Abiomed, Inc.
Q2 2015 Earnings Call Transcript

Published: 30 Oct 2014

[Operator:]

Good morning ladies and gentlemen, and welcome to the ABIOMED Incorporated Second Quarter 2015 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 call is being recorded. I would now like to turn the conference over to your host, Ms. Ingrid Goldberg, Director of Investor Relations. Ms. Goldberg, you may begin.

[Ingrid Goldberg:]

Thank you. Good morning and welcome to ABIOMED’s second quarter of fiscal 2015 earnings conference call. This is Ingrid Goldberg, Director of Investor Relations for ABIOMED and I’m here with Mike Minogue, ABIOMED’s Chairman, President and Chief Executive Officer; and Bob Bowen, Vice President and Chief Financial Officer. The format for today’s call will be as follows. First, Mike will discuss strategic highlights for the second quarter and then turn to our key operational and strategic objectives. Next, Bob will provide details on the financial results outlined in today’s press release. We will then open the call for your questions. Before turning the call over to Mike, I would like to remind everyone in the call that this presentation includes forward-looking statements about development of ABIOMED’s existing and new products, the company’s progress towards commercial growth and future financial performance as well as future opportunities and expected regulatory approvals. These forward-looking statements contained in this presentation are subject to the risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears under the heading forward-looking statements and the press release we issued this morning and in Part 1, Item 1A. Risk Factors in our Annual Report on Form 10-K and the year-ended March 31, 2014 as filed with the SEC and is available at www.sec.gov and in our website at www.abiomed.com with our subsequent filings with the SEC. The forward-looking statements in this presentation speaks only to the original date of this presentation and we undertake no obligation to update or revise any of these statements. I thank you for joining us and I’m now pleased to introduce ABIOMED’s Chairman, President and Chief Executive Officer, Mike Minogue.

[Michael R. Minogue:]

Thank you, Ingrid. Good morning everyone. ABIOMED achieved our best quarter in revenue with $51.9 million and growth of 17%. U.S. patient utilization also set new highs with a robust 19% growth rate driven by record number of patients in all three categories of support prophylactic, emergent and others. From a product perspective Impella CP utilization was a key driver and increased 79% in patient supported. The CP is now in 56% of our customer sites. We are proud of our execution this quarter and that grown top line revenue double-digit year-over-year for 20 straight quarters. This second quarter demonstrated the renewed interest by physicians to identify a new population of patients for the cath lab that can benefit from extensive revascularization and may require hemodynamic support for high risk procedures. Most of this patient population has likely been turned down are not considered for surgery by a heart team because of age or prior surgical risk factors. With the support of hemodynamic assess devices such as Impella is historically undertreated patient population may now be provided in alternative treatment with real benefit. This new physician driven initiative around complex high risk interventional procedures called chip was highlighted at TTT and is a call to ARMS by the interventional community to create education and screening around the ability to identify and appropriately treat this high risk patients. For today’s call we have some very positive news regarding execution on a regulatory processes. In regard to our Impella 2.5 PMA submission, we are pleased to report today that ABIOMED and the FDA have agreed on the indication for used or high risk TCI for the Impella’s 2.5 premarket approval, and ABIOMED no longer anticipate the requirement for an FDA panel before our projected PMA approval in February to March 2015. We believe this development is the result of our submission of the most comprehensive data set in the field of circulatory support and our positive interaction with the FDA during the 515 process. As a reminder our data set incorporates two FDA approved studies Protect I for Protect II, totaling 472 patients which includes randomized data 637 new high risk PCI patients from the U.S. Impella registry and clinical data from 215 Publications for a total of 1,638 Impella patients. This submission also contains a Medical Device Reporting Analysis MDR from approximately 14,000 patients and comes after six years of real world U.S Impella experience with over 24,000 patients treated post 510(k) clearance. In summary, Impella is the most studied FDA percutaneous circulatory support device and its reference in five Clinical guidelines. Relative to next steps ABIOMED recently completed an FDA audit at our Denver facility, which allowed for a combined review of our operations and quality systems for both the Impella 2.5 and Impella RP submissions. We want to thank the FDA for their engagement in this process and recognize that their initial decisions to grant the 510(k) clearance in 2008 provided Americans with access to this breakthrough technology for the last six years. As a reference Impellla has been approved in Europe, since 2004 for a variety of indications. To remind our investors, our stated plans has always been to submit for PMA approval for a high risk PCI for the Impella 2.5 and complete all the mandated FDA audits for clinical data, operations and manufacturing. Following approval of the Impellla 2.5. The Impella 5.0 and the Impella CP will be submitted as PMA supplement including add-ons for other indications. And still the 515 process is completed the Impella 5.0 and CP will remain on the market under the existing 510(k) clearances. In parallel to our 515 process this quarter, we completed our Impella RP HDE submission and announced recover right results at TTT in 2014. The clinical trial results demonstrated in overall survival rate of 73% in this challenging patient population. We appreciate the FDA combining the recent operational audit for the Impella 2.5 with the Impella RP and reiterate our projected HDE approval, by February to March 2015 an increase in one month earlier range. Moving oversees to Japan, we hosted a Japanese Advisory Board at TCT, and physician society support remains very strong. We maintain our expected reimbursement approvals to occur, 6 to 9 months from the PMDA approval which leads to a commercial launch forecast as stated between June and December of 2015. In the market we feel and tell a momentum as Healthcare reform drives physicians and hospitals to relentlessly explore and study better ways to achieve higher quality at lower cost. One such study that compares quality and cost was recently published in the journal of the American College of Cardiology. The publication altered by Yale physicians titled National Trends in the Utilizations of Short-Term Mechanical Circulatory Support concluded that the use of short-term mechanical circulatory support in the U.S. has decreased in hospital patient mortality, while also decreasing hospital cost. Conversely there was a 25% increase in the cost of hospital stay associated with the intra-aortic balloon pump use and the study also revealed that the use of balloon pumps in patients, before short-term mechanical circulatory support was a predictor of mortality. This analysis is consistent with our own U.S. Impella registry results, our recent (indiscernible) publication. The result of the Shock II balloon pump study and the recent decision to downgrade balloon pump use, in cardiogenic shock patients to class III in the European society of cardiology guidelines. The overall study in which ABIOMED had no involvement, analyze nearly 12,000 adult patients from 2004 to 2011, using all payer in-patient hospital stays, from the healthcare research and quality database. In summary, our investment in clinical research new products and our pattern portfolio along with our disciplined approach in execution continue to provide ABIOMED with the opportunity to become the new standard of care and recognized leader in percutaneous circulatory support. We want to convey our excitement for the future to our stakeholders, and thank all our employees for their hard work and dedication to our mission. We look forward to continued execution this year and meaningfully impacting the lives of our patients. I will now turn the call over to Bob Bowen, our CFO.

[Robert L. Bowen:]

Thank you, Mike. And good morning everyone. As noted in this morning’s earnings release, fiscal second quarter revenue increased 17% to a record $51.9 million. To summarize the most important parts of Q2 revenue, Impella patient news for the U.S. was up 19%, Impella reorder revenue in the U.S. was up 20%, Impella revenue outside the U.S. was up 53%, and service revenue was up 27%. Worldwide Impella product revenue of $46.9 million grew 17% in line with total revenue growth of 17%. In the U.S., Impella revenue of $42 million grew 14%. The largest piece of U.S. Impella revenue was from Impella pump reorders, totaling $36.7 million, up 20% driven by 19% increase in patient use. Outside the U.S., Impella revenue grew 53% to $4.9 million. Hospital owned average Impella unit inventory levels of Impella 2.5 and Impella CP combined was 2.6 units, equal to the prior sequential quarter and up two times from last year’s average of 2.4 units. With regard to the breakdown of patient utilization, 46% of patient use was in a prophylactic setting and this segment grew 10%. At 46% in Q2, the prophylactic setting returned to the highest segment of patient utilization. 42% was in American setting and this segment grew 25% and has consistently been growing at about this rate. And 12% was all other the largest piece of which has reached the ablation, this segment grew 32%. As of the end of the quarter 56% of U.S. customers have the Impella CP and 38% of U.S. customers have Impella 5.0. Gross margin for the quarter expanded to 81.5%, compared to 79.6% a year-ago, largely due to few replacements of AIC consoles, which totaled a 140 this year, compared to a 172 in the prior year. As of the end of the quarter, 88% of U.S. Impella sites have the AIC console, so we are near the end game of this upgrade cycle. R&D and SG&A expense together totaled $38.1 million compared to $33.9 million in the prior year. R&D expense totaled $8.7 million and the increase of $1.1 million from the prior year was attributable to the ECP acquisition which closed in July. SG&A expense totaled $29.5 million compared to $26.2 million in the prior year. The increase was attributable to continuing investment in our field personnel, training and customer support and higher stock compensation expense partially offset by lower legal fees. During the quarter, the company incurred $4 million in stock compensation expense, $0.6 million of legal fees related to the DOJ investigation and $0.4 million in transaction cost related to the acquisition of ECP in July. The amounts for the comparable prior year period were $2.8 million of stock compensation expense and $1.7 million of legal fees related to the DOJ investigation and shareholder litigation matters. GAAP net income for the quarter increased to $3.9 million or $0.09 per diluted share from $1.1 million or $0.03 per diluted share a year ago. Our balance sheet remains in excellence shape and we ended the quarter with cash and short and long-term marketable securities of $111.9 million after using $15.7 million to acquire ECP. Turning to guidance, as noted in our press release, we have increased the lower end of full year revenue guidance by $4 million and the new range is now $209 million to $212 million, compared to the previous range of $205 million to $212 million. We expect the third quarter revenue to be somewhat higher than the second quarter and fourth quarter revenue to be somewhat higher than the third quarter. We are reiterating our GAAP operating margin guidance to be in the range of 1% to 4% of revenue, as we continue to invest in the expansion of our field sales clinical and training authorizations, prepared for a post PMA marketing and clinical environment and accommodate remaining legal expense related to the DoJ investigation. We are very pleased with our strong results this quarter and it was a significant one for us on many fronts. In particular the 515 announcements today represents a major milestone for ABIOMED, which positions us well and gives us increasing confidence in our ability to deliver continued growth and profitability. Operator, would you please now open up the line for questions?

[Operator:]

Thank you. (Operator Instruction) And our first question is from Matt O’Brien with William Blair. Your line is open.

[Matt O’Brien:]

Good morning, thanks for taking the questions. Mike or Bob I was hoping we could start off with the Prophelactic re-acceleration that we saw in the quarter also but that model is a pretty difficult comparison. I know there is a lot of buzz at TCT about ship but given the timing of that conference, I can’t imagine that – that hadn’t much impact, despite something more for Q3, Q4, can you just talk a little bit about some of the drivers of that re-acceleration in Prophelactic?

[Michael R. Minogue:]

Sure, Matt, this is Mike. So the growth of the Prophelactic application didn’t back as you mentioned into the double-digit, it’s range – it was at 10% growth and it was 46% of our patients, so returned to the most patient category, emergency growth as Bob said was 42% of our patients and grew 25% and the other category was 12% of our patients and grew 32%. We believe that the – this is because people are now more aware of the guidelines. They are more aware of the protective publications, to-date we have six publications now and most recent one was the publication on the octogenarian population, which is the – that concluded that irrespective of age, the use of Impella 2.5 with an independent projector of favorable outcomes. If you look at the model that dealt with the heart [team] (ph) approach with percutaneous valves, they are out-looking and find the patients as a surgical turndowns. In the case of Protect II, the average age was actually 67, but we have the ability to treat patients that are older than that. I would also highlight that the formal initiative has started by the interventional cardio geology community that’s called [chip] (ph) and that is really designed to recruit more patients to the cath lab, patients have historically have been turned down from surgery because of complexity or age and now they have the benefit of a new therapy such as PCI. And to remind folks that the PROTECT II study shows that the ejection fraction did go up greater than 20% to 30% and more than half of the Class III and Class IV patients improved by at least one class at 90 days as well. So this is a new and growing population for the cath lab. And our goal is really to become the standard-of-care for helping to increase and provide a hemodynamic support device for this high-risk population.

[Matt O’Brien:]

Okay. And just a follow-up and add a little bit of my ship, I mean it would seem into me that that patient population is pretty identified at this point. So given that it’s coming from the clinicians that are recruiting these patients, it would seem that that could be a fairly near term catalyst in terms of getting more people to the cath lab and potentially having Impella planted as well. Is that a fair assessment?

[Michael R. Minogue:]

That is and it’s partly because of things we’ve talked about in the past called the appropriate use criteria that the bread and butter simple procedures are no longer in the most appropriate category. When you get into our patient population Class III, Class IV triple vessel disease, they are seen in the area that’s most appropriate. With the exception of those that are turned down and don’t get the option. So that is what I believe has kind of rejuvenated the high risk population.

[Matt O’Brien:]

Okay. And then just one last one from me for Bob. The gross margin strength in the quarter was pretty meaningful, is it just a function of the generator conversion process kind of winding down and this is something along the lines of what we should expect going forward?

[Robert L. Bowen:]

Yes, Matt. It is partly the consoles, it’s also the yield levels and the higher volumes in the manufacturing area all contribute, pricing was essentially stable. We like to think about gross margin rates at the 80% level and we’re pretty happy with that. And anything above that is kind of just extra icing on the cake for us.

[Matt O’Brien:]

Understood. Thank you.

[Robert L. Bowen:]

Thanks, Matt.

[Operator:]

Thank you. And our next question is from Danielle Antalffy with Leerink Partners. Your line is open.

[Puneet Souda:]

Yes, hi guys. This is Puneet in for Daniel. I just wanted to know in terms of the high risk PCI lay for, and kind of what it means for the emerging shocked patients. And it is safe to assume that these patients fall under a high-risk umbrella?

[Michael R. Minogue:]

So the question on the label, the label applies to high-risk PCI and Impella 2.5 and to reminder, that is our plan, and then the plan has also been to add the other products of Impella 5.0 and its Impella CP as a supplement that, including adding on other indications, which could be in the shock category. So relate to the high-risk PCI, what that means is it has been declared safe and effective, and we’ll now be able to market for indication – the indications in ways that were not previously able to do. And we do believe this will be a catalyst for growth for the high-risk patient population.

[Puneet Souda:]

Okay. Thanks for that. And then just about the impact of TCT, do you think it actually, it does look better, actually to look better than it and then what it is in the event of timing of TCT, serve from the volume perspective?

[Michael R. Minogue:]

Puneet, could you explain the question to understand?

[Puneet Souda:]

Yes, yes, sure. So in terms of, the TCT in September, you talked about versus October last year in terms of given the timing of the TCT in terms of volumes that are, that you are seeing and are you seeing that there were several doctors, TCT that we’re talking about and list out volumes that are not – they are not implanting. and so are you seeing any trends along those volumes?

[Michael R. Minogue:]

I think the trends that we see are very favorable across the board.

[Puneet Souda:]

Okay. Thanks for that. That’s it from me. Thank you.

[Michael R. Minogue:]

Thanks, Puneet.

[Operator:]

Thank you. And our next question is from Raj Denhoy with Jefferies. Your line is open.

[Raj S. Denhoy:]

Hi, Good morning.

[Michael R. Minogue:]

Good morning, Raj.

[Raj S. Denhoy:]

What if I could just ask kind of about FDA, the panel decision obviously is the big one. No longer you’ve been sort of pushing us to be able to discuss with the FDA we’re positive, and I guess this clearly shows that. but if anything sets that we change in what the FDA, it’s our view, that was the one thing particular they’ve got them over whether they didn’t think the panel was necessary anymore?

[Michael R. Minogue:]

So the focus of the 515 through a PMA transition requires the reasonable assurance of staffing effectiveness and this is the most comprehensive data set ever submitted to the FDA for Percutaneous Circulatory Support, that’s undeniable. And so I just think that they have announced that expectations that we’ll not require a panel, and we’ve came to an agreement with the FDA on the indication for use for high-risk PCI. So there really doesn’t appear to be a need for a panel.

[Raj S. Denhoy:]

What do you think about the other indications and the other products as well? Do you feel that you have the same level of data to support the supplements there? Do you think there is going to be – I guess what I am trying to get is the timing and when we can expect to see those additional supplements proved?

[Michael R. Minogue:]

You’re right, that’s a good question, because the hottest bars across relative to the risk benefit for the FDA’s ratio is really around the prophylactic use and if that’s because VADs are used on usually emergency patients. So we have passed the bar for prophylactic use that it is safe and effective. And then now we’re going to move into a patient that has a different risk benefit ratio because they’re having emergency requirement for hemodynamic support. And just to remind everyone that one is the practice of medicine and that’s why you’re seeing the current growth that we have. And two is that emergency used with Impella already carries a Class 1 recommendation, which means it has the strongest recommendation and it’s also been and is reimbursed by CMS for all indication. And to answer your question, I do believe we have that strong level of data for these other indications for these other products. If 5.0 had an FDA study that was the recover one. We also have an extensive registry that we’ve been collecting that we’re continuing to use and there were multiple publications that we’ve talked about in the past for example the Robert Wood Johnson that shows a greater than 70% survival in these types of patients. So we are working with the FDA, so the moment that we – that the formal approval on the 2.5, the supplements for the 5.0 will go in as well as the CP and again we’ll work with them to be expeditious about the getting the approval. But in the meantime just to remind everyone, the Impella CP and 5.0 remain on the market with the current 510(k) clearance until we have the completion of the 515 process.

[Raj S. Denhoy:]

So that’s clear. And just one last one, I mean – you clear about with us is that through this period where you were awaiting FDA approval, you’re going to be a little bit more conservative perhaps in your marketing and promotional activities around the products. Now that you almost have the FDA approval in hand. Should we expect a more aggressive pasturing from the company and should we expect to see an acceleration in revenue growth over the next several quarters?

[Michael R. Minogue:]

Well, I think we’ve already have a plan that has acceleration. You saw that in the past quarter, we do expect to have the approval by February and March and we work very closely with the FDA only compliance somewhat so that if we have certain things we want to work on we do it collaboratively we show that in advance in that way we just have a good working relationship.

[Raj S. Denhoy:]

Okay. That’s helpful. Congratulations.

[Michael R. Minogue:]

Thanks a lot.

[Operator:]

Thank you. And our next question is from Jayson Bedford with Raymond James. Your line is open.

[Unidentified Analyst:]

Hi, this is my call Michael on in for Jason. Can you hear me, okay.

[Michael R. Minogue:]

Hey Mike.

[Unidentified Analyst:]

Thanks for taking the question. Great. First congratulations on the 515 news that’s great. Not (indiscernible), but it sounds like the labels a little bit more specific than prior commentary which I think included high-risk PCI and hemodynamic instability. So I don’t think that’s an issue really for the 2.5, but I guess my question is do you know what the label expansion will be for the CP and 5.0. Does that include Hemodynamic instability or is there another label expansion that you’re going for those two supplement analysis?

[Michael R. Minogue:]

Yeah, so first of all the label is what we had guided to. And so there will be other things in the label that will allow us to really get into the benefits of the Impella for high-risk PCI and allow us to really train and market and educate people on all the data from Protect I and Protect II. So we’re just telling you that the label is around high-risk PCI and you’ll get more details as we go on. It is prudent when you’re in these discussions and you’re closing out your program with the FDA to not discuss more than any two. We thought that we got an obligation if we wanted to be transparent with our stakeholders. So that’s why we’re telling you today that we’ve agreed to the indication for use for high-risk PCI. For your second question we will be submitting for other indications on 5.0 and CP and we’ll be going after more that short status in that population and just remind everyone that the 5.0 study that was done the FDA per 5.0 study was for patients that were in shock and struggling coming off the heart to lung machine. So we already have data in house for that, as well as what we’ve collected in the Impella registry.

[Unidentified Analyst:]

Okay, great thanks. Shipping to the RP, did you roll any patients in the cath during the quarter, and then the follow-up to that? Do you have an idea what the roll out strategy is going to be for the RP in terms of target centers or number of centers you could add in the first 12 months and do those centers need IRB approval, since it’s in HTE and not PMA for 510(k).

[Michael R. Minogue:]

Sure Mike. We didn’t the couple of patients we still have other sides getting their new RP approve for the cath continue with access protocol. What we expect to have is a very controlled launch, similar to what we did on the CP and estimates will probably be in the first couple of quarters to make sure that we can really collect the data, publish the data and share best practices. We anticipate probably around 10 sites per quarter. And your question on RV is correct. The other product that’s out there, the Levitronix for the right side already has in HDE for surgical use and so all those sites also are required to have an IRB. So we started the process of identifying besides that in our initial target and we’ll be working with them in advance to work through the RV process.

[Unidentified Analyst:]

Okay, great. That’s very helpful. Thanks and congrats.

[Michael R. Minogue:]

Thanks, Mike.

[Operator:]

Thank you. Our next questions is from Chris Cooley with Stephens. Your line is open.

[Chris Cooley:]

Thank you and congratulations again on the 515 win on what’s been long a hard fought fight that’s well worth it. Just a couple of quick questions if I may, Mike. Would you mind reminding us what you’ve invested to date just in terms of your domestic sales and clinical support infrastructure and kind of where you see that meeting to go, maybe kind of characterize how your activities will change now post what’s assumed to be a PMA approval here in the months ahead? And then, just us a follow-up so that, just want to make sure I’ve a clear follow-up on that prior question. As you file for your supplements, do we treat this like any other traditional PMA supplements? Is there anything different? We need to think about that rather in terms of the way the data is collect or the timing, or can we kind of finally revert back to the traditional approval timelines? Thanks.

[Michael R. Minogue:]

So, Chris, we have been preparing for this PMA as we’ve talked about for the last four quarters. So we’ve been adding heads in anticipation of this. We have felt confident that this was coming and we are currently around 155 to 160 people in the U.S. sales team. Two-thirds of those are clinical and we also again have a call center that functions 24x7 that we’ve ramped up. So that will continue in the future. It’s a case of two to six depending on if we find the right qualifications and the right person. We will do more of the six range if we’re moving along at the slower pace and we’re just going to be selective about who we add and it’s our choice. Relative to the supplement, this is going to likely transition out of the traditional timeframes. It is a 515 process, but that is what our expectations will be as well.

[Chris Cooley:]

Thank you.

[Operator:]

Thank you. And our next question is from David Louis with Morgan Stanley. Your line is open.

[James Francescone:]

Hey, good morning. This is actually James in for David. I wanted to drill down maybe a little bit more on the potential (indiscernible) implication for an indication in high-risk PCI. Obviously we saw that that growth rate take up a little bit in this quarter, we just encouraging even without the label. As we move forward with a label in hand and presumably some reinforcement marketing around that label I mean, what is the growth rate of that segment look like relative to the other two segments that you’ve called out kind of shock and other, I mean. Can we get the high-risk elective growth rate of source where those other two segments are, is that too much so far?

[Michael R. Minogue:]

So James that’s a very good question and we have already a growth rate at double-digit. So I’ll give you general guidance is that we believe that this will be a catalyst to ramp up the growth rate on our high-risk patient population or a prophylactic use. We have been growing that population, however what we haven’t been able to do is have a program similar to the percutaneous valve model where the heart team is looking into the community talking to the heart failure cardiologist and looking for referrals for patients that are not surgical candidates or prefer not to have surgery. And we now can create training modules, clinical programs that will allow us than to share the clinical data that we have from our studies and provide this alternative treatment to patients who can benefit from minimally invasive revascularization.

[James Francescone:]

Got it. And then just one for Bob more just in the quarter obviously very encouraging. We touched a little bit on the gross margin strength already, but more the upside really seen to come from operating expenses. And with the full-year guidance obviously implies some modest compression in margins in the back half of the year. Can you walkthrough what might be driving that relative to the margins that you saw in the second quarter and to what extent those dynamics might be transitory versus permanent?

[Robert L. Bowen:]

Okay. Well, James, we have added the ECP acquisitions, so in the R&D area that is incremental to certainly what we had last year. We also have some continued expenses related to the remaining completion of the regulatory filings. And then, we’re continuing to build out our sales and marketing organization as we prepare for the post PMA kind of marketing efforts that Mike talked about. And then we’ve left some room, which to some extent is a bit of a placeholder, but we’ve left some room for potentially incremental expenses to hopefully bring the DOJ related matter to close as quickly as possible.

[James Francescone:]

Okay, great. That’s all for me.

[Operator:]

Thank you. (Operator Instructions) Our next question is from Jan Wald with Benchmark. Your line is open.

[Jan David Wald:]

Good morning, everyone. Congratulations on the quarter and especially about the panel. I guess a lot of my questions have been answered, but maybe you could give a little more detail about what you’re going to be doing after the approval? You mentioned education in 20 programs, but I think there is going to be an opportunity to fairly lower marketing effort and a fairly detailed one to physicians. So maybe you could talk a little bit more about what your plans are going forward and what the implications are from the SG&A spend rate?

[Robert L. Bowen:]

Jon, we are planning to do the things that we haven’t really done in the past relative to physician education. It will look a little bit like the percutaneous valve model. I would rather not get into the details now, so after the approval. And again, we will be giving our guidance on the impact of the SG&A. Overall, as we look at our picture, you know, it’s more than just that. So the first piece is that we want to maintain – continue to have a strong CP rollout, getting great outcomes for patients; that’s the focus. The 2.5 PMA allows us to go out really and expand our high-risk PCI platform. Not to mention that the RP approval is going to happen at a similar time, which will allow us to work on a biventricular basis and also crossover between the cath labs and the hybrid labs and the surgical suites. As you know, there is great demand for the RP. We do believe that getting a PMA on the 5.0 will also be a catalyst for that device, which is currently in probably around 30% of our sites. So the 5.0 with some of the enhancements, we do think will also show growth. And then again from a geography perspective, we’re excited to bring Impella to Japan and China and the rest of Asia. So the net is we believe we have years of growth ahead of us and we’re very proud of the fact that over the last five years, over the last 20 quarters, we’ve grown double-digit year-over-year and we think we have double years ahead to continue with that growth.

[Jan David Wald:]

Thanks and just one more question. If you look at look TCT and if you look at the clinical literature, complete – more complete revascularization is certainly gaining a lot of attention in the physician community, I guess – and you’ve got a benefit from that. But one question I have is if you look at it right now its people – that are able to do these more complete revascularizations. How far do you think this goes into the physician community? Or do you see kind of like a higher setting where people are – patients are going to be referred to these centers – for these centers to do the more complete revascularizations.

[Michael R. Minogue:]

Jan, I think it’s going to be a combination of physicians that that want to grow a practice around high-risk and I think so it will be subject to those that that have that interest, but certainly you require for some of these patients, some type of hemodynamic support if you want to try to do extensive revascularization or long balloon inflations or atherectomy. And to some extent the clinical data that we have, the protective data, shows the benefit at very skilled centers of giving them the ability to provide a better cardiac power output as they treat the patients. The one statistics that is wasn’t the primary endpoint, but really applies to the healthcare concerns of today is that when patients left the hospital and Protect II, the Impella arm had a 56% reduction in major adverse events to 90 days. And seeing a 56% reduction from discharge to 90 days is a pretty staggering statistic and it really matches what the healthcare reform is trying to do as they now measure hospitals, they measure them in quality not so much in discharge but out to 90 days and they’re looking at things like repeat revascularization and readmission. So we’re excited and to your question, I think it will be a combination because I think it’s going to be heart team approach and hospitals are looking to find better ways.

[Jan David Wald:]

Thank you very much and congratulations on the quarter again.

[Michael R. Minogue:]

Thanks John.

[Operator:]

I’m not showing any further questions at this time. Please proceed with any closing remarks, Mr. Minogue.

[Michael R. Minogue:]

Right, thank you again to all of our stakeholders. We appreciate your support and as always if you have any questions, please feel free to reach out to us. Have a great day.

[Operator:]

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and everyone have a wonderful day.