Spectranetics' (SPNC) CEO Scott Drake on Q1 2016 Results - Earnings Call Transcript

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Spectranetics Corp (NASDAQ:SPNC)

Q1 2016 Earnings Conference Call

April 28, 2016 04:30 PM ET

Executives

Michaella Gallina - Director, IR

Scott Drake - President and CEO

Stacy McMahan - CFO

Shar Matin - COO

Analysts

Jeff Chu - Canaccord Genuity

Brooks West - Piper Jaffray

Mike Matson - Needham & Company

Rick Wise - Stifel

Suraj Kalia - Northland Securities

Glenn Novarro - RBC Capital Markets

Chris Pasquale - Guggenheim

Matt Miksic - UBS

Operator

Welcome to the Spectranetics First Quarter 2016 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, April 28, 2016.

I would now like to turn the conference over to Michaella Gallina, Director of Investor Relations for Spectranetics. Please, go ahead.

Michaella Gallina

Good afternoon, everyone, and thank you for participating in today's call. Joining me from Spectranetics is President and Chief Executive Officer, Scott Drake, and Chief Financial Officer, Stacy McMahan. Earlier today, Spectranetics released financial results for the quarter ended March 31, 2016, which can be found on the Investor Relations portion of our website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of Federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For a list and description of those risks and uncertainties, please see the company's filings with the Securities and Exchange Commission. Spectranetics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, April 28, 2016.

I'll now turn the call over to Scott Drake. Scott?

Scott Drake

Thanks, Michaella, and good afternoon, everyone. We appreciate all of you joining us. On our call today I'll begin with financial highlights and provide an update on our business segments, recently presented Stellarex data, and strategic initiatives. Stacy will review our financials in more depth and we look forward to answering your questions.

Our results demonstrate progress in our quest to deliver both commercial performance and advances in our innovation pipeline. I'll begin by detailing segment highlights from Q1. All numbers will be on a constant currency basis.

In the first quarter, we posted top line growth of 10% and overall disposable growth of 12%. Our team performed well across vascular intervention, lead management, and international. Our vascular business grew 15% over prior year. Growth was primarily driven by peripheral and coronary atherectomy in the US and Stellarex and AngioSculpt in Europe. US peripheral atherectomy continues to grow 2 to 3 times the market rate, this quarter at the higher-end of that range. Stellarex adoption was the primary growth driver of our international vascular business. AngioSculpt overall was up modestly this quarter and trends in this franchise continue.

International growth was stronger than US and coronary stronger than peripheral. In lead management, revenue grew 5%. We continue to be pleased with our mechanical device conversions globally. Our focus remains on developing the market and delivering important lifesaving technologies to serve this undertreated patient population. We're just embarking on our Bridge product launch, more on this in a moment. On a regional basis, our US business was up 9% and global expansion efforts yielded a more rapid international growth rate of 16%.

Now, let me shift to our strategic initiatives. Our focus as an organization is to continue to grow by way of product innovation, compelling clinical data, and commercial execution. We've made important progress in Q1 on our drug-coated balloon platform, the In-Stent Restenosis opportunity, and efforts to unlock the lead management market.

Let's start with our DCB portfolio and recently released ILLUMENATE global data. On Tuesday of this week at Charing Cross, Professor Thomas Zeller presented interim 12 month data on 153 patients from our ILLUMENATE global study. Professor Zeller states, “these data compare well with the highest DCB patency rates reported in comparable studies with similar patient populations yet with a lower level of drug concentration”. At day 360, primary patency was 88.5% and at day 365, 84.7%. We provide both numbers to allow for comparison with similar studies. To be clear LEVANT 2 and IN. PACT SFA are the two core lab adjudicated studies that key opinion leaders view as comparable to ILLUMENATE. Our freedom from clinically driven TLR was also in line with market-leading results.

From the headline primary patency and TLR numbers to analysis of patient subsets, our data is rock solid and achieved not only with the highest level of rigor, but with a much higher rate of severe calcification. The feedback from physicians at Charing Cross was unanimously and profoundly positive. We couldn't be more pleased with these results. Our messaging of more with less is resonating with customers across Europe and key opinion leaders in particular. Physicians are struck by the results we achieve with relatively low drug dosage. This unique combination yields customer feedback that Stellarex is indeed a next-generation device and there is no class effect in drug-coated balloons.

As previously shared, we anticipate 12-month results of the full ILLUMENATE randomized control trial and the US pivotal study at VIVA and TCT later this fall. Importantly, we're on track with the PMA submission of Stellarex above-the-knee and we look forward to commencing enrollment in our below-the-knee pivotal trial. We anticipate the European launch of our below-the-knee platform by the end of 2016. On the coronary side, we're awaiting CE mark for our drug-coated AngioSculpt product and expect commercial launch this year. We believe we are well-positioned by having a highly differentiated drug-coated balloon and vessel preparation portfolio.

Let's turn our attention to In-Stent Restenosis. We are pleased with early customer feedback regarding our Turbo-Power launch. Customers are complementary of clinical results and the product's ease of use characteristics. This device, the ISR indication, commensurate clinical data, and our commercial focus position us well in ISR specifically and peripheral atherectomy generally. In summary, our customers are adopting DCBs rapidly and there's an increasing level of interest in vessel preparation for complex disease. We believe we are well-positioned for these trends today and increasingly more so over time.

Turning to lead management, we are very excited about launching our Bridge to Surgery device as we focus on improving patient outcomes and mitigating mortality risk. We will showcase Bridge next week at the Heart Rhythm Society Conference in San Francisco. Data submitted for FDA clearance and early clinical experience will be presented in several forums and our customers will have the opportunity to get hands-on experience with the device. We are hopeful that this advancement will yield appropriate and widespread patient treatment. Finally, on lead management, our team continues to deliver on mechanical tool conversions. Our broadening portfolio, market development efforts, and commercial focus augment our market leading position.

I'll now turn the call over to Stacy to review our financials.

Stacy McMahan

Thank you, Scott, and good afternoon, everyone. I will begin by referring you to the press release issued this afternoon for details and to our Form 10-Q that will be filed on Friday. Consolidated first quarter revenue was $62.9 million, delivering growth of 10%, both in reported and constant currency. Total US revenue growth was 9%. International revenue growth was 12% as reported or 16% on a constant currency basis. Vascular intervention revenue was up 15% in both reported and constant currency. As a reminder, AngioScore is now reported as part of our vascular intervention product line.

Lead management revenue was up 4% over last year or 5% on a constant currency basis. Laser, service, and other revenue continues to represent a headwind to growth and decreased 13%, both as reported and constant currency. In the US, peripheral and coronary atherectomy grew double-digits. Primary offsets to this performance were modest growth in the sales of AngioSculpt and declines in laser-related revenue. International growth was led by Stellarex and AngioSculpt in Europe and was partially offset by flat laser-related revenue.

Gross margin for the quarter was 74.4%, a 60 basis point improvement over last year's first quarter was driven by higher average selling prices and mix as well as the absence of acquired inventory step up amortization. Selling, general, and administrative expenses were up 10% versus last year and represented 65% of sales, primarily due to the expansion of our sales and marketing team during 2015 that will have a full year impact in 2016. R&D spending was up 7% year over year and represented 26% of our sales. The increase was primarily driven by our continued investment in Stellarex and related clinical studies.

Turning our attention to certain special items on our P&L. As expected we saw a significant reduction in costs related to our AngioScore and Stellarex acquisitions and integrations, primarily due to the reduction of legal activity in the quarter. Both acquisitions are fully integrated and as a result we anticipate these special costs to be in line with Q1 for the remainder of 2016.

Moving down the P&L, operating losses of $13.9 million in the quarter compared to a $25.2 million loss in the same quarter a year ago. Net losses for the quarter were $17.3 million or $0.40 per share versus a $27.3 million net loss or $0.65 per share in the prior year. The decrease in net loss was attributable to an increased gross profit as a result of increased sales and a decrease in acquisition-related costs. Excluding special items, non-GAAP net losses were $13.7 million or $0.32 per share in the first quarter of 2016 versus a $12.5 million net loss or a $0.30 per share loss in the prior year's first quarter. Cash on hand as of March 31, 2016 was $67.5 million. Cash used in operating activities during the quarter was $12.4 million. As we stated before, we are confident in our liquidity position through the US launch of Stellarex and beyond.

Regarding laser placements, we are being very thoughtful with our existing fleet ahead of the launch of our next-generation laser. We placed 44 lasers globally during the first quarter. 18 of the lasers were redeployed within the field, demonstrating our continued effort to drive greater productivity from our install base. And lastly, we are reaffirming our previously given guidance for the full year 2016 as set forth in our February 25 press release.

With that I will now turn the call back over to Scott for closing remarks.

Scott Drake

Thanks, Stacy. And thank you, everyone, for joining us today. We are pleased with our Q1 results and the progress we have made both commercially and on our innovation pipeline. We're in the midst of exciting times for our company and working hard to create value for shareholders.

Stacy and I are joined by Shar Matin dialing in from London. Operator, please open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Jason Mills of Canaccord Genuity. Your linappdat]

Jeff Chu

This is actually Jeff Chu filling in for Jason. Congratulations on a good quarter here. With regards to Stellarex I was wondering if you could comment on your distribution infrastructure in the US once you receive FDA approval. I understand it may be little early here but any color you can provide on your readiness plans and capacity for share is appreciated.

Scott Drake

Yeah, Jeff. Happy to. I would tell you we've got those plans well under way and I think we're very well positioned to compete not only today demonstrated by the results growing 15% overall in the vascular business but we'll be augmenting our infrastructure ahead of the Stellarex launch. I don't think there's going to be any dramatic moves, Jeff, but I would say augmentation, as you've seen us do in Europe as well. So, we've got those plans well in place and we're building towards that as we speak.

Jeff Chu

Great. And sticking with Stellarex for a moment, what do the results from the ILLUMENATE global registry portend for randomized control studies? I guess asked another way, given that the global registry was designed similarly to a randomized study, is there anything that should result in significant anomalies when we see the US data later this year?

Scott Drake

Yes, Jeff. I would say a few things. One, up front, about the data, there was just uniform, very enthusiastic feedback from customers truly across the board at Charing Cross. We couldn't be more pleased with the feedback from customers. What we heard literally from everybody that we spoke to is that we have top tier efficacy and safety. Physicians are struck that we're able to achieve that very top tier profile with less drug than the other competitive device that also has impressive data.

And I mentioned in my script, the studies that key opinion leaders believe are comparable to ILLUMENATE and those include not the registry from other companies but the IN.PACT SFA and LEVANT 2 and all of the inclusion-exclusion criteria from ILLUMENATE are similar. So I'm not going to get into the business of predicting future outcomes but what I can tell you is our data from both our first in human and this interim look and the other top tier clinical data, those three numbers lay right on top of one another.

And what I found very interesting at the show was how many physicians stated that they thought the data coming out of IN.PACT SFA were so good they in some ways questioned is it too good to be true. And the fact that our data lays right on top of theirs really bolsters confidence in the overall therapy and reinforces that there's not a class effect in drug-coated balloons. So, I think it was frankly a win not only for our company but the therapy overall and like I said, very pleased with what we have.

Jeff Chu

Super. Thanks for taking the questions.

Operator

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

Brooks West

Hi. Thanks for taking the questions. So Scott, there was a snap survey at Charing Cross on pretreatment of lesions prior to treating with drug-coated balloon and it was largely in favor -- I'm actually looking at 87% in favor versus 13% nos. And that data has roughly flipped over the last couple of years. I'm curious just are you seeing that in your business yet, this foreshadowing? And I'm kind of also curious to hear how you're seeing the mix of atherectomy versus the scoring balloons in terms of vessel prep?

Scott Drake

Yeah. That really caught our attention as well, Brooks, at Charing Cross and I would tell you there's two other data points that completely aligned with that. As you know, we built our strategy and portfolio around two very important premises as it relates to our vascular business. One is that vessel prep is only going to get more important as we go forward and, two, definitive treatment is going to take the form of drug-coated balloons in the peripheral market for the foreseeable future. And I think we are very well-positioned in that.

So, to see that data go from 20% or so support a few years ago and nearly 90% today, very much aligns with the survey that we did recently internally with a very significant subset of US customers and the timeframe is even shorter here in the US market and attitudes have shifted pretty dramatically from 18 months ago to today in terms of vessel preparation in conjunction with drug-coated balloons for complex disease in particular which is obviously where we're focused.

So, it feels very much like those two survey sets of data is aligning with what we're hearing from customers where early adopters that were using drug-coated balloons essentially as standalone therapy are seeing those patients come back for retreatment and those physicians are rethinking their algorithm of vessel prep followed by drug-coated balloons. That's probably the newest thing that we're seeing in the market.

And to your question on atherectomy versus scoring balloons, really it kind of falls along the lines of people that believe in atherectomy and that subset of physicians that are more balloon and stenters. And so thus we feel like we're very well positioned both with the vessel prep portfolio and the highly differentiated DCB portfolio at this time.

Brooks West

That's helpful. And then let me follow up with what might be a difficult question but I think it's worth asking. I think people came around to the quality of the data in maybe the 24 or 36 hours after it was presented and I started to get a different set of questions from investors basically saying how is Spectranetics going to compete against Bard, Boston Scientific, and Medtronic even with an equivalent product? And I'd love to just get your reaction to that thought process. Thanks.

Scott Drake

Brooks, I tell you, that's kind of the question that we face from investors that it’s posed in various ways but I think our best answer to that question is first to take the question out of the theoretical. How will we compete in the future with Stellarex to the practical and say how do we compete today and how have we competed over time? And if you look at categories where we're head to head, crossing solutions, we've been the leader in that market for a very long period of time.

I think we're on something like 20 quarters of growing two to three times faster than the market generally speaking in atherectomy. We're the market leader in both peripheral and coronary scoring balloons and have done well share-wise there here over the past several quarters. So, we're competing well today head to head. Our vascular business grew 15% versus a market that's growing mid-single digits.

So, I think that's an important context to have. And then when we project forward, how will we compete in the future against these companies that are much larger that we have a lot of respect for? I think our competitive position as it relates to the overall market with the pipeline of new products and clinical data that we have coming augments our ability to compete with those companies.

The third thing I think we would mention really is regarding hospital buying behavior. And I spent about 20 years of my career on the large company side of the equation and now I'm on the smaller company side. But the big guys kind of slug it out for prime vendor status and companies like Spectranetics sell a differentiated portfolio primarily on clinical data and we do so, I think, successfully given the context I provided.

And I think hospitals very intentionally leave room for both. They don't want to turn their lab over to one company and I think each player plays to their relative strengths and we both or all play an important role in the marketplace. A final comment that I would tell you, I think probably the best leading indicator of success in any business is the talent pipeline and I would tell you we're very uniquely positioned and very fortunate that we've got a lot of talent that comes towards us.

And we're fortunate to get some of the best and brightest from those great companies that have built their skill set, have built their confidence, and want to work in an environment where they can have a big impact on a company and see that impact in the marketplace. So, really I'm quite comfortable with our position and the recipe of winning on differentiated clinical solutions, commercial execution, and our pipeline, very time-tested recipe and I think we're well-positioned there. Thanks for the question, Brooks.

Operator

Thank you. Our next question comes from the line of Mike Matson of Needham & Company. Your line is now open.

Mike Matson

Hi. Thanks for taking my questions. I guess I just wanted to start with the ISR indication for your peripheral atherectomy product. Bard on their call said that they're going to be submitting a PMA supplement for their Lutonix balloon for an ISR indication. So I understand you have your own drug-coated balloon that's on the way but it's probably going to be a little while before you have ISR indication for that. So do you see any risk that as these other competitive balloons get ISR indications that that would hurt your atherectomy business?

Scott Drake

Yeah. Mike, the atherectomy space is obviously very competitive. We're playing pretty well there right now and I do think the indication is important, both for us and from the two other companies that are currently in the US market. So, I think it's an important move to make. I would tell you it's our observation in the survey that we did and our day to day interaction in the field that the lack of indication doesn't appear to be getting in the way of adoption in ISR cases currently. So, we're watchful there, but I think drug-coated balloons are being used liberally in ISR cases currently.

Mike Matson

Okay. And then just in light of the upcoming CE mark for the AngioSculpt DCB, coronary DCB in Europe, can you just refresh on what that market looks like over there, how many competitors there are, the size of the market and what the opportunity is for you with that product?

Scott Drake

Yeah. I'd be happy to. I might invite Shar in here to make a comment but from a high level, Mike, it's about $100 million market that we'll be entering into from a drug-coated balloon coronary perspective. We'll obviously be the first company with a drug-coated scoring balloon and we're quite interested in how the market receives both the data that's out there and this new technology. I would say from a 2016 perspective, I would mitigate expectations in terms of revenue contribution.

We're going to go through a very thoughtful launch when we do get CE mark for the product. We want to learn about the technology with a relatively small subset of clinicians, make sure our positioning and messaging is correct before we go widespread with it. But I do believe that it's going to be interesting to clinicians in particular as they adopt bioabsorbable scaffolds and treat complex disease in the marketplace.

Let me pause there and invite Shar to make any other comments that he might want to make.

Shar Matin

Sure. Thanks, Scott. I think from a competitive perspective, there's about half a dozen competitors in the marketplace. Again, they all have plain drug-coated balloons and as Scott mentioned, this is going to be unique and differentiated. So, as we test how we can position it, I would say generally we see the opportunity and as I think we've mentioned earlier or in the past, that in Europe, drug-coated balloons are considered standard of care for in-stent restenosis and the coronaries. I think that's our initial target. And then from there as we test our messaging we see opportunities to go places where drug-eluting stents may not be as ideal. Those may be the opportunities where we can test and see if there's potential upside to the market with a drug-coated balloon that's specialized like an AngioSculpt.

Mike Matson

Great. Thanks. That was helpful.

Scott Drake

Thank you, Mike.

Operator

Thank you. Our next question comes from the line of Rick Wise of Stifel. Your line is now open.

Rick Wise

Good afternoon, Scott. Just maybe start with a bigger picture question. After sort of a challenging year last year it seems like you stabilized the business in the fourth quarter. And now as we look at these first quarter numbers, it feels to me like you're back on a little more of a solid growth track. So, clearly stable, feels like this is stable to improving this quarter in each business and geography. Maybe a couple of things related to those thoughts, if you would characterize that as well. Do we now sort of say to ourselves that these growth rates we're seeing in the first quarter seem sustainable, sort of mid-single digits for lead management, 10% is sort of roughly where you've been growing on the vascular side. Could they accelerate as the year unfolds? Maybe help us think through the headwinds, tailwinds, as we think about the rest of the year and maybe just your perspective on what you're pleased with and what you feel like you still have to work through beyond just launching these wonderful new technology as well?

Scott Drake

Yeah, happy to, Rick. Thank you for the question. I would say in the quarter I was pleased with how the team performed, really across the board; vascular, lead management, and international. I think the moves that we've made on the people front have been helpful to us. I think the sales force additions to our European team as we separate the LM and VI side and augment the size of that team. Just as we added fire power to our US VI team in kind of between Q1 and Q2 of last year, I think we see those people really settling in and improving in terms of their productivity. So I would say I'm very pleased with that.

As it relates to going forward, Rick, we're just going to reaffirm guidance at this point. Q1 was a relatively easy comp for us. The hill gets a little bit steeper as we go forward. We compete in very competitive markets with some great competitors and we want to be very deliberate on that front. But in terms of what I'm pleased with, I would tell you commercial execution and the pipeline are really the two highlights for me and inside of the pipeline, I would say the early results from Turbo-Power and the Stellarex data are really headlines for us and we look very forward to launching Bridge here in a more widespread way in the coming months.

Rick Wise

Maybe turning to lead management, up 5% as the mechanical device conversion going well, obviously the Bridge launch is going to be incremental. Maybe some color on where are you with that mechanical conversion or in interest of share, whatever kind of color you'd give us so we can better gauge where you are and where you might be over the next year or two?

Scott Drake

Yeah, I would say it's still a nice growth driver for us. I'm very happy that we made the decision a few years ago to enter into the mechanical tool space. Frankly I think that's true across multiple markets but incrementally more so in some international countries that are less apt to adopt and can't afford the laser technology. So, it has definitely been a tailwind for us in that business and we have done a pretty good job I think converting business there. We've got high regard for our competitor there and I want to make sure I say that. They've been pioneers in this business, but I would say that the team has had a fair amount of success, both in the US and Europe.

Rick Wise

Two last questions from me. Just with all the – the move to MRI space, the leads, and possible extractions discussed, is this going to be a tailwind for the lead management business? And I'll just ask my last question now and you can tackle them both. Turning back to Stellarex, is there – I appreciate you're not going to give us exact numbers. Clearly you did well in Europe with Stellarex with - on the vascular side. Is there any color you can give us that would help us understand new growth? Any color on number of centers, accounts, share? Anything that could help us appreciate where you are and reflect on where you might go? Thanks a lot, Scott.

Scott Drake

Happy to, Rick, and thank you for your questions. As it relates to the MRI issue, there very much is dialog around that in the marketplace. I think it would be premature for us to say that that's going to be a tailwind in the business, but clearly that's the direction of where the CRM companies are going to benefit. The patient population that would need an MRI sometime in their future and I think the data suggests that that's something like 75% of the patient population out there. So, clearly that's where the market is heading. And for those patients that currently have a device that switch over to MRI compatible devices, full system extraction is required for us to – for the patient to be able to benefit from that.

As it relates to the Stellarex launch, we're going to stay at a relatively high level in terms of the granularity of data that we provide. I would tell you qualitatively a few things that I hope would be helpful to you. Number one, the market access work continues and I think the team is doing a nice job there. Number two, the pipeline of conversions is building. Number three, the feedback from the show at Charing Cross, as I mentioned, was very positive.

And we had a non-trivial number of physicians looking for confirmatory data to our first in human data and they shared with us that in their view this was indeed that and I would anticipate that that will help us further penetrate the market as we go forward. So, we're excited about that. We're looking forward to the below-the-knee launch and the drug-coated AngioSculpt launch. So, we're pleased with where we're at and look forward to keeping you apprised as we go forward.

Rick Wise

Thank you very much.

Operator

Thank you. And our next question comes from the Suraj Kalia of Northland Securities. Your line is now open.

Suraj Kalia

Good afternoon, everyone. Thank you for thank you for taking my questions. Congrats on a nice quarter.

Scott Drake

Thank you, Suraj.

Suraj Kalia

Scott, please forgive me, I've been just hoping between calls, so in case some of this has already been talked about, my apologies for missing it. Specifically on the sales force, Scott, did you all mention the current sales force rep productivity and expected additions, albeit it will happen next year once Stellarex gets approved?

Scott Drake

Suraj, we've stopped providing a lot of granularity there. We've shared qualitatively that we have and will continue to augment our commercial footprint in Europe as we further separate the lead management and vascular sales forces. That is showing to have a positive impact on both sides of that business. So, I think you can anticipate that we will continue to do that in the European market. And in the US we added reasonably significantly to the sales force in the April timeframe roughly one year ago and we see those folks getting more and more productive and I think you see that reflected a bit in our results here, but in terms of providing specifics for competitive reasons we're choosing not to do that.

Suraj Kalia

Fair enough. Scott, in Europe, specifically on DCBs, they have been around for some time now. How do you all derive the lessons learned from Europe? We do know where the various balloons stack up, at least clinically, what the data suggests. Is adoption being driven more by the safety and efficacy or in other words the clinical data? Is it being driven by feet on the ground? Or is it being driven by the ability to bundle? I guess where I'm headed is just trying to see some time next year you guys will be facing – Stellarex is obviously going to be a big product for you all and whatever has been learned from Europe, hopefully that can translate into the US in terms of blocking and tackling with the two big players. Any help there would be great.

Scott Drake

Yeah, happy to, Suraj. In the European market there certainly are lessons learned in terms of how best to position and price technology. The market is kind of bifurcated between three companies that have rigorously studied and are in the process of continuing to study their drug-coated balloon technology and ASPs on those products is pretty significantly higher than other products out there that really don't have clinical data and those lessons we have learned and continue to learn we're onboarding and contemplating as we approach our US launch.

The market is very, very different in Europe, as you know well, with a dozen or more drug-coated balloons and in the US market, we anticipate there's going to be a several year period of time when we launch that there will just be those three technologies on the market. And I can tell you that both European and US customers are looking more and more at the data as it comes out in these randomized control trials. I think that we'll continue to move share in the European market and certainly in the US market as well.

We're very confident that the clinical data is going to really matter. That feedback is loud and clear throughout our experience and very notably so at Charing Cross this week. So we look forward to the cadence of launches and clinical data that's forthcoming and believe we're well-positioned on that front.

Suraj Kalia

And finally, Scott, maybe this is too esoteric a question. I'd be more than happy to take it offline. Based on the feedback that you all have received, where are clinicians headed or rather what do they primarily focus on? I don't want to intervene someone again, whether it's a clinically driven TLR. That's really what I focus on. Or they're like give me this patency and that's what I'm going to focus on or I'm just trying to get a sense of because there are too many moving parts in all these different studies. You can pick and chose whatever you want to suit your purpose and there's not one size fits all. I'm just curious what is the message you all are receiving? If your ILLUMENATE pivotal study later this year, this is what we're going to be looking at on this metric specifically? Any help there would be great. Thank you for taking my questions.

Scott Drake

Happy to, Suraj. Thoughtful question. I think the – what we're hearing when we net out all of the noise in the marketplace is a few different things. Number one, as I mentioned previously, vessel preparation as measured by the survey at Charing Cross, the survey that we did on our own, conversations with customers, it is a therapy and a marketplace that is based on multiple tools to achieve long-term patency for patients. I think that's going to take the form of first vessel preparation in whatever form the clinician finds most appropriate for that patient, combined with a drug-coated balloon.

And I think the data that are out there today very much support that premise and you can anticipate that we and others are going to do very significant work to further prove the right algorithm for the patient population that's out there. We have the SABER registry that we're going to be instigating to augment all the ILLUMENATE data that we have and I think that's going to shed light on what is the appropriate treatment for these patients.

The other thing that you hear time and again from thought leaders and others is the desire to leave no metal behind. So, again, vessel preparation followed by drug-coated balloon with a minimum of stenting is really the prevailing thought that is in customers' minds and I anticipate that will be the thought for some time to come.

Operator

Thank you. Our next question comes from the line of Glenn Novarro of RBC Capital Markets. Your line is now open.

Glenn Novarro

Hi, good afternoon. Scott, I agree with you with respect to your commentary coming out of London. We spoke to a lot of cardiologists in London and it's clear that they thought the data from ILLUMENATE was very strong but when I also spoke to cardiologists, particularly in the United States I also got the feedback that I don't really know Spectranetics. They don't really have a presence in my practice.

But I think I'm also hearing from you that you're willing to go all in and spend the money to expand the sales force and make this a big product. Can you just clarify and let us know that you're willing to do what it takes to make this a big product because there's a big market opportunity and you clearly have the opportunity to be number two in this market. So, I just want to hear the commitment a little bit more from you that you're willing to do what it takes to make this a big market opportunity for Spectranetics. Thank you.

Scott Drake

Absolutely. Glenn, it was nice seeing you at the show there. I think actions speak louder than words and if you look at the investments we've made in the Stellarex platform that's probably more meaningful to you and others than any of my words. It is a transformational opportunity for the company and we are bound and determined to succeed with what we perceive and what customers tell us is a next-generation product. Clearly the performance that we've been able to drive over time suggests that we have an effective commercial team and that augmenting that team is a smart move and as I've mentioned on the call here now a couple of times, we will continue to do that.

I would caution everybody on the following. We do not have balloons, stents, and wires on a commodity basis. We have a highly differentiated portfolio and we sell on clinical data. So, we don't need to have the size of an organization that some others do that are selling commodity products in the field. But that said, we will continue to augment and put ourselves in a position to win in the market. We recognize that we have winning technology and we will continue to put the things in place that we need to do to win in that space.

Glenn Novarro

Okay. And just -- I notice you're going to do a meeting next week at HRS. Is this just an update meeting? Is there anything new that's coming out of HRS that we should be aware of?

Scott Drake

The big thing there, Glenn, is going to be the launch of the Bridge device. We'll have Dr. Jude Clancy with us. Jude is a pioneer along with us in developing this technology and he's been a real driver for mitigating mortality and providing appropriate patient treatment in the form of following HRS guidelines. So, those that will join us I think will very much enjoy having Jude there on the platform with me describing what he sees going on today and the role that he sees Bridge playing out into the future and I'm sure in the audience there will be questions on the vascular side of the business as well. So, we will be both kind of premiering Bridge and answering whatever might be on investors' minds.

Glenn Novarro

Thank you, Scott.

Operator

Thank you. And our next question comes from the line of Chris Pasquale of Guggenheim. Your line is now open.

Chris Pasquale

Thus far you've been pretty deliberate with the European Stellarex launch. Now that you have some more robust clinical data and like you said a lot of clinicians were kind of waiting for that follow up to the first, how do you think about the risk-reward in the near-term of making a bigger push to try to take some share in Europe versus all the other draws you have on your resources?

Scott Drake

It is and has been, Chris, a really big focus of ours. We're not being as specific and that may be a bit frustrating to folks in terms of how many people we are adding but we are putting the pieces in place, to the previous question, to succeed commercially after making such an enormous investment in the technology. So, I would like to deliver a very clear message here that we're doing what we need to do to win and succeed both in Europe and we'll do the same in the US market.

Chris Pasquale

Thanks. And then AngioSculpt showing some signs of stabilization. I'm wondering how that -- to the pieces that have been under pressure, starting to recover themselves or just the change in the mix of that business given that we've had a few quarters now of the US peripheral piece being under pressure while coronary and international continue to do better. Just update us on what that business looks like today in terms of the US, OUS, and coronary-peripheral splits?

Scott Drake

Yeah. I would say, Chris, you're exactly right. I think the right word is stabilization. The growth was modest year over year and a little bit better than that sequentially and the trends continue. Our international business is growing more rapidly than the US business and the coronary growing faster than the peripheral space.

The above-the-knee peripheral business continues to be pressured by drug-coated balloons and I think the pressure that we're seeing there now is in the process of anniversary and maybe there's a little bit of benefit as it relates to just time here but I also think the conversation that we had earlier in response to Brooks' question, in terms of what's new in the market and vessel prep is becoming more and more apparent to US physicians that they're going to have to do vessel prep to get durable outcomes in complex disease.

I think that's settling in. And when you take a look at the fact that our AngioSculpt business is growing in concert both with bioabsorbable scaffolds in the coronary market and in the peripheral market in concert with drug-coated balloons, perhaps that bodes well for what might happen into the future here. But again from a guidance standpoint we're simply reaffirming. But I do see a change in attitude taking place in the market.

Chris Pasquale

Thanks. That's helpful.

Operator

Thank you. And our next question comes from the line of Matt Miksic of UBS. Your line is now open.

Matt Miksic

Thanks for taking our questions. Maybe following up on that topic of AngioSculpt and atherectomy growth more broadly, this idea of vessel prep, if you could talk about which products in your portfolio kind of fit that new and emerging treatment model of some prep ahead of drug-coated balloons and which are maybe less suitable in that category and how your business is adjusting to that change in the US?

Scott Drake

Matt, I would say on the vessel prep side -- and I'll break it down both from a coronary and peripheral standpoint. On the coronary side, you have our coronary atherectomy in the form of our device ELCA device and our scoring balloon franchise for the coronary market is used sometimes for vessel prep, sometimes for definitive treatment. But that essentially is the vessel prep portfolio there in the coronary market and on the peripheral, similarly we have atherectomy and scoring balloon technology as vessel prep.

Again, depending upon the complexity of the disease, sometimes that takes the form of definitive treatment but I think more and more we're going to see that these technologies are used as vessel preparation both in concert with bioabsorbable scaffolds in the coronary market and drug-coated balloons in the peripheral market. And the franchises there that I've mentioned are performing pretty well.

Matt Miksic

I think not to ignore the fact that you've got what is now looking like -- on its way to the US, in the meantime we've struggled with this idea that some of your products may be losing some share to drug-coated balloons and some may be getting pulled along with drug-coated balloons as in a prep category as you talked about. Is that stabilizing here or is that a dynamic that's still in motion across your portfolio? Is that even a fair way to characterize it?

Scott Drake

What we've said on that topic, Matt, historically, over the last several quarters, is that on the atherectomy side of our business it is not obvious to us that there's any net impact to our peripheral atherectomy business. In other words there are certainly cases that are done almost exclusively with drug-coated balloon and there are other cases that atherectomy is being used in concert with and prior to deploying a drug-coated balloon but the net effect of that heretofore, so far as we can tell, is net neutral.

Our atherectomy -- our coronary atherectomy business has been growing quite rapidly now for several quarters. So, it's been kind of a push on the peripheral atherectomy side, a tailwind on the coronary atherectomy side. And I think we've been hopefully clear that our above-the-knee scoring balloon franchise is where we have faced pressure from drug-coated balloons.

So, that's the best characterization of it. I think if you go up maybe 10,000 or 20,000 feet from the specifics of the question, when you see a vascular business of reasonable scale growing 15%, I think that indicates that, number one, the team is performing pretty well, and number two, we're reasonably well positioned for market trends and I believe that's more and more the case over time as clinical data and new products are launched.

Matt Miksic

That's very helpful. Thanks.

Operator

Thank you. I'm showing no further questions at this time. I'd like to hand the call back over to management for any closing remarks.

Scott Drake

Thank you very much, everyone, for joining us today. We appreciate your time and attention and look forward to reconvening in another 90 days. Thank you, all.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Have a great day, everyone.

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