Avinger, Inc. (NASDAQ:AVGR) Q2 2016 Results Earnings Conference Call August 1, 2016 4:30 PM ET
Jeff Soinski - CEO
Dr. John Simpson - Founder and Executive Chairman
Matt Ferguson - CFO
Josh Jennings - Cowen & Company
Jason Mills - Canaccord Genuity
Chris Cooley - Stephens
Steve Lichtman - Oppenheimer
Good day, ladies and gentlemen, and welcome to the Q2 2016 Avinger Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.
I’d like to introduce your host for today’s conference Ms. Caroline Kohn. [Ph] Ma’am, please begin.
Unidentified Company Representative
Thank you. And thank you all for participating in today’s call. Joining us today are Avinger’s CEO, Jeff Soinski, Founder and Executive Chairman, Dr. John Simpson, and Chief Financial Officer, Matt Ferguson.
Earlier today, Avinger released financial results for the second quarter ended June 30, 2016. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. All forward-looking statements including without limitation our future financial expectations are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission Avinger disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements whether because of new information, future events or otherwise.
I’d now like to turn the call over to Jeff.
Thanks, Caroline. Good afternoon and thank you all for joining us. During the second quarter, we delivered the strongest growth of our installed base in a single quarter with 19 new lumivascular accounts added and recorded our highest quarterly revenue in the Company’s history with $4.7 million. However, despite this progress, our second quarter revenue fell short of our expectations. As discussed on our conference call a couple of weeks ago when we reported preliminary revenue results, this lower than anticipated revenue was primarily related to lower than expected utilization of Pantheris during the quarter.
As those of you who follow us, know the second quarter was our first full quarter of Pantheris revenue, following FDA clearance and product launch on March 1, 2016. Although we cannot mitigate [ph] stronger than anticipated in the first month of launch and have now shift Pantheris to over 100 accounts with a majority of those accounts placing reorders in the second quarter, it’s taken us longer than expected to consistently build utilization across our ordering account.
A number of factors influence utilization in a given account, to name a few, previous experience with our Ocelot image-guided catheter for CTO crossing, existing PAD volume in an account, the number of lumivascular physicians within an account, and tenure of sales representatives supporting the account. However, on our last call, we identified three main areas that we believe contributed to our slower than anticipated utilization ramp in the second quarter.
First, we had some early issues with device robustness, primarily related to the imaging fiber connection. As discussed on our last call, our R&D and operations teams were able to rapidly identify the issue, make a minor yet important improvement to the connection that has effectively addressed this issue. I am happy to report that these improved devices have now been used in hundreds of cases and are performing very well. While we will always be looking for opportunities to improve our devices, after seeing the continued positive results on the improved reliability Pantheris, we’re confident in the strength of our product offering moving into the second half of the year.
Second, we’ve refined our selling messaging and training programs to help physicians understand how to best integrate Pantheris into their PAD treatment algorithms. Pantheris is a completely new approach with real-time information and precision of control never before available on an atherectomy device. As physicians gain their initial experience with Pantheris, they are still learning how this new device can best fit into their PAD treatment paradigm. Although we initially guided physicians to begin by using Pantheris on relatively straight forward cases, we have now seen excellent clinical results from our more experienced users and especially our vision investigators in a broader variety of lesions and anatomies. We are sharing this positive case experience with our user base and have refined our selling methods to encourage physicians to use to Pantheris in a wider variety of lesions and especially anywhere they would consider using a directional atherectomy device.
We’ve also enhanced our training programs for physicians and our sales rep to build clinical confidence in a more diverse and complex lesion set with the goal of helping physicians realize the unique benefits of using our lumivascular technology and Pantheris in more challenging lesions.
Third, we experienced a slower than anticipated ramp in sales force productivity, which is due in part to the relatively short tenure of many of our sales reps. We hired the majority of our catheter sales people in the last nine months, as we expanded our commercial organization in preparation for the launch of Pantheris. We are now focused on expanding not just the breadth but the depth of our commercial organization and have slowed the pace of new hiring to prioritize building the capability and productivity of our team on the field.
On this front, we have intensified the training regimen of our new people and are also providing our seasoned reps with additional education. Just last week, we had the entire sales force together for training focused on expanded clinical messaging and selling skills. We’ve also seen a new level of energy and enthusiasm in the organization in response to the leadership of JD Simpson and his new role as Senior VP of Sales and Marketing. With his extensive background with our lumivascular platform and the PAD space more generally, JD has hit the ground running and we’re confident he and his team will drive improved results from the second half of the year.
We are still early in the launch of this revolutionary and highly differentiated technology. Our early clinical success with Pantheris and an expanding variety of lesion types and anatomies has confirmed our belief that our lumivascular platform and Pantheris image-guided atherectomy catheter will change the way physicians treat PAD.
We ended the second quarter with a total of 126 lumivascular accounts and remain confident that we’ll meet or exceed our goal of approximately 150 lumivascular accounts by the end of the year. This is a solid foundation to build on. Going forward, we will be working to maintain this positive momentum in new account acquisitions while increasing our emphasis on penetrating deeper and driving utilization in each account.
We are also working to expand our lumivascular platform with Pantheris product line extensions that will make even more of the approximately $500 million U.S. atherectomy market available to us. These programs remain on track. By the end of the year, we expect to launch a version of Pantheris with an enhanced cutting capability. And we expect to file for FDA clearance in the first half of 2017 on a lower profile device for expanded treatment of below the knee lesions.
We have a lot of work to do and got off to a slower start than anticipated, but we’ve already made important corrections and improvements, and I believe we have a right team in place to realize the potential of this disruptive technology.
I would now like to ask Dr. Simpson to share some of his recent case experiences and feedback from physicians who have used Pantheris as well as outline our clinical programs. Following Dr. Simpson’s remarks, Matt will review our Q2 financial results and review guidance for 2016. I will offer some closing remarks and then, we will open the call for questions. John?
Dr. John Simpson
Thank you, Jeff. While we’re reminded on a daily basis of the need to execute on all the near term priorities those that you have just discussed, I would like to step back and say a word or two about the broader opportunities at Avinger. I spend a lot of time observing lumivascular procedures in cath labs all around the country turns [ph] to me that so many of these cases are for patients coming back for re-intervention after PAD treatments with other technologies.
In the last few weeks, I’ve seen patients with failed stent balloons, directional atherectomy, rotational atherectomy, and drug-coated balloon angioplasty. None of these treatments work as well as our competitors frequently allege. And at each case, using Pantheris and frequently Ocelot ask a lot as well, many of these patients have been successfully treated with our technology. The key results have been excellent and I have more confidence than ever in the durability of these outcomes.
A lot of physicians are taking notice of these results and the versatility of the Pantheris. For many seeing the devices work and actually procedures has always needed to turn them into lumivascular believers. But I’m also really looking forward to prove these results with a series of rigorous clinical trials and eventually making lumivascular the standard of care for the treatment of PAD. We recently announced a study in collaboration with Highmark Health and Allegheny Health Networks under the VITAL program that will exam the use of lumivascular in all verities of PAD lesions.
We believe the study will provide important clinical outcome and health economic information supporting the use of our lumivascular products for the first time treatment for PAD and expect to begin enrollment in this study during the third quarter of 2016.
Another more targeted area we plan to go after is in-restenosis or ISR. This remains an especially challenging lesion subset to treat effectively. We believe Pantheris will be particularly well-suited to this task. Pantheris is the only directional atherectomy device that is icon [ph] predicated for ISRs. And we’ve seen the results when physicians have chosen to use Pantheris in their setting based on the results and the characterization [ph] relation of stents drugs under OCT, we’re very much like to be able to actually promote Pantheris for its use.
We believe we could have the clinical data to file for the FDA clearance for an expanded Pantheris label to include in-stent restenosis by doing a relatively small trial with our 60 patients. We’re currently working to design the details of the study, but expect we will be able to begin enrolling and trading patients the first quarter 2017.
We’re also working with our scientific advisory board to design other studies to address the use of Pantheris and in other types of lesions and then head-to-head studies comparing Pantheris against other products.
We’re focusing our efforts and resources in the areas that we expect to generate the highest clinical and commercial impact. And we look forward to sharing more details of these programs as the protocols are finalized and the studies are initiated.
Before I turn the call over to Matt, I just want to add how gratifying it has been over the past several weeks to see physicians using Pantheris to get great clinical outcomes in a wide verity of more challenging lesions including the tibial vessels. As they come up the learning curve on Pantheris and gain more experience with the device, these early users are helping us understand the true potential of Pantheris. These physicians are our most important partners in developing this technology and improving the standard of care for the millions of people suffering from PAD. And I’m proud to be associated with them. Based on the results they’re achieving in the clinic, I’m more confident than ever in the future prospects of Pantheris and the ability of lumivascular platform to radically change the way vascular disease is treated.
With that, I’ll now turn call over to Matt.
Thank you, John. Total revenue was in line with our previously reported preliminary results of $4.7 million for the second quarter ended June 30, 2016. That was a 54% increase from the second quarter of 2015 and 3% increase from the first quarter of 2016.
Revenues related to our Lightbox imaging consoles were $1.0 million, a 26% decrease compared to the second quarter of 2015 and a 16% decrease versus the first quarter of 2016. We believe the decline in Lightbox revenue in the second quarter relates to the increased flexibility in the Lightbox acquisition programs we’re offering, which resulted in our largest quarterly increase in the installed base of lumivascular accounts with the somewhat lower proposition of accounts acquiring Lightboxes through upfront purchases.
We added 19 lumivascular accounts during the quarter with four accounts purchasing Lightboxes. Revenues from disposable devices were $3.7 million, a 119% increase compared to the second quarter of 2015 and a 10% increase from the first quarter of 2016.
Gross margin for the second quarter of 2016 was 22%, down from 46% in the comparable quarter of 2015 and down from 26% in Q1 2016. This decrease was primarily attributable to the cost associated with expanded manufacturing infrastructure related to the introduction of Pantheris against lower-than-anticipated volumes and lower manufacturing yields as we implemented our improvement to the imaging fiber connection.
Operating expenses for the second quarter of 2016 were $13.3 million, compared to $10.5 million in the second quarter of last year. This growth was primarily attributable to the expansion of the Company’s commercial organization and marketing expenses associated with the launch of Pantheris.
Loss from operations of the second quarter of 2016 was $12.3 million, compared to $9.1 million for the second quarter of 2015. Net loss for the second quarter of 2016 was $13.5 million, compared to $10.2 million in the second quarter of 2015.
Adjusted EBITDA, which is a non-GAAP measure, was a loss of $10.3 million for the second quarter of 2016, compared to a $7.5 million loss for the second quarter of the previous year.
Turning to our balance sheet. Cash and cash equivalents totaled $22.4 million as of June 30, 2016, compared to $43.1 million as of December 31, 2015. Total debt at quarter end was $40.1 million. We expect that our available cash is sufficient to fund operations at least through the end of this year. Nevertheless, we recognize the importance of adding to our cash reserves and we’ve focused on raising additional capital in the near future.
Turning now to our financial guidance for 2016. As we communicated on June 12th, we expect 2016 revenue to be in the range of $19 million to $23 million, representing year-over-year growth ranging from 78% to 115%. We expect gross margin to increase steadily through the second half of the year and exit the year in the 40% to 45% range. This will translate to a gross margin for the full year in the range of 30% to 35%. We continue to expect adjusted EBITDA for 2016 to be a loss of $40 million to $43 million. Assuming a share count for the year of 12.8 million shares, we continue to expect net loss per share for 2016 to be in the range of a loss of $4.35 to a loss of $4.55.
At this point, I would like to turn the call back to Jeff.
Thanks, Matt. For the balance of the year, Avinger will be focused on increasing the utilization of Pantheris, making additional product improvements to Pantheris, training physicians in the benefits of our lumivascular technology and improving the productivity of our sales force. We’re encouraged by the strong growth in new accounts, which speaks to the appeal of our lumivascular approach for the treatment of PAD. We’re implementing a plan of further penetrate and increase utilization in each account. And while we continue to execute on our commercial and product development initiatives, we also remain committed to obtaining additional data proving out the clinical efficacy and outstanding safety profile of our lumivascular platform. And we look forward to updating you on our progress in all these areas.
At this point, we’d like to open the call for your questions.
Thank you. [Operator Instruction] Our first question is from Josh Jennings of Cowen & Company. Your line open, sir.
I was hoping to just start, you guys listed three cause or factors for the initial ramp in this first full quarter of Pantheris launch. I just want to make sure we are clear on those three issues. So, the quality issue of Pantheris we should consider them fully resolved. And then two just in terms of integrating Pantheris in the physician practices and pursuing more complex lesions the sales force is fully marketing that pursuit. And then lastly, just on sales force productivity improvements, I just wanted to make sure that we weren’t seeing any significant attrition over the last couple of months or anything out of the normal in terms of what you’ve been seeing historically?
So, why don’t I go ahead and address those, Josh, and ask Dr. Simpson or Matt to chime in, if they have additional thoughts. But, as we said on the call, we were able to quickly identify the source of the imaging fiber weakness and have significantly strengthened that connection. We have been -- started shipping that product very early in the quarter and now have seen literally hundreds of cases with very, very positive results and increased device robustness, even in more challenging anatomies and legions, and a significant reduction in any complaint rates related to imaging fiber connections. So, we do consider that issue effectively addressed. We will of course always continue to look for areas to improve the device. We’re very focused on expanding our platform with our line extensions for more enhanced cutting and the lower profile device for expanded below the knee usage, but all that is tracking very well.
As it relates to the sales force, one of the reasons that we brought everyone together last week was to enhance and fully communicate our training related to supporting physicians in a wider variety of lesions. Now that we’ve been out there especially with our more experienced users getting a lot of very positive case experience down in the tibial vessels and more challenging legions, and Dr. Simpson can add to that, we’ve been developing case studies and teaching tools that we can use to train the sales force. And by extension, physicians are utilizing the devices. Also as they get more experienced with the device, they naturally build more confidence and are willing and able to take the device into a broader lesion set.
And then finally, as it relates to attrition, we really haven’t seen any kind of meaningful attrition on the sales force. We’ve made a couple of corrections. We continue to look to strengthen that group. But, we have, and I will tell you I can speak with a lot of confidence around this just coming off of a couple of days in Chicago with the group, we have a very strong group of sales professionals. They are committed, they are enthusiastic. JD has I think made a big impact in term of increasing the enthusiasm and pulling everyone together and driving a spirit of accountability, especially towards utilization. And so, I’m really very much looking forward to what they can do and what we can help them do in the second half of the year. John, do you have anything you want to add around the cases and…?
Dr. John Simpson
Yes, I would say Josh that some of the cases -- well, almost all of the cases have been really, really exciting. We had treated these below the knee lesions that perhaps I thought we might not be treating yet, and the results have been really outstanding. We’ve also had as it relates to driving physician adoption, I think the better way to understand treatment, the more likely physicians are to adopt this technology. We had a procedure last week where the physician treated a directional atherectomy restenosis lesion with the Pantheris and saw during that treatment phase that all the media was missing secondary to the previous treatment. So, there’s no doubt there’s sort of cushion [ph] on this theory in humans, if you take the media out of an artery, it’s likely to create a very large scar. This would be added in tissue, [ph] external elastic lamina removed, although the atrium looks really good. The OCTMs [ph] that we derived the other day show that this would have been too aggressively treated. You could argue well, if had you put a drug on that that might have suppressed all of that. I think that was really, really unrealistic, to believe that kind of suppression can come from the drug.
But the point really being is that physicians will adopt the technology that gives the best possible safety and efficacy profile eventually. Right now, we still see physicians, sometimes stress to hurry and to do cases with technologies that are probably not the safest and/or the most efficacious but maybe they’re the fastest. So, we have to work our way through that. We have to educate the physicians, our sales force has really done I think a much reinvigorated job just based on the experience that we had in Chicago. So, I feel really good about that, I feel really good about market adoption with the physician base. We just need to expand that base, right? So, that’s where we’re targeted now.
And just wanted one of the ways to expand or penetrate the market is to through these next generation of Pantheris devices, enhanced cutting capability devices as well as the below the need device. Can you up as just think about what’s required -- you’re planning on filing 510(k)s for both those, but is there any certain number of patients or is it just all primarily just a safety study or do you just have -- already have your predict in the Pantheris that this path can be streamlined?
Dr. John Simpson
So, we did believe that this path can be streamlined; we did not yet have a commitment from the FDA that that is in actually factual. So, the enhanced cutting device, it’s a pretty subtle change to the cutter edge but it’s very, very effective. And we believe and we’ll try to and we hope for that that being a letter to file, because it doesn’t really change significantly the former function of the device. And therefore, we don’t believe that it would require even especial 510(k). That is to be determined, but we’re actually pretty optimistic about that. And then the below the knee device is faster than the 7 French device that we’re using above-the-knee has now proved to be profoundly reliable and effective below the knee -- even without the actually [ph] balloon being inflated because it’s so large that it takes up a lot of the space. So, we have actually an effective below the knee device currently but for it to be more effective we’d like to reduce it one French size, so take it down to 6 French and we saw -- we can see those devices coming out of the R&D group recently. That they do look very favorable.
And one of interesting things is that -- and it confirms our overall thinking and that is that because we can -- we are just reducing the size of the device over an optical imaging fiber, it takes a very little space that we have the chance to make these devices smaller that mostly we might have appreciated. So ultimately, we’ll be able to go to very, very small vessels, but all the below the knee vessel, particularly the tibials and tibial posterior, tibial perennial. All of those vessels are going to be effectively treated. And the enhanced cutting version of the device will [indiscernible] we think it’ll cut -- we’re not really seeking a classification indication with the current technology. But it’s very, very effective and we’ve seen that in all our experimental models. So, I feel very confident that that’s the case.
I think all of these different -- the improvements, the strength in optical fiber, the enhanced cutting efficiency, all of this -- and smaller size, all of this plays into an expanded role for Pantheris and associated devices in the treatment of PAD, particularly below-the-knee and that’s where the safety profile is so important. So, I think that to me even increases our confidence even more about the opportunity for us going forward.
One last question, Jeff or Matt, I know it’s been short time since the preliminary announcement, but you’ve had some positive things happen over the past couple of weeks. And just wanted to get an update on in terms of your confidence in terms of new guidance range that you reiterated today? Thanks a lot.
Josh, it has been only a couple of weeks, but I’ll tell you, we are really pleased with the amount of progress that we’ve made, not only in terms of kind of packaging and delivering these case studies, we continue to see more and more positive cases in a wider verity of lesions. We are -- and again, as I said, the performance of this improved device’s just been excellent. So, as we continue to go out -- we’ve also enhanced our training programs. We’re putting our training and great proximity to cases with new physicians and providing additional training for our existing physicians.
So, we’re moving on this in real time, we’re really pleased with the results. And frankly, we just have more visibility five months into launch now. So, we have a lot of confidence in the second half of the year. But as an organization, we are focused on execution. And we know we have to execute and build not only the confidence of our organization internally, which I would say is on a very, very positive and solid trajectory, but also of our investor base, but a lot of confidence here in Avinger.
Thank you. Our next question is from Jason Mills of Canaccord Genuity. Your line is open.
Great, thanks. Can you guys hear me okay?
We hear you fine, Jason.
Great. Thanks, Jeff. So, I’ll start with I guess somewhat of a multi-part question. With the exception of the Allegheny study, which fortunately isn’t costing you guys that much, the studies that JD has talked about are the ones that I think a lot of physicians would like to see; obviously you’re hearing that as well. But they do cost a fair bit of money in a time where you’re trying to be very prudent with cash that you have on hand, unless and until you can raise sufficient funds to just go full-bore ahead. So, could you give us a sense for how you’re balancing, the current capital position and your desire to raise the clinical evidence to the point for lumivascular technology? I think that will be very helpful commercially.
Yes. So, as you said, the vital or the study under the vital program is being funded by Highmark. And so that doesn’t provide cash a drain. In fact the utilization of catheters under that study adds to our revenue stream. When we talked about, Dr. Simpson talked about the interest in an ISR indication, and that came directly from -- we pulled our scientific advisory board together in the second quarter, we call them our science lab, which is made up of thought leaders and treating physicians in the endovascular space and PAD. And there was a lot of excitement and enthusiasm about their own personal experience, and other cases that they had seen where physicians had used Pantheris in in-stent restenosis. And based on that excitement, we really do believe that that has real commercial and clinical bang for the buck.
The way -- where we are and kind of a timing standpoint on that process is we’re in our study design and protocol development; we will be filing for IDE approval, our plan is in the fourth quarter, but we won’t actually start enrolling patients in that study until the beginning of 2017. So the real expense behind that will be -- in early 2017, we’ll begin -- I guess will begin feeling that expense. We don’t think and I don’t want to specific numbers out right now but according to our internal plans and input from our advisors that that will require a large number of patients. And we don’t think that will be a large cash drain relative to the value of the study.
I was wondering if you could may be elaborate on sort of larger and more head to head studies that you guys have talked about in the past, transactions and actually seems [ph] you talked about the desire to finally show may be a head to head with other atherectomy devices or even with drug-eluting balloons whether it be Pantheris plus DEB versus DEB alone, the latter -- the former actually does just as well. Could you just talk about those kinds of studies? It sounds like perhaps those are little further out once you’re in more solid footing from a capital perspective, is that right? And maybe talk about your sort of timeline for those over the next couple of years, maybe.
Dr. John Simpson
So, we’re definitely convinced that this is an important study. You reflected the way you worried, your question a little bit of bias, because you said a lot about Pantheris versus -- DEB versus DEB alone implying that you believe that DEB alone could be an effective form of therapy. I am just [indiscernible] little bit. So, DEB by itself has not proven to be an effective form of therapy in Europe or even in any of the early studies here in the U.S. So, it’s got to be DEB following something to prep the artery. Humor in my answer, you don’t see it?
Yes, I do. I actually think the study you would prefer is DEB plus Pantheris versus Pantheris alone and…
Yes, that’s correct.
Dr. John Simpson
I just wanted to make sure that you knew what correct study was. So, I think that is the study that I would like to do early on. And I what would like to do is have a study -- and this is still to be determined, this is what we are discussing. But, I would like to use Pantheris in series of patients and treat their arteries, so doses get down to may be 30% and then randomize the patients at that point drug-eluting balloon or to more Pantheris to take it down to zero, and to see which -- I think that will be the fascinating thing. Because I think everybody tends to accept now that DEB needs something done before. You [indiscernible] but I think everybody is moving toward atherectomy followed by DEB. I just think atherectomy alone and correctly you really as [indiscernible], but it has to be proven. And that would be the study that will be the most appealing from my own perspective. And I think there is a lot of discussion about that internally. We have presented that to the science lab and some of them well, yes, but maybe just Pantheris versus the SilverHawk maybe. But I think people are moving more toward DEB and atherectomy. And there is no better way to do it than with Pantheris because we can avoid cut into deep into arterial wall, we can avoid the aneurismal risk; there is a risk of aneurism following excessive debulking and then drug.
So, I think we’re better positioned than anyone else to address study. We’re committed to doing them, but we’re not offering up any timeline currently. I don’t think that would be appropriate; it’s little bit early for that.
That’s fair. And it’s always been intuitive to me exactly what you said, but of course those trials cost a fair bit of money and there are other things that you are working on and other things that require those funds now. So, we’ll look forward to the time when we see an IDE established and the trial enrolling. Do you think it is -- not to put a timeline on it specifically, but is it in the next 18 to 24 months or do you think it’s further out than that?
Dr. John Simpson
No, I think for sure, it’s earlier than that; it’s for sure sooner than the next 18 months, for sure.
Yes, Jason, although we haven’t published or committed the specific timelines, our internal thinking and planning now is that that would be a 2017 initiative, at least on a pilot basis.
That’s helpful. Yes, right. Okay. That makes sense and it gives us a little bit of a sense for what you are working towards next year. And Matt, in terms of cash burn, it looks like you maintained your adjusted EBITDA guidance. But, you said you were comfortable getting through the balance of the year with current cash on hand, but what will you be left with at the end of the year? Can you just give us some of the mechanics of cash burn assuming you hit let’s say the midpoint of your revenue range and your gross margin range?
Yes, sure. So, we would -- the current cash would get us to the end of the year, it would -- we expect the cash burn to be kind of in the $10 million to $11 million range per quarter. So, it wouldn’t leave much at the end of the year. So that leads directly to the additional comment that we made about recognizing the importance of putting more cash to the balance sheet. And that’s something that we are committed to doing in the near future.
Got it. And then, lastly from me, and I will let some others jump in. Jeff, I wonder if you could comment on Pantheris launched in early March and you had sort of between then and now, so early August, you had the issue with the fiber, the OCT fiber. I am wondering if there are any trends lately, sort of similar to Josh’s question, trends lately in terms of whether it’d units per rep or units per high volume account or per experienced account, if you sort of denote those accounts as Ocelot users that you could share with us to help investors feel a bit more comfortable that things -- or you have a hiccup, things are moving in the right direction. Is there anything that you would point out?
I’m not sure if there is specific number….
On a month-to-month basis.
Specific numbers that we would put out on this call. However, we are seeing this increased utilization in accounts where they build -- get to a point where they build the confidence to start using the device in a more diverse lesion set. So, by and large, our more experienced users, those who’ve been involved with Pantheris and with OCT imaging longer and have more experience reps. And so, where we see reps being on -- well, physicians being on-board with us longer in lumivascular and reps being on-board with us longer, we are seeing sequential increase in utilization. But it’s really kind of a trend, which will show up obviously -- and we anticipate will show up in our revenue numbers. But it is a building situation. We’re hopeful that more and more of these accounts, because so many did get on-board with Pantheris very early in the process will start to drive that increased utilization. We also are focusing on bringing new users in existing accounts. And where we’ve been successful and doing that, you can imagine the direct impact that has on increased utilization and efficiency of that Lightbox.
Got it, okay. So sorry, just last follow-up, to just follow up on that. So, the idea there is just that chip shot SFA, short focal lesions; Pantheris maybe the best technology but hope maybe a few technologies that can get that job done, so they may fall back on what they’re using and they have to be incentivized by competitor to use their device there. But when it comes to a more difficult lesion where I guess the stakes are higher for lack a of a better word to put it, there are less comfortable using another technology and therefore give you a shot, so you would effectively be working away backwards, but working your towards from difficult lesions to the chip shot to over time as you show your chops on the different side. Is that the right way to look at it?
It’s a great comment. And a lot of accounts we’re in, because the majority of our installed bases and hospitals aren’t seeing a lot of kind of chip shot lesion. And so as we -- and the benefits of real time visualization and the extremely positive safety profile of Pantheris are realized to a large degree in these more challenging lesions. You’ll remember the day that we generated envision in our CTO subset, which was outstanding. And so, as physicians have more cases that are viable for them to use Pantheris, as they have the success, their staff and they themselves also become more facile with the device, the setup becomes easier. They just become more used to using it, and that naturally extends the usage as well, which is kind of reiterating your point, Jason.
Thank you. Our next question is from Chris Cooley, Stephens. Your line is open, sir.
Maybe just a quick one from me following on kind of the study, I think you’re on track or you were on track to complete your radiation production study during the fourth quarter. So, when you think about an enhanced safety profile, making more so from both the operator and the staff’s perspective, could you may be just give us an update if that’s still tracking, and when you think you will have those study results? Then, I have a couple of follow-ups.
So, as we met with our science lab, Chris, the ISR and the pilot study that Dr. Simpson spoke about with DAB -- DEB and other kind of took more of a priority than a large scale radiation study. And so, what we’ll be doing and presenting as the data becomes available is working within the existing data sets and case histories within our current users and especially in certain sites and developing that data for presentation. Because we’re seeing such a strong radiation reduction just through tracking radiation utilization in our existing sites outside of a defined and expensive study. So, there has been a bit of a prioritization or shift in prioritization as to where we are going to be spending our clinical dollars and kind of really in response to Josh’s question earlier, as we have -- our focusing and making sure that we’re using these resources most efficiently and most directly related to commercial impact.
Makes perfect sense to get more bang for your buck that I follow you, just wanted to make sure we’re on the same page.
I appreciate the question.
If I could maybe push a little bit when you talk about some of the new initiatives that JD has brought on board now to the sales force and the sales force being obviously reenergized and committed. So, if we just think back since the time of the Company’s IPO, JD was there in the early days, John was there for about three months, you yourself, Jeff, ran sales on interim basis for about five months and then Joe was there for six months. What’s maybe different now that the sales force is more excited about and gives them -- or gives you enhanced confidence that on a go forward basis because the market message is right now, and you can see the sequential and year-over-year improvement in sales growth that clearly that the technology has the potential for --significantly has potential to exceed?
I would say the biggest difference here is that JD really has been here since the founding of the Company and he lives and breathes and understands lumivascular at such a deep level. And so, that knowledge and the experience of the [indiscernible] of lumivascular and the benefits of lumivascular, what it really takes to drive utilization in these accounts through his experience with Ocelot and really being with this technology from the beginning gives him a tremendous amount of credibility and confidence and also I think insight to drive improvements in our programs. JD is also a very strong leader. And the sales force has rallied around him in an incredibly positive way. This is I think a sea change in terms of the attitude and the commitment and the enthusiasm of the sales force since JD came on-board.
So, there is some kind of more qualitative things but then there is just the fact that he has the experience with lumivascular, which frankly we think that’s one of the reasons ramp has taken a little slower than we had anticipated. This is a totally new, unique and disruptive technology. And so, having a leader in place that can understand that and kind of express that and rally the troops around it I think is very important and I think that’s the difference.
Understood. And then just maybe two quick modeling ones from me, and then, I’ll going to back in queue. Kind of along those lines, clearly you’ve faced some aggressive, I guess you said verbiage counter-detailing from competitors as maybe a little bit stronger than one would anticipate at this juncture in the launch, I think that speaks to the long-term potential of Pantheris and the lumivascular platform more broadly. But can you kind of help us better understand what you’re assuming to a certain extent or when you think about to revised top-line guidance range where it be continuation of these type of counter-detailing events more, moderate utilization growth in the installed based? Just kind of help, maybe give us metrics around what drives the revised revenue range.
And then, just lastly, just to push back a little bit on Matt, I think your verbiage was cash, at least enough cash through the calendar year-end. But if we do a burn of 10 to 11 a quarter and you have approximately 22 at quarter’s end. Just curious if you have some additional levers there that you can pull, to extend the cash balances or alternatively if we should interpret the guide as maybe being more conservative either in the revenue growth ramp or in terms of the margin expansion? Thanks.
Sure, Chris. Let me try to take those one at a time. So, in terms of the revenue guidance, we’ve looked at it from a bunch of different angles. And we’ve certainly spent a lot of time analyzing it. And we’ve been doing that since even before the launch, but we do have some actual sales track record under our belt now to further inform the forecast that we make at this point. So, we looked at it on an account-by-account basis, looking at the trends that existed at each account, and we then added the specific situation of that account knowing the individual physicians there and the sales professional that’s handling the account or groups of sales people that are working in that account. So, we really looked at it at a very granular level.
In terms of the assumptions that we’re making, we are continuing to expect most of the growth that we’re going to see in the back half of this year and largely through next year, driven by growth in Pantheris revenue. And we would expect to continue to see an expansion of our account base. We’re comfortable given what we’ve been able to do in the first half of the year that we’ll get to the 150 number or perhaps a bit better than that in terms of the number lumivascular accounts. And we’ve modeled in modest utilization increases for our lumivascular catheters and particularly for Pantheris.
So, I think given the initiatives that we’ve put in place Jeff just talked through, we feel very comfortable and confident with the revenue guidance. And we’re just looking forward just showing that over the next couple of quarters here.
I think your other main question really had to do with cash burn. And, I guess, I would say that we’ve modeled out the expenses and gross margin along with the revenue ramp that we’re expecting in the second half of the year, and that sort of gets us to the cash utilization that we talked about of $10 million to $11 million per quarter. I do think that some opportunity for improving on that, whether it’s from improved top-line or other areas where we may be able to manage our expenses a little bit more tightly, but we’ve got a lot of important work to do. So, we’re not necessarily looking to defer cost any further than we already have in the plan that we’ve discussed with our Board and that there is the foundation for the guidance that we’ve given. There perhaps maybe some other alternatives in terms of looking to bring cash into the Company, but the primary approach is to go out and raise money during the second half of the year here. So, hopefully that addresses what you’re talking about. Let me know if there is a particular follow-up.
No. That’s great. Thank you so much.
Thank you. Our next question is from Steve Lichtman of Oppenheimer. Your line is open.
Thank you. Hi, guys. I think you mentioned last time in the quarter there were 15 Lightboxes placed through alternative pathways. Can you update us on which programs you guys are focused on using today, as options for customers for Lightbox acquisition?
So, our overall philosophy is to improve our targeting of accounts to drive utilization, Steve, and to not let the -- introduce, as you know, we started this actually when I was running sales back in the middle of last year, to put a little more flexibility into our capital acquisition model. So, by and large, most of the boxes added and accounts added in the second quarter were related to our placement-to-purchase program, which is really an evaluation with terms of an acquisition of the Lightbox renegotiated upfront.
We also introduced at the beginning of this year a rental model and we saw some activity in the rental as well, and of course have our existing options of purchase, outright purchase or purchase through a lease program. So, we’re really trying to put our sales representatives in a position where they could listen to their customers, understand their needs and not let the capital process delay utilization of the device. Because we’re so confident in the results that a physician will receive after they’ve been trained and being using not only Pantheris, but also Ocelot for CTO crossing that that will lead acquisition in that account. So, it’s really a mixed bag. There is structure around the different options, but the idea is to enable our sales reps to be able to listen to their customers and work with us to design a program for the specific needs with our customer to get this technology into the physicians’ hands as soon as possible.
And those place-to-purchase, those have minimum catheter commitments in there of course, I would assume. And I would also assume those commitments kind of build over time; they’re not as stringent early on, after a customer gets a box versus later on. Is that fair?
Dr. John Simpson
Well, there is a wide verity, Steve. The main goal of the placement-to-purchase program is to get into the account and making sure that the account is having a good experience with it and leverage that to convert it into a purchase or a rental agreement or some kind of permanent arrangement. And the kind of arrangement you’re talking about is something that we could do but is not -- we haven’t gone down that path in very many cases so far. So, but there is a mix and it depends on the given situation and a sense of value of the account, what we’re willing to do. But, the number one goal with the program is just to get them up and running and get them experiencing the positive benefits of using lumivascular, both Pantheris and Ocelot.
Okay, got it. And then, just lastly from me, any data publications, perhaps there will be single some center or presentations over the 6 to 12 months that would highlight some of the early positive experience that you’re seeing, post launch?
As you know we have VIVA coming up [indiscernible] is also coming up and we expect to be on the podium at both conferences.
Thank you. At this time, there are no other questions in queue. I’d like to turn it to Mr. Jeff Soinski for any closing remarks.
Well, I would just to like to close by thanking you all for joining our call this afternoon. We appreciate your interest in our Company and we’re excited to update you on our progress when we report our third quarter results. Thank you very much and have a pleasant evening.
Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect.
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