.S., but not several quarters as we have traditionally done. That would suggest that our first implant best case is first quarter next year internationally if everything is submitted and reviewed timely and it would be sometime sooner after hopefully in the U.S.

Chris Pasquale - JPMorgan

And what’s the thinking behind not doing the first demand series in Canada just to gain some human experience while you wait it out here on the quality side?

Doug Godshall

So, couple of things. First, as we described last month, we were running into challenges with Canada just figuring out what patient population you actually could justify using the MVAD and that no other pump could work for. And so as the argument started progressing with between the physician and the regulators, it started to get very uncomfortable, because that you started describing sort of biventricular failure patients with very small chests etcetera, etcetera and those are the kind of patients that aren’t going to do well. And so the fact that between HVAD and HeartMate too, you can treat just about everybody, the whole purpose of special access is get it provide Canadian citizens with access to a device, where there is no other device available that can treat them.

And so that as other companies have recently witnessed as more technology is available, it’s harder to carve out a specific patient population that is otherwise untreated. So, as we saw the diminishing returns of that argument and then simultaneously received a special fax from the agency, we realized that having a separate somewhat less tested system go into Canada was perhaps not in – anyone’s best interest although obviously we would not have gone and if we didn’t have high confidence in the safety of the device, but just managing multiple revisions of the controller and pump than everything just seem like it was also fraught with risk that was not worth taking. And so the combination of not knowing if we could even navigate the regulators and embedding risk, we felt we would leave what was always an opportunistic strategy in Canada and go back to a more traditional trial approach.

Chris Pasquale - JPMorgan

Thanks, Doug and congrats on the good quarter.

Doug Godshall

Thanks.

Operator

Thank you. The next question is coming from the line of Matthew Taylor with Barclays. Please proceed with your question.

Matthew Taylor - Barclays

Thanks. I just had a follow-up on MVAD, so you mentioned the best cases first quarter of 2015. Can you just talk about any risks to that timeline in terms of steps that may cause you to be delayed? And do you think in worst case is 2Q ‘15 if there is some administrative delay here or do you think that can be meaningfully delayed from that?

Doug Godshall

So I’m reluctant to describe worst case is because we’ve – I think we’ve demonstrated we have the ability to delay MVAD longer than I had hoped so, I don’t want to predict what could happen because you can always end up with some unanticipated failure that you discover in some routine testing that cause you to take a pause. We certainly don’t expect that. So, what could – what could delay it if you’re – if we do discover something that requires us to change layout of a board or component in the system or something like that, in theory, that could pushes out further if there is a regulatory delay and it takes multiple months to review the submissions than that would pushes into the second quarter. It would require fairly efficient regulatory review to get into the first quarter which is why I’m describing it as best case.

That said even though, we’re doing this sort of last clean up a bit on MVAD as our internal group looks at integrity of the MVAD documentation relative to the HVAD documentation that invited the FDA response. It’s materially stronger than the work that we did on HVAD years ago that we’re cleaning up now if you sort of through a line from HVAD to where we’ll be a year from now post a warning letter response, MVAD is sort of maybe three quarters at the way there in terms of integrity and a lot closer to where we’re ultimately going to be there for the amount of activity we need to do to tighten up the MVAD program is much less which is why we think it’s only a few months to get there.

Matthew Taylor - Barclays

Thanks. And maybe just switching gears, you did have a pretty nice quarter here with new highs on pumps in the U.S. Can you just talk about some of the U.S. dynamics? It looks like you’re continuing to gain a lot of share in BTT, but DT enrollment spend a little bit slower, I guess how much room do you have left in terms of adding centers and share within centers in BTT and then what’s going to accelerate that DT enrollment?

Doug Godshall

Yes, we were – we are certainly relieved that June started picking up and then July was much more in line with what we’ve had been expecting. So, there was a bit of a April, May softness in DT that was little befuddling, but we also, as we modified our modifications to our clinical department, which currently everybody is reporting to me until Catherine starts in September, we started really ramping up our communications with our sides holding more investigator calls collaborating far more closely with our PI’s as well as tasking to two of our more senior clinical specialists, experts to specifically work on each site to understand if there are any barriers to enrollments. What are the objections to the trial or any concerns or any needs to enhance training on blood pressure management and the like to ensure that there are – that we’re maintaining a high level of screening which would then of course translate into enrollment. So, I think as a combination of activities and renewed focus on our end is perhaps somewhat responsible and there’s probably also just one of those usual audit lumpiness is that have been in April and May that adversely affected this. So, we – I think we’re on the right path now there is renewed energy in the program and I don’t think that July was an anomaly and hope that it’s more of the go forward trend.

In terms of our – the market dynamics, just like last quarter when we – we aren’t quite sure exactly what – how the overall market did since we only have visibility to our portion of it. We remained long-term quite bullish as always. We are flattered by the strength of the reception we are getting in our sites. We also see meaningful upside in Bridge volume at a lot of these centers. As we continue to analyze the sites we are encouraged that we are seeing growth both at “all the sites” sort of old IDE centers are the ones we have had for more than a year didn’t grow. New sites obviously contributed very nicely and there remain several key large centers that are not either not using HVAD at all or hardly using it at all that we think could have a measurable impact on our volume into the future. So we don’t think we are anywhere near tapped into the full potential of our product for Bridge. And hopefully continue to see uplift in DT implant volume.

Matthew Taylor - Barclays

Great thanks.

Operator

Thank you. The next question is coming from the line of Jason Mills with Canaccord Genuity. Please proceed with your question.

Jason Mills - Canaccord Genuity

Thanks. Hi, Doug. Good morning. Thanks for taking the question. Can you hear me, okay.

Doug Godshall

Absolutely. Hi Jason.

Jason Mills - Canaccord Genuity

Good, let’s circle back to MVAD real quick. Following on some of the earlier questions, walk us back through over the last 18 months when we started to thinking we could get MVAD first and manned anytime now, then we have obviously had some delays. And initially the changes were to the pump to the system, the recent delays seem to be more validation testing. I am just curious if you could give us more granularity to sort of the last time changes or any changes were made to the actual pump or the system the electronics, the things that patient will interface with day-to-day. And if not for the warning letter, would you guess best guess think we would have been in the clinic by now?

Doug Godshall

Let’s see. Yes, so last July we had the unpleasant cannula fracture or ceramic tube fracture phenomenon. September, March strong started, by October, November we realized that we were going to be able to stick with ceramic and we found a means of assembling the system that took a lot of the stress out of the ceramic and enabled it to maintain its integrity. And so we were able to keep the same interface between impeller and tube, but not switch to a titanium tube that we had thought we were going to have to switch to. So that was a huge win on the pump side and now it’s a piece of cake on the pump side. It’s really tight. And we also used that time to integrate a reduced shear stress impeller into the system that did require us do some incremental testing, animal testing just to confirm that we weren’t introducing something clinically or pre-clinically that our fluid dynamics model would have missed. And again that has been pristine.

So on the pump side, we are in very good shape although we obviously did have to make sure that all the documentation is in strong condition relative to the FDA expectations, which we thought we were complying with, and in retrospect we need little buttoning upon. The other Mark Strong impact taking a guy who spent 23 to 24 years doing electronics, he saw a lot of stuff on the electronic side that we had opportunity to improve on closing our test reports and the like. And so there was a lot of issues that had sort of been justified or rationalized that he has systematically for the last nine months been closing out. And so we are really tight now in terms of open issues that could have resulted in challenges from regulators because they might have said well, why didn’t you just repeat the test or what have you rather than justify the test, so Mark has really been buttoning up our approach on the electronics side quite commendably. And so that kind of activity combined with the recognition that in the warning letter there are enough points in there that we were – we may have been complaint with our former design controls but we needed to upgrade our design controls procedures. So while you are at it you better make sure MVAD is consistent with what you believe you need to do on the quality system side.

So absent the warning letter, would we be in the clinic right now, we will be a little bit closer. And I don’t know if it would be this month or next month or October or whatever, but it be probably a little bit sooner. And yet if an inspector comes back in here and says, well that’s really nice to you fixed everything on HVAD, but your complete knucklehead because you made the same mistakes on MVAD after I gave you a warning letter so now you are in big trouble. And sort of we are – while we are going through this grow up process as a company we got to do it the right way. And there is an obviousness as we get our deep dive diagnostic on the MVAD program, what steps we needed take to put ourselves in a strong position. And will probably result in a faster regulatory review because we will have higher integrity to our documentation.

Jason Mills - Canaccord Genuity

Thanks Doug. That was helpful. Moving to the market dynamics, again I understand that you only have access to your data at this point. I am wondering from your data, you said that thoracotomy increased this quarter, I think you said both in the United States and outside of the United States. I am wondering if you could put a percentage number to that and just generally speaking how many HVADs were implanted via that implant technique. And in Europe specifically a best guess in terms of your share position at this point excluding Japan?

Doug Godshall

So thoracotomy U.S. is about same range that it’s been so our implant volume has picked up, but we are still in the sort of 16%, 17% implants via thoracotomy as we were last quarter. Europe is interesting because it seems to have picked up, it’s about third, about I think 30%, 33% of our implants via thoracotomy last quarter which is intriguing. And our sales team in Europe last year really started commenting about how it was fun for them to have thoracotomy. A, because they are actually allowed to about it, unlike our U.S. guys, but we gave them a sort of new product to sell, if you think about the timing and the HVAD got approved in 2009. So they’ve been added quite successfully thankfully for several years. And sort to be able to really promote a new way of thinking about the system gave them a reason to talk to some sites that maybe they didn’t run out of things to talk about. So I am cautiously optimistic that the same thing might happen in the U.S. when we can switch over to a openly discussing thoracotomy and generating interest and enthusiasm at the trial sites first.

Jason Mills - Canaccord Genuity

Super. Thanks Doug. I will get back in queue.

Operator

Thank you. The next question is coming from the line of Brooks West with Piper Jaffray. Please proceed with your question.

Brooks West - Piper Jaffray

Hi, thanks for taking the question. Doug, I am just I am looking at all the various trial timelines. Could we actually see the SYNERGY trial start before we saw MVAD would you – if the timing worked out would you prioritize that way. And then can you just remind us what the trial program looks like before the product was pulled and kind of give us an idea what it might look like going forward?

Doug Godshall

Sure. And sorry I am not going to be able to see you next week Brooks. The – I would – but I would be disappointed if SYNERGY caught up with MVAD. On the other hand, if you put a gun to my head and I had to pick MVAD or SYNERGY I don’t know which I would pick right now because the – whenever we go out and talk about SYNERGY the room just floods with cardiologist. It’s a strangest thing. What we sort of suspected when we bought the company that the cardiologists would be more comfortable with the device that goes under the skin instead of the one that goes under the chest. But it’s stunning how enthusiastic they are for a system that has arguably kind of mediocre data because of all the thrombus and fractures and everything they had. They are very comfortably look past that and it just seems intellectually resonate – intellectually and emotionally resonate with the cardiologist in particular.

I don’t think I am going to have make that choice, no one is going to put a gun to my head, I think we are going to get to do both simply. And I think MVAD is more complete and so close to being done it’s just buttoning it up and finishing the SYNERGY on the other hand we are making modifications to the impeller geometry. We are really feeling very good about the integrity of the cannula that had fracture issues before, so we are – we feel like we are going to have a very substantial performance upgrade once we get there. But we are at redesign mode that then has to get validated that then has to slip into the clinics. So we are at least a year from submitting for a start of the trial I would project just if I try to think about the steps we would have to go through to get ourselves in a submission position. So I would suggest whatever 6, 7 months lag from MVAD if all goes well and maybe even a little bit longer than that. So it will be a back half of ’15 submission for SYNERGY.

And in terms of what if they had a CE Mark and we will have we believe we will have to generate clinical data for two reasons. One is we are making so many changes to the system even if we still had the CE Mark it wouldn’t make – if the product is going to be different enough that we believe now we would have to redo some clinical activity. And perhaps as importantly even if we couldn’t just immediately relaunch the product you really want to create a clean data set with which to commercialize it versus the legacy data set that the company had. So there are very intriguing elements to their data set like once they got through the first few months the patient survival is fantastic, so their initial survival was not much better than regular VADs, but their long-term survival is really good. Their stroke rates were incredibly low. Their thrombus rate was intolerable which is why we are making the impeller designs.

In the U.S. there was a feasibility trial considered for the Class 3 patient which means it would be randomized against the standard medical – optimal medical therapy what we are expecting to do is commence our clinical activity with that same Class 3 patient population. What we then have to – what we will them contemplate very quickly is whether or not or how we would evaluate the technology in a patients with preserved ejection fraction because that’s one of the areas that gets the clinical community incredibly excited that Dan Burkhoff has continued to research and he is getting increasingly optimistic about the potential for that platform.

Brooks West - Piper Jaffray

Great. I will leave it with that Doug. Thanks for that update.

Doug Godshall

Thanks.

Operator

And your next question is coming from the line of Jason Bedford with Raymond James. Please proceed with your question.

Jason Bedford - Raymond James

Good morning and thanks for taking the question.

Doug Godshall

Thanks Jason.

Jason Bedford - Raymond James

Doug you mentioned the potential for meaningful upside in Bridge volume, I am just wondering where do you get this optimism, is it related more to deeper penetration into existing accounts or is it new sites coming on and then how quickly do you think that Bridge market is growing?

Doug Godshall

That’s a good question. Looking at Peter right now I would say both in terms of new or existing suite. Some of our sites that we – that I thought we were fully penetrated in we have continued to see growth in. And it’s a small handful that I would argue we were fully penetrated in, so.

Peter McAree

It’s still without giving our percentages when we look at the larger implanting sites overall in DTT, there is still plenty of room upside for us to access accounts that we are not currently in. And then to add to what Doug said, we actually just took a fairly recent look at just implanting volumes overall and they remain our implanting penetration rates continue to perform and increase well both among existing sites as well as new sites. And it’s hard to predict the trajectory of the newer sites, but the indications are very strong that the implanting rates are increasing nicely even at the lesser sites, newer sites.

Doug Godshall

And then in terms of market growth, it is evident to us that it continues to grow DTT, but I have not sort of thought about the number. So, I am not going to make up a number on the phone, but we will go back and do a little noodling on it. But it – and it is a little hard to having cast us picture on the market. It will be more helpful obviously in a week when we see both reports.

Jason Bedford - Raymond James

Fair enough. Just a quick follow-up, the DT study, I think you mentioned 150 patients enrolled currently, what was that at the end of 2Q? Thanks.

Doug Godshall

So, I am trying to – so, we reported as of the earnings call last time how many had enrolled, do you remember what that number was. Basically, we did so far this year, I am just looking at the number Chris has. Just get the number for my last report, what’s our last report? And then I will tell – I will update later. I will get that before the end of the call.

Jason Bedford - Raymond James

Alright, thanks.

Operator

Thank you. Our next question is coming from the line of Larry Biegelsen with Wells Fargo. Please proceed with your question.

Larry Biegelsen - Wells Fargo

Hey, good morning guys. Thanks for taking the question. Just circling back, one on MVAD, one on the o-U.S. market, Doug in the past, I think you said you thought it was prudent to do a first demand series with MVAD before starting the CE Mark trial and the U.S. trial. It doesn’t sound like unless I just misheard that you are planning to do that anymore. So, can you talk about why and if that has changed? And I just had one follow up on the o-U.S. market?

Doug Godshall

Sure. Yes, it was – we liked the idea obviously if we could do a few patients before we hit a clinical trial, but we also – we always tried to make sure folks understood that if special access didn’t work out or the timing of the CE Mark trial started to coincide with special access, then we would just go right to CE trial, because we were confident enough in the device that we didn’t think it was necessary, but it was we thought easy and opportunistic to go to Canada under special access first. As it turns out, it was hard and the door closed at least for this type of VAD for special access. Maybe a device like CircuLite is different enough that you would say this can treat a patient population that is otherwise untreatable and then Canada might say oh, I believe you on CircuLite, because you are right, there is nothing for preserved ejection fraction. So, you can come in on CircuLite, where as you can’t come in on MVAD. I could see that the door is still being opened for something like that.

But my impression is that Edwards ran into a similar situation with their valve, where they had gone in under special access multiple times before and when you go they went and began with their more recent design Canada said no, because you can’t convince us that there is a patient that is otherwise untreatable with the existing devices. So, once that opportunity closed and we thought well, do we fight harder? We also simultaneously got the letter from the FDA and the prospect of trying to manage a Canadian special access only controller version of also producing controllers for U.S. and Europe, it just seemed fraught with peril. And we were not confident that we would be able to convince Canada to come along. So, we have plenty of work to do both in terms of completing the MVAD activities and obviously flowing resources towards warning letters, medications. So, we dropped the early opportunistic special access, and we didn’t try to find a country other than Canada that we could go to. We just decided to make sure we were highly confident in the system when we go to Europe and U.S. And then you had a question.

Larry Biegelsen - Wells Fargo

Yes, you know what I’m going to ask about just the ENDURANCE switch gears and ask about ENDURANCE and the plans for the top-line results and just an update on that or have you guys decided if your top-line results are kind of what’s the communication plan on ENDURANCE. And I’ll drop. Thanks.

Doug Godshall

Sure. And so to answer Jason’s question first, on May 1, we said we had just over 80 patients enroll in DT so, May 1 to I guess teetering on August 1, it went from 80 to 150. And the top-line results we continue to dial out internally as you know Larry because I think we chatted with last time I was with you about the challenge of top-line versus full clinical data download. We will be calculating our primary endpoint later this year and if we come out and say, we have met our primary endpoint which is what we had predicted last time we spoke on this topic last year. If you say you hit your primary input, but you say nothing else about topics of significant interest like thrombus and stroke. Have you really provided the full story is, sort of part of the challenge and if you start providing the full story than you’ve stolen the opportunity from the principal investigators to present the data which they have made quite clear to us. They do not want to see us presenting the trial, they want to present the trial and so, it’s the – we continue to debate how to best manage the process both in terms of honoring our obligation to the trial and the physicians as well as recognizing the keen interest amongst the street to have the data recognizing, however, that as we said all along the second cohort of the patients, we are enrolling this to demonstrate that we can reduce neurologic events and that we plan to submit both arms together and we feel that the second cohort is necessary in order for us to secure approval. So, the – our plan remains unchanged in terms of the submit both data sets together once this group reaches the one-year follow-up.

Larry Biegelsen - Wells Fargo

Thanks for taking the question.

Doug Godshall

Thanks, Larry.

Operator

Thank you. Our next question is coming from the line of Matthew O’Brien with William Blair. Please proceed with your question.

Kayla Crum - William Blair

Hi, guys. This is Kayla in for Matt. Thanks for taking our question. So the two year rolling average I guess for international unit growth took a step back in the quarter. So, I’m just trying to understand what’s going on outside the U.S. and particularly in Europe if you’re seeing any sort of impact from competitive audit trailing any commentary there would be helpful.

Doug Godshall

That’s funny, Kayla, because I was psyched by our quarter (indiscernible). So, I don’t know, I mean, it’s – frankly as I look at the past 12 months to 18 months, it’s – the strangeness of international has been actually more consistent than it has – than it hadn’t been historically so the lumpiness that always affects VADs has been – was is a little less apparent and internationally as we’ve – I think in part because we’ve expanded so substantially geographically as you’ve got more folks sort of throwing pennies in the jar every month. And as we’ve worked diligently to ensure that we’re supporting customers getting good outcomes and more countries come on with reimbursement in the like. So, I don’t have the perception that there has been a – any real meaningful share loss we have sites here and there that every now and then shift a little bit one way or the other. But we feel like we’re in a very strong position vis-à-vis the various competitors that have CE Mark and hopefully, we’ll continue that way. I don’t see a negative trend on.

Kayla Crum - William Blair

No.

Peter McAree

Part of the quarter-to-quarter phenomenon is we were bit stronger with distributor sales in Q1 pulling out sort of lumpiness at distributor sales, the direct sales were actually quite consistent and strong and the trend was growing and improving. And the distributorship was also partly the reason why in our ASPs for the second quarter, you see that we have more direct channel sales momentum with influencing the overall average selling price a bit.

Kayla Crum - William Blair

Okay, that makes sense. And then to follow-up on the prior MVAD question, you mentioned that in Canada, it was tough to find a specific patient population that current generation products could be used as – could not be used as a solution. So, what do you think is really going to drive that shift away from earlier generation products and the use of MVAD longer term once it is available?

Doug Godshall

Okay. So, full disclosure, I am like, I am like I am biased. So, as long as you recognize my bias that I joined the company in 2006, because I saw prototype of MVAD and I thought this company has a huge upside potential in part because of that product. So, I have been waiting for this pump as long as everybody other than Jeff Burrows who invented it, but – so, with that bias aside as I think I can objectively assess the response that I see from physicians when they see that device, it’s they can’t wait to get it. The volume of the device that sits outside the heart is so small that it just is anatomically I think ideal or best of current options or better than current options, including the HVAD. If the impeller geometry change and sheer reduction proves out in the clinic, you are getting a super small size with no trade-off in terms of blood handling characteristics and actually potentially meaningful upgrade in blood handling characteristics based on our bench and animal testing. So, that should also result in a potentially a notable reduction in adverse events versus current devices.

So, size and performance should be notably observably better, obviously the performance one will just take time for people to actually confirm. It’s not like when you turned it on, all of a sudden, the patients get healthier, faster than the other devices, but I think it’s more the downstream adverse events should be lower as you start to aggregate patient volume. So, it’s a – I am really into that when we had to describe to our investigators, hey, this is going to take us a little bit longer than I thought, they are just bring it on as soon as you have it, I can’t wait to use this thing. So, their enthusiasm remains high and for some reason they remain patient with the company even though we are impatient with ourselves for having this added delay.

Kayla Crum - William Blair

Great, thanks so much guys.

Doug Godshall

Thank you.

Operator

Thank you. The next question is coming from the line of Bruce Nudell with Credit Suisse. Please proceed with your question.

Bruce Nudell - Credit Suisse

Good morning. Thanks for taking the question. Doug, just we know there is going to be an impact on MVAD timing, is there going to be any impact of the warning letters on your ongoing dialog with the FDA regarding the DT trial and is there any chance that this could spillover long enough to impact that trial?

Doug Godshall

So, I hope not in terms of length of time. I think unlike larger companies like the one I used to work for when we got a corporate warning letter, we had plans all over the world that affected so many facilities we had coupled together, multiple different quality systems from the different acquisitions we have done and that made it materially more complex to figure out how to work through the warning letter that BSC had back then. Ours is sort of disappointing personally that, that I wanted to be a company that grew fast, that didn’t get a warning letter and so, now we’re sort of trying to continue to grow fast and do a turnaround at the same time in terms of our internal systems. But there is a sort of line of site advantage that you have when you’re at our size versus widespread around the globe.

It does not diminish the magnitude or importance to us. And as I look at the work streams we’ve identified the vast majority of our initial work activities will be completed this year. There are others that will go into next year as well. And we’ll probably identify additional work as we dig in and mitigate some of the areas that were identified and others that we’ve identified through internal audits. And so even if we completed everything this year does not suggest that suddenly the first quarter next year, the FDA will say, okay that was good work, now you’re all done. So, as we described, it will take a little bit of time. I don’t expect it will take all the way to the time when we would have been anticipating filing for DT. I was encouraged by the dialogue regarding thoracotomy, the warning letter it never came up, granted it’s a different branch of the agency, but they were thoughtful in the review of the – of our proposal to use INTERMACS.

Maybe we misinterpreted them a little bit when they were saying was use retrospective data to support your filing and maybe what they were saying was use retrospective data to create a performance goal, versus use retrospective data and just file on INTERMACS. Although, it seemed pretty clear to us initially that they were saying use INTERMACS and maybe they just thought about it more and realized that's a little too less burdensome and they wanted a little more burdensome in that. And we’re actually pretty enthusiastic about starting a trial and now that we have clarity. So, the thoracotomy dialogue didn’t feel like an agency that’s how to get us and is going to the hold a warning letter over our head, which in no way guarantees that they won’t hold it over our head later, but at least at this juncture we’re not sensing it.

Bruce Nudell - Credit Suisse

Perfect. And just if you could briefly characterize what do you think the volume growth in the U.S. and ex-U.S. markets were this quarter?

Doug Godshall

I’m going to pass on that again just because I don’t have that. Yes, internationally obviously it’s a little bit easier for us because we’re not constrained on the – with a label constrained that we’re in U.S. – U.S. is a little hard to project. So, we certainly aren’t changing our position as we have moved. It feels like we have collectively moved well past the angst of the fourth quarter of last year. The news flashes that folks were afraid, we’re going to really do a downdraft on the market. I think are behind us and it feels like the momentum is good in the market.

Bruce Nudell - Credit Suisse

Perfect, thanks so much. Have a great day.

Operator

Thank you. The next question is coming from the line of Steve Lichtman with Oppenheimer. Please proceed with your question.

Steve Lichtman - Oppenheimer

Thank you. Good morning. Doug, just to confirm again on MVAD between now and through submission in the few months ahead, the work that you guys are doing is running through the same sort of validation – testing and validation upgrades that you think are required for HVAD. That is – just if you can talk a little bit more about specifically what you guys are going to be doing over the next handful of months here on MVAD specifically?

Doug Godshall

Yes. As I mentioned earlier, we – the overall theme of the FDA audit and then subsequent communication with us is both sort of make sure you buttoned up on your documentation, make sure you buttoned up on your validations, and then in a specific area of validation make sure you are – you have specifically validated any of the equipment that used to produce your product or measure your product and the like. And so, that there is – that can cover a wide array of things that can be measuring equipment, it can be what you test your batteries with, etcetera. So recognizing you need to ensure that’s when we submit the document to the FDA, that if they have just make sure all your equipment is validated, we would better make sure all of your equipment is validated for MVAD because it’s not the same equipment that we are making HVAD with.

Additionally, as we – as soon as we get the later, we pulled aside a group including some external experts and said okay, do a – do an audit of all of our documentation, all of our test reports, all of our findings to make sure that we are really clean in terms of how we have written the test reports, what we documented, how we have run the tests to make sure we are complaint with all the external standards so that there is no – we are not skipping any steps. And so we have been working to that – we worked through that sort of the internal audit process and did identify some things that we needed to clean up a little bit and that’s the parallel process that’s going on right now to ensure that again there is no missing pieces which we were in very good shape, but not all the way there. And again I think the integrity of the MVAD data is night and day relative to the data we had when we first submitted on HVAD. But times have changed, expectations are higher and certainly now in general with regulators compared to 2007 and 2008 and now expectations on us have just ramped up considerably and so the – trying to cut corners would be a bad choice at this point.

Steve Lichtman - Oppenheimer

Okay. And then just a follow-up, you have talked in the past about an upgrade on the control I think PAL maybe – I know you talked about previously launching that with MVAD any thought about sort of separating the pathway there and launching that new controller with HVAD?

Doug Godshall

Yes. So we see – in fact I just met with the group that’s helping us to design and manufacture that system last week. And as I described to them, we see PAL really as the backbone for running all of our pumps in the future. So it may not run CircuLite initially when it to goes back in the clinic, but it’s such a patient friendly intuitive simples but elegant system that we certainly envision that – that’s our platform for the next multiple years across our multiple pump platforms. We can’t however take an MVAD pump which has one motor and three internal cables in the drive line and a smaller connector and use that same controller to power HVAD which has six internal cables, two motors, and a larger connector. So it’s at one point we had contemplated one controller for both pumps, but would have ended up becoming a much larger controller to accommodate the complexity of running two different kinds of pumps. We are moving forward with an HVAD version and are encouraged by what we are seeing although at this point it looks likes it’s going be a slightly different shape just because of the dual motors in HVAD just requires a little bit more space inside this system, so it won’t look identical to the MVAD version which should have clinic first. But we’re – it’s last on us that for the thousands of patients on HVAD, they would all I think benefit from a more elegant system which is what we believe that will be.

Steve Lichtman - Oppenheimer

Okay. Got it. Thanks Doug.

Doug Godshall

So, I know as I seem to do often, we are running a little bit long so I will take two or three more calls and I will try to talk less.

Operator

Thank you. Our next question is coming from the line of David Roman with Goldman Sachs. Please proceed with your question.

Chris Hammond - Goldman Sachs

Hi, guys. It’s Chris Hammond in for David. Thanks for taking the questions I won’t belabor on the MVAD issue, but I would like to go back to the endurance trial. So just doing some back of the envelope math, it looks to me sort of you guys are done 36 implants in the quarter, 35 last quarter and then, let’s call it mid-teens in the fourth quarter which just come on the back of the envelope tells me a couple of things is, one, it seems that on a two-to-one control matching that each bet is not really and rolling as fast as HeartMate is. And secondly with only, call it a 150 total and rolled to-date. It doesn’t seem to me that the early first quarter ’15 completing the enrollment is actually realistic goal. So, I was hoping you could update me on or update us on what’s your latest thinking on when you can complete that trial all in because just doing the math, now I feel like mid ‘15 to late ‘15 is a more realistic option.

Doug Godshall

So, it’s not physically possible for one – well, first of all, it’s a two-to-one randomization and we’re right on track with the two-to-one randomization and one arm doesn’t enroll differently than the other arm. The patient shows up, and then finds out which device they are going to get and went through a certain automated randomization scheme. So, it – the – your numbers are probably not all that wrong. So, sort of nine units in the first – in the fourth quarter of last year and it – and so in total, we’re at about 100ish HVAD implants to-date in the trial. The – if we’re – if we continue to track at the 30 plus per month total randomized range, I think that pulls it in considerably, relative to your timeline. So we didn’t see a pickup in the first quarter then fell off a little bit in April, May, we don’t know why and then it has reaccelerated June, July, I think we’ve helped to stimulate that through our efforts partly and I think partly it’s also just recovery from a little bit of a low and certainly, we’re pushing aggressively to try to move back up towards the sort of peak enrollment in the high 30s that we had anticipated. We would be peaking at per month similar to what we had seen in the original trial when we’re peaking in that trial. So, I think in part as we were working through organizational transitions in a like we may have lost a little bit of attention focus on our and that is renewed now and contributing.

Operator

Thank you. Our next question is coming from the line of Suraj Kalia with Northland Securities. Please proceed with your question.

Suraj Kalia - Northland Securities

Good morning, gentlemen. Thank you for taking my questions. Doug, forgive me for going back to the MVAD. On a more fundamental level, I’m curious how the HQ curves of the MVAD look versus the HVAD. Because our understanding from the field is that, the RPMs are almost seven times better than HVAD, and I wanted to juxtapose that with your earlier comments about the kind of patient’s not currently well serve. Is it that the MVAD is the most suited towards Class III or are they sticking with the Class IV because the output at the RPMs, at least in that current literature. It’s interesting to compare to HeartMate II and HVAD. And I’m just curious to get your thoughts on that. Thank you for taking my question.

Doug Godshall

Sure. So, as I know you are well aware, Suraj, rotational speed is not really the critical metric for accessing the pumps performance because it’s a – the output of a pump is going to be a function of rotational speed and diameter of the impeller or tip speed. And so while we will be in the by 15,000 to 18,000 RPM range with MVAD to get us to the 5, 6, 7 leaders of flow which is where 90 plus percent of our patients are – we think about 1% of our patients with HVAD get 8 liters of flow, and that’s probably not even really 8 liters of flow is probably just reading error. So, the MVAD is absolutely in the sweet spot of the Class IV patient demand based on our data and based on our best interpretation of the HeartMate II data which is a little harder to get flows from. But as we take their speeds and overlay it against their HQ curve that’s published, they are probably about the same range 4 to 6 liters. We are generally in the 4 to 6 liter range with HVAD. The HQ curve for MVAD is going to be a little bit steeper since it’s an axial flow pump. And that will increase pressure through the pump which is one of the reasons why we will have a – but it will also enables us to implement pulsatility very easily. It will have all sorts of section response algorithms. It’s going to be a very sophisticated system much more biologically responsive than the HVAD.

The patients that in Canada for the Canadian government that you are referring to get special access you have to prove that there is a patient who other devices cannot serve and we and the clinicians who are submitting just weren’t able to prove that the HVAD couldn’t treat everybody. And the fact that we have done so many pediatric cases in Canada it’s awfully hard if you are treating five and six-year-old it’s hard to convince the Canadian government that this small device can somehow treat somebody that the HVAD can’t and so you will sort of lose the argument in part because of how all the HVAD is working. Next question, if there is anyone.

Operator

Thank you. We have an additional question coming from the line of Danielle Antalffy with Leerink Partners. Please proceed with your question.

Danielle Antalffy - Leerink Partners

Hi. Good morning guys. Thanks so much for squeezing me in. Doug, just wanted to talk about the U.S. market a little bit. So last quarter it looks like a pretty significant market share shifts towards you guys embraced your transplant. And I think part of that at least from your competitor’s perspective was driven by the New England Journal of Medicine article on increasing rates of thrombus with their competitive device. Just wondering if number one, you would agree with that assessment, are you seeing in centers where you are currently – that currently have the HVAD are you seeing them shift market share in part because of that and if so has that trend continued into the second quarter and sort of how sustainable I guess do you think that trend might be and the benefit there?

Doug Godshall

So if you think about our historical experience internationally, we have been very fortunate that on balance we don’t go back. We have not had – we are not going backwards often at any sites in terms of share and rarely do. If we do, see a shift away from us, it doesn’t tend to last for long. And so we have been really flattered and blessed that that has been the case internationally. And our hope was always if we get – if we can migrate our experience internationally to the U.S. serve our customers well, help them get good outcomes. As we have seen internationally that we would enjoy the same traction in the U.S. centers such that once you get comfortable with our device you expand utilization of our device versus remaining static or declining. And the – none of that would be true if our competitors device was perfect and likewise if our device was perfect, we would need to work so hard. And so both devices have their – have challenges not every patient unfortunately survives and gets a perfect outcome and we are – our goal is to get as close to that as we can. But for whatever reason that a site initially decides to try our device our goal is of course to make sure that everything goes incredibly well so that they decide that their next patient should also get an HVAD.

And so to the extent New England Journal might have stimulated a few sites to think about trying our device or using it a little bit more. That is only – that only has a durable effect if the patients do well. If the patients don’t do well they will say well the New England Journal might have been a good reason to try it but it’s not a good reason to keep going. And so we are – it doesn’t come up anymore. And nobody says, by the way I just noticed in my waiting room in a New England Journal article on VAD Thrombus therefore I am going to start using your device. So I think it’s had its effect and now it’s much more what is my experience with one device, am I satisfied or dissatisfied and would I be potentially more satisfied if I try the HVAD.

So with that, I think I don’t know if we have any other questions. I don’t think – I think thankfully Danielle, you snuck in at the end, I thought you had forgotten about us. So, thank you for joining and thanks all for joining our call today. We are quite optimistic about the future. I think the next few months are going to be painful in some ways and incredibly rewarding in many other ways. So, hopefully in the future, I won’t be having to talk about delays and submissions and the like, we will be able to talk about trials starting and more predictable and more rigorous development timelines. So, with that, thanks for your call. I look forward to seeing you folks and have a good summer.

Operator

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation and you may disconnect your lines at this time.

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