Abiomed, Inc. (ABMD) on Q2 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Abiomed’s Second Quarter 2021 Earnings Conference Call. Please be advised that today’s conference maybe recorded. I would now like to hand the conference over to your speaker today, Mr. Todd Trapp. Sir, you may begin.
Todd Trapp: Good morning and welcome to Abiomed’s second quarter fiscal 2021 earnings call. This is Todd Trapp, Vice President and Chief Financial Officer and I am here with Mike Minogue, Abiomed’s Chairman, President and Chief Executive Officer. The format for today’s call will be as follows. First, Mike will discuss second quarter business and operational highlights and then I will review our financial results, which were outlined in today’s press release. After that, we will open the call to your questions.
Mike Minogue: Thanks, Todd and good morning, everyone. Over the past 7 months, we have navigated the challenges presented to our patients, customers and employees by COVID-19 and coronary artery disease. Our ability to put patients first and adapt and execute as an organization has been our strength. We have created the new Abiomed 2.0 operating procedures while significantly investing in innovation and clinical research to revolutionize the standard of care for hemodynamic support. I am proud of the patient’s first commitment and leadership from our employees and customers to recover hearts and save lives everyday. For fiscal ‘21, we designated a three phase red, yellow, green approach to address the evolving COVID-19 environment. Q1 was the red phase reflecting the broad restrictions on elective cases, limited access to hospitals and limitations on travel meetings and headquarters’ operations. In our Q2, we moved to the yellow phase with the acceleration of Abiomed 2.0 and preparing to return to growth during our summer quarter with essential procedures. We were focused on sequential and year-over-year growth, which occurred in hospitals and geographies better positioned to handle the resurgence of COVID-19 patients. However, two elements remain challenging in Q2. First, patient anxiety caused delays in seeking treatment for urgent and emergent care. Second, hospital ICU availability impacted patient referrals, further causing delays in cardiovascular treatment for patients without coronavirus. These factors keep patients home longer, suppress the referral network and simultaneously increase patient risk in cardiogenic shock rates. This phenomenon has been reported for high-risk PCI steady and cardiogenic shock. However, in this COVID environment, staging PCI in high-risk open heart surgery called CABG are less preferential and the heart failure patient populations at the hospital tend to be higher risk and sicker.
Todd Trapp: Thanks, Mike and good morning, everyone. In the quarter, we delivered revenue of $210 million, an increase of 27% sequentially and an increase of 2% versus prior year. While our business continues to be negatively impacted by the COVID-19 pandemic, we saw a gradual improvement in patient utilization in our key geographies over the course of the quarter. By region, the U.S. reported revenue of $172 million, up 28% sequentially and flat versus prior year. U.S. patient utilization increased 24% sequentially and was down 4% year-over-year. Sequentially, high-risk PCI and AMI cardiogenic shock grew 33% and 20% respectively. Versus prior year, cardiogenic shock increased 1%, while high-risk PCI declined 8%. As we discussed on our last call, we saw resurgence in COVID cases in July across some of our key markets, such as Texas, California and Florida, which impacted our utilization in that month. Within the quarter, we did see a recovery in some of these regions and overall we saw a sequential improvement in U.S. patients in August and September. In the U.S. at the end of September, the Impella 2.5 and CP have reached 1,468 sites. The Impella 5.0 has been placed in 657 sites and the Impella 5.5 with SmartAssist is now in 121 sites, up 31 sites versus prior quarter. The full market release of the Impella 5.5 continues to deliver as our left-sided surgical portfolio, including the 5.0, the LD and the 5.5 reported a 53% increase in revenue versus prior year. Finally, the Impella RP is in 552 sites, up 14 sites versus Q1 with RP revenue increasing 4% versus prior year. In the U.S., we continue to see favorable sales mix as we transition to Impella CP with SmartAssist and Impella 5.5 with SmartAssist. In the quarter, the reorder rate was 100%, a slight improvement over last quarter. Average combined inventory at the hospitals to the Impella 2.5 and CP was approximately 4.6 units per site in line with the inventory levels we saw last quarter. Outside the U.S., revenue totaled $38 million, up 25% sequentially and up 14% year-over-year.
Operator: And our first question comes from Margaret Kaczor from William Blair. Your line is open.
Margaret Kaczor: Thanks for taking the questions. First, I wanted to talk a little bit about the green phase and your comments, Mike on being able to go on the offensive here. So, can you give us give us a little bit more color around what that means? And then you had talked about patient fears? Is that something that Abiomed can directly address or is it more about being able to go out and kind of try to reinvigorate those referral networks and get some of these patients that may be our backlog or on the sidelines and get them into hospitals coming up in the fiscal third quarter?
Mike Minogue: Thanks, Margaret, for the question. Let me start by saying that I am very optimistic about the quarter and getting to green as well as the fiscal year, the impressive work, the engineering and the clinical teams are doing and most important in the future. So they cover what it means to go to green. So in this transition to the green, that means we want to treat more patients than ever before, because the population at the hospitals is greater than it has ever been. Because the patients are sicker door to balloon time is longer, non STEMI. Patients wait longer. So everything is every patient sicker as a higher risk. We don’t have elective cases at Abiomed, we have high risk PCI, we have urgent and we have emergent and our patients have some of the highest risk factors of any patient, any patient in the hospital from a cardiovascular perspective. So that part of us means we need to be better able to adapt and execute. And the way we are doing that is working with the hospitals and the societies which are much better prepared. I mean, it starts with being prepared. So we have more knowledge around COVID, we know it’s airborne, we have better testing from temperatures, to looking your SpO2 and in-house. We have testing for PCR, antigen and antibodies and some of those tests are within 48 hours or some within an hour. And now we are routinely testing in our Danvers facility with over 100 a week and we are starting at now in Aachen, treatment is better there are those that have immunity from having it already. And then of course, everyone is waiting for the vaccines. But what that leads us to, is having our plan where we know what we can control, we know we can influence and we know what we endure. And so we are controlling the things around heads and investments and the regulatory milestones, the engineering, we are influencing things by helping with training and education online, we are helping with CAMP PCI and directly connecting with physicians. And then we just have to endorse certain things like the referral pattern or the ICU is filling up. And where we seek to influence those things we can do. We tend to work by working with the societies by working with our physician champions for road shows and also running commercials that are a combination of public service to identifying our needs of protected PCI. So, those are the things we are doing and again, we are very optimistic about the second half of the year.
Margaret Kaczor: Okay, great. And then if I can, I will ask a little bit about the third quarter guidance, which sort of stems into that. You guys are assuming a pretty sequential – a pretty nice sequential increase as we go into that third quarter up mid single-digits. So, as we think about what that number implies, it doesn’t seem to necessarily imply some kind of incremental COVID headwinds, you did spoke to potentially not getting those and thinking you are better prepared, but just kind of give me a range if you can of what gets you on the low end, the high end and maybe above or below that range? Thanks, guys.
Todd Trapp: Yes. Thanks, Margaret. So, this is Todd. I will take that one. So, we do as I mentioned in my prepared remarks, we do expect to see sequential improvement from Q2 to Q3 as the gradual recovery continues in the seasonality of our business. So again, forecasting depending on the range growth of 5% to 10% on a sequential basis. I would say the low end of the guidance assumes some impact of the COVID resurgence within the quarter, as we see it today, in the specific hotspots and we are really not expecting to see the full recovery within the quarter that we have seen in the past. So we think about Florida, we saw resurgence in cases in July, but made a strong recovery in August to September and actually grew year-over-year quarter. So, the timing of the bounce back of the recovery is tough to call, but as you know – but we know it’s going to happen as hospitals are better prepared to handle the resurgence. And again, our patients are now elective, they are sicker and they are in the need of hemodynamic support. I would say, the high end of the range, we continue to see a gradual sequential improvement, some lift from the robust clinical data from TCT that Mike highlighted earlier on the call around PROTECT III and Restore EF. And again, we will just continue to be transparent on the trends that we are seeing.
Margaret Kaczor: Great. Thanks, Todd.
Operator: Thank you. And our next question comes from Matthew O'Brien from Piper Sandler. Your line is open.
Matthew O'Brien: Thanks. Good morning. I would like to just follow-up a little bit on the Q3 guide, especially in the U.S. I know it’s a nice sequential bump that we are expecting here. But I think it’s probably a little bit softer than some people may have thought just based on a little bit easier comp versus Q2 into Q3. And I think just based on what you have said about the interest level in 5.5 and RP, it would imply that there is still a lot of weakness on the high-risk PCI side of things. So, can you just talk a little bit about why that would be the case? And then Mike, either do this a long time, is this kind of similar approach you have done historically or you are just trying to be as conservative as possible on that number just given all these different variables that are difficult to predict?
Mike Minogue: So, Matt, I will take the question. This is Mike. Thanks for the question. I think it’s a good analysis to say where are we on our guidance knowing that most companies haven’t given guidance for the fiscal year or for quarter. To look back last October was the highest patient month we have ever had in the United States in the history of the company. So, October itself, as Todd mentioned, we do expect to be up sequentially from September, but it is a tougher comp. And then it gets a little bit easier as the quarter goes on. We think it’s prudent to give this guidance knowing that we are better prepared, knowing that we have new data. And we do have access at most hospitals to get in with the exception of some areas in California. But we are confident that our patients are benefiting from the therapy, the societies and the hospitals are working together to treat these very sick high-risk cases or these shock cases. And we also believe that there is a range there for a reason. In Germany, what you are seeing is there is a local team has coined it. It’s a COVID light resurgent meaning that if the numbers are way up, they are anticipating and they are seeing the ICUs fill back up somewhat, but they are not as sick. And so we are balancing not just the U.S. numbers, but the global numbers. And we are taking into account that if the ICU beds fill up, it does restrict some of the care. And unfortunately, for many of our patients, we don’t create a backlog these are patients that need to be treated and if they are not treated, unfortunately, they will die or they will have some permanent damage that will limit the ability to treat them in the future. So, we are in a situation here where again we are confident that we are going to be able to continue to grow sequentially, with the ultimate goal of growing year-over-year as we did in the summer quarter in Q2, but we are going to be prudent about our guidance and try to do the best to give full transparency to what we are looking at coming into this transition to green.
Matthew O'Brien: Okay, fair enough. And then on the steep side of things, great to hear that the timing for that is on track do you say Q3 of 21. For the limited launch there can you kind of frame up how often 25 is even used anymore in these PCI cases that we don’t really get into that at this point. So given that it’s going to be 25 of that sheet, how impactful could that product be Q3, Q4, and even into fiscal ‘22? Thank you.
Mike Minogue: Now, the question of 2.5 is used less because we have the Impella CP. However, there’s probably a patient out there population out there that doesn’t get it used at all that are more female. You see that in our bailout studies were smaller size individuals where that next physician group. That is more worried about access closure, might be more willing to use it for that patient population. And remember, the PROTECT II was only at a 2.5. So we think we are going to get some of those new, smaller patients, more female patients get those doctors more comfortable. It certainly does a lot more than a balloon pump. In many cases, places are not using balloon pump. They are either just they are getting in and out, or they are getting in and out and trying to stage and meaning they will bring it back again in 60 days. And staging is something that is going down currently with the COVID environment. And a lot of these high-risk CABG patients are less likely to get CABG. So they are going to be referred in to interventional cardiology. We also know that for high risk PCI, that single access by our more relaxed expert experience user is around 40% of their protected PCI. So they have a product that we are very comfortable with single access continues to grow. And what we are doing is we are really trying to address the different levels of our users, those that are early adopters versus early majority versus late majority. And we know that access closure is very important. And that is why you are seeing us really leverage the PROTECT III data to show that the vascular complications are now numerically lower, and in some cases statistically better than the PROTECT II numbers, especially around the Intra-Aortic Balloon Pump. So we think that within the combination of the XR sheets and the new data that is out there, and then our training and education program, we are really going to minimize that fear of access closure that keeps some of the physicians from holding back and again, the goal of doing a PCI is to get complete revascularization because by doing that, you enable the improvement in EF and the improvement in quality of life. That is now been proven in multiple studies, including FDA studies as well.
Matthew O'Brien: Very helpful. Thanks Mike.
Operator: Thank you. Our next question comes from Chris Pasquale from Guggenheim. Your line is open sir.
Chris Pasquale: Mike, just following up on the expandable sheath question, what’s the timing on the CP compatible version, because that is obviously more meaningful in terms of your current product mix?
Mike Minogue: What we have said and we continue is it, we are going to follow up and then the following quarter, so we are talking about end of Q3 or Q4 to submit for the CP. And then depending on the cycle, for that 510(k), that will lead us to the limited market release on the CP.
Chris Pasquale: Okay, so stop thinking about sometime in the first half of FY ‘22 for the market release.
Mike Minogue: Correct.
Chris Pasquale: Okay.
Mike Minogue: I would note though, that when we talk about Impella, one other things to look at is CABR so a lot of the same centers and some of those sophisticated users, they have already mastered doing it, 14-French cannula all the way through. Remember, the Impella for the CP just has a 14-French Motorhead, the rest of the catheter and the pump is 9-French. So, that’s why our XR sheath is unique because it expands and recoils. So you can close with a 9-French. So, that’s even significantly easier than the ones who are comfortable doing a TAVR. We also know that again, the single access technique is very popular. And most important, what PROTECT III shows is over the last two years, the best practice is the training, you really are looking at adverse event rates on complications such as vascular complications and bleeding, similar the rates around the balloon pump and PROTECT II and in the case of stroke, you are looking at statistically better outcomes than what we have seen historically with balloon pump.
Chris Pasquale: Yes, I think that’s a good point, Mike, maybe help square this for me. Given that context, vascular complications are down, we have gotten better at large bore closure. so easy expandable sheath a real catalyst for the business, or is this sort of solving a problem that’s already been solved by technology evolution in other areas?
Mike Minogue: It’s a combination. It’s all of the above, Chris. So, remember, we have different size users and different comfort levels. So, what we are doing is we are giving a solution starting with regular education. Here are the actual results of what you get and what you see in the last 2 years for vascular complications, bleeding and stroke. And the one thing to point out in this circulation publication of a mean, it does not give net outcomes for any of those three components. It just gives an odds ratio. So, we continue to try to pursue circulation to put out the net numbers, because in our own investigation and buying the data, you will see that all of those are single-digits, they are lower, but because you have 4,000 Impella patients and 40,000 balloon pump patients, you can get a P value difference of 1% when it’s low single-digits is reasonable in a database that doesn’t even track it. So, we are going to continue to drive the education. We believe that where we are today in best practices, is that we have really gotten those adverse event rates to a very reasonable number and the overwhelming benefit of the hemodynamic support and being able to achieve complete revascularization is really the message you are hearing from the physicians around the PROTECT III data as well as in Restore EF proving to physicians, if we are going to do high-risk PCI, the ultimate goal is to do the best we can in a single setting, because it has an improvement in the patient’s quality of life and ejection fraction, the same way you get for CABG where they remove and sow a vein in without having the invasiveness of a sternotomy. So, it’s the most exciting time for us as far as clinical data, education and training. And the COVID world has really opened up a new opportunity for us. We have plan to do online training and education in live cases. But we are going to be able to have more input now than ever before with online training and education. We do weekly cases where our users log in. And because they have password protected identification, we know who they are, we know their outcomes, we know their indications, we know where they are at from Impella Connect with the sole goal of getting them trained and making them more comfortable, so they can continue to improve outcomes for both high-risk PCI and cardiogenic shock. So, while there is a lot of negative things with the COVID world, there is many things that are going to be very positive for us. And if what you are trying to do is become the standard of care and train the masses from small to large centers. This whole network we have now with physicians logging on and watching cases and answering questions to each other did not exist a year ago. And so with everything we are doing from Impella Connect to online training, we think we are going to be able to get in 12 to 18 months where we would have – it would have taken us 4 to 5 years in a normal world without COVID.
Chris Pasquale: Thanks. That’s helpful. And just last one for me picking up on your point about maybe some silver linings to what we have gone through this year, you have highlighted some of the COVID-related approvals that you have gotten over the past 6 months or so. Are you actually seeing meaningful utilization in COVID patients who you wouldn’t otherwise be treating, can you quantify the impact of that at all? Thanks.
Mike Minogue: I think there are two pieces to that answer, Chris. First is that the majority of all our patients because of COVID, they are sicker. So, an average door-to-balloon time now is 3x higher than it’s been the non-STEMIs have a higher mortality rate. STEMIs have a higher mortality rate. So, there it is increasing that component although patients are sicker when they get to the hospital. For COVID itself, we are getting some incremental opportunity, but I still think there is a lot more education we need to do both around pulmonary embolism for people that get right heart failure as well as ECPELLA and just unloading in general. So we are going to continue to further publish papers on that – on those populations.
Operator: Thank you. Our next question comes from Raj Denhoy from Jefferies. Your line is open.
Raj Denhoy: Hi, thanks. Good morning. Maybe, Mike, I could start with ECP news this week, some of the early feedback there seemed to be quite positive on that device. Maybe you could describe a bit more about the past from here and what that initial early feasibility study looks like and when you transition to something a little broader?
Mike Minogue: Sure. So, I was in Detroit for the first case. The Impella ECP has been in the works for a while. These are very difficult pumps to do. Thorsten Siess, our Chief Technology Officer, is a co-inventor of it. And when I bought the original Impella Company, I was not able to secure ECP and I had been trying to get it back from the day we closed on Impella. So that was a great acquisition back. That is probably the one competitive product that would compete with Impella CP and it is now part of Abiomed’s portfolio and it did need to utilize our core Impella patents in order to come to the market. That being said, we see the market having different needs. So a high risk PCI patient may need four to six hours of support. Whereas a cardiogenic shock patient may need four days of support with smartest algorithms AI running the cloud, and then longer term pumps that we are working with 55 and the Impella BTR to really focus on those chronic patients. So we have got components that we are working on. Now what the path is for ECP is you have a product, early feasibility process with the FDA. So we are looking to do the first five patients which we should be done with shortly for high risk PCI. We will do a preliminary screen with a safety monitor and go back to the FDA to do the next 20 they consider that the pilot phase. And that will be an ongoing process after the pilot phase is over, we then anticipating, and this has not been confirmed and agreed upon yet with the FDA, but our current plans would be that we will move into more formal of a pivotal study, we will be now going a bigger number in high risk PCI, and we will most likely be comparing it to our current data that we have coming in on the multiple studies for the Impella, 2.5 and CP, especially from the PROTECT III dataset. So that is the current plan. But the nice thing about the early feasibility process is once you enter the United States, and we are here and it’s not going to go away, we are going to continue now to expand the number of centers that get access to ECP as we continue down the path to get approval.
Raj Denhoy: And just to put a finer point on that, so when you move into that pivotal, say late this year, like this fiscal year, maybe early next when do you think that product might ultimately get approved for much broader use?
Mike Minogue: Yes, Raj, it is a valid question. With everything going on right now, let us get through the early feasibility study. And we can tell you that, but it is going well, it is a pretty incredible product 9Fr now you are talking about something that is essentially a similar size to a balloon pump, but it actually can flow at rates similar to the Impella CP. So it’s a it’s a dynamic breakthrough product, I think all the physicians that have been waiting for it are excited. And I hear from many physicians that say, now all my partners will use the ECP. But what we are trying to do with their partners is show them today, they can get low adverse event rates and vascular complications of bleeding with today’s product with training, the XR Sheath will make it better than obviously the ECP will make it even easier. So that’s our path.
Raj Denhoy: Great, great. And then sort of a similar questions on PROTECT IV, with PROTECT III now having been presented sounds like we are moving aggressively to PROTECT IV but I don’t think you have ever fully outlined for us the size of that trial, how many sites when do you think it might be when it might be done, so anything you are going to offer today on the path there?
Mike Minogue: Sure. One of the benefits again, the COVID is the physicians now are routinely online. So we have had weekly calls on PROTECT IV if you look at the executive committee, the PI’s of the technical committee, these are the world leaders involved there trials world leaders in studies around stenting or valves. And we have got complete engagement, we have locked in the protocol, we have locked in the steering committee, the country leaders, it will be a global study, it does not require an FDA IDE because we are already on label. However, we are working with the FDA to ensure that they know what we are doing. And we are looking at many things to potentially expand our label later on. And we routinely work with the FDA and give them an update every quarter. So, we will let them know how we are moving, but we are guilt to give us the ability to move faster, we expect to have 1,200 patients, it will be an adaptive design, plus there will be a registry of another 30 or another thousand patients that are not in the study that will track our big challenge would be to make sure from an ethics perspective that all patients are randomized, we will be able to do that, because we will know every patient at every center because of Impella Connect and the IQ database. And we expect to have our first patient in PROTECT IV at the end of this fiscal year, or the first quarter of next fiscal year. So we are moving fast, we are excited. The reason that this study is set up to have a long duration of tracking so after the first year, we are then going to start looking at the data from 30 days to six months to up to three years, we really believe there is a separation of the curve for patients that get better revascularization and see an improvement or EF. And because of that, in the way the study set up is it really is designed to have the strongest recommendation to meet all the requirements for a Class 1 guideline, which will then essentially mandate usage of this device, not just here in the U.S., but in the sense globally. And as you have been watching with the balloon pump, the balloon pump is a Class 3 meaning it’s harmful for shock in Europe and Asia. And now the class – it’s balloon pump is Class 3 harmful in the United States by the surgical associations for patients that can’t come up with the heart lung machine post CABG. So, I would say it’s a really important thing that we both get Class 1 guidelines for Impella as the world moves the balloon pump to Class 3 and list it more as harmful. So, it’s exciting time. That’s a great group. And I think PROTECT IV is going to be probably one of the most revolutionary clinical studies in all of cardiovascular medicine.
Raj Denhoy: But you did say 1,200 patients and now you are describing a potential follow-up period that could be as long as 3 years. When do you think you will be in a position with enough data to actually move to where it could justify moving to a Class 1 indication? Maybe a follow-through is when you think that 1,200 patients might be enrolled, so we could even start to see some early 90-day kind of endpoint data from it?
Mike Minogue: Yes, it’s a good question. And in some cases, lot of times companies do 30 days or 90 days, because they are rushing to get to the number to get the p value, so they can go before the FDA panel and get approval. We already have that approval. So, the way it’s going to work, Raj, is at the end of 1 year after the last patient, then we are going to have the data, then we have to process it, but it’s really think of it as 1 year after the last patient, it’s up to 3 years of tracking, we will be then putting out the data. But what we will have in that data is we will have the 30-day to 6-month to 1 year and then beyond that, so that we will have the kind of data that you really need to show what happens when you do better revascularization. And what we expect to happen is our patients will have better EFs more active and our PROTECT III dataset shows our best practices, but the Restore EF protocol is similar to PROTECT IV which really continues to show that you can treat these patients get a massive improvement. So, you are talking about a net 10% to 15% improvement in EF. So, if you have a 30% EF going into a protected PCI, you come out with 45%. Your quality of life is different. If your EF goes up that much, it improves the curves on your survivability. So, we are going to test that. And they also feel better in many cases avoid having to have an ICD. So there is a cost savings for that as well. So that’s the reason we are doing this. We already have the label. We have already shown the best practices, but the PROTEC IV is really swinging for the fences to document that this is the way to go similar to the way TAVR has proceeded and driven the conversion for their patients.
Raj Denhoy: Great. I just wanted to squeeze one last one, because I don’t think we have had a chance to ask you about this since it came out last month that the final reimbursement rates for Impella DRG 215. It was down, I think roughly 11%. Any broad thoughts you want to offer on this that’s going to have any impact and kind of really the future direction of reimbursement?
Mike Minogue: Yes. We always say the reimbursement exercise is a math exercise. So, if the hospital charges go up, then the reimbursement goes up. If hospital charges go down, then it goes down. Remember though we have a mix of patients, we have high-risk PCI to shock. So if a patient is high-risk PCI and they do well and discharge and they can make a little money. If the patient is in shock and not everything goes well, they can lose money. So what they do for those is they submit outlier payments to get back some of the reimbursement and if the – if CMS gets it wrong and that hospital charges higher, it goes up the following year. So, we continue to monitor it. I don’t see this as an impact pro or negative and we have talked about that for years. Because what happened is CMS, HHS, and the federal government has setup a system that there is multiple ways to get paid for Impella, whether you are at the hub or the spoke, you can get the DRG 1, you can get DRG 3 with ECPELLA, you can get DRG 1 with biventricular Impella, you can get 2.15, which is the DRG you are talking about or you can get DRG 2.68, which means you have accepted Impella on – our patient on Impella already. 3 of their 4 have gone up. And so again, it’s a system of care. We are very grateful to CMS and the FDA that they have given us exclusive FDA approvals as safe and effective. And we are especially appreciative to CMS that they have given us exclusive ways to get paid for Impella that they have deemed reasonable and necessary.
Raj Denhoy: Great. Thank you.
Operator: Thank you. Our next question comes from Danielle Antalffy from SVB Leerink. Your line is open.
Danielle Antalffy: Good morning. Thank you guys so much for taking the question. Todd, maybe the question is for you. But you mentioned that July was down utilization was down 4% sequential. I think that was I am sorry, year-over-year, I believe? And then, but you were up 4% for the whole quarter. Is there any way you can give us a little bit more color on what happened in August and September, obviously would have had to grow much faster than that 4%? And then I have one follow-up.
Todd Trapp: Yes, it’s a good question, Danielle. I think what we talked about on the call in my prepared remarks is we did see sequential improvement in patients in August versus July and September versus August. So again, we continue to see the sequential improvement in both revenue and as well as in patients in the U.S. And other way that is what our focus is on getting better each month, and seeing sequential improvement. And that is what we saw in July, in August and September in the U.S.
Danielle Antalffy: Okay, is it fair to say maybe up I mean, just doing the math. I mean, it would have had to be up relatively meaningfully to get to that 4% for the quarter is that fair to say?
Todd Trapp: If you look at the – if you do the math, I mean again, it’s on just the year-over-year comparison I would say 4% in July, we got a little bit better in August in July and September I see it’s a little bit probably more kind of breakeven on a year over year perspective.
Danielle Antalffy: Got it. Okay. And then my follow-up is around how to look at the go forward growth outlook ex-COVID sort of getting rid of all the noise around COVID. And one of the things we have been hearing is that the high volume users are still very much believers in Abiomed. So, I was wondering if there is – it’s been the lower volume users that have been sort of declining seeing declines in usage. And so I was wondering if you could help us sort of characterize how the high volume users have been growing versus the low volume users and sort of bridge us to what the go forward ex-COVID outlook could be just sort of looking at those different dynamics? Thank you so much.
Todd Trapp: Danielle thanks for the questions. It is a very good question. It is something we track and we have such visibility to our doctors are indications and our hospitals that we track this on a daily basis. And we get an email for every patient all day long. And if they are independent, we ultimately find out about it, either it is on Impella Connect directly so we know about it or in a reorder. That being said, as we have analyzed, the actual smaller to medium hospitals have gone up sequentially in the 20% range, but they actually are up year over year in Q2. And the reason is, is because these patients don’t want to go far you are going to see this trend where you are going to end up with more spoke hospitals, those physicians are doing, the patients are sicker when they do high risk PCI, or potentially, that is where they are going for shot so collectively, we are doing pretty well in those centers. It’s a good trend for us. It is why being online and training, education is helpful. We can get those physicians to log in and watch cases on cam PCI they can ask questions of the experts. They can even get proctored if they go through the studies or curriculum that is online as well. Now, when you end up looking at the large centers are top 20 centers that we have talked about in the past that do about 50%. They are up also in the 20% range sequentially in Q2, which is a good trend, but you are looking at them being down a little bit from 5% to 10%. And we think there is a couple things for that reason. One is they are already doing high volume. So when their referrals get cut down or physicians in the community don’t want to refer him to the big center that hurts them And one of the reasons that we speculate is because they would become the COVID hubs, right. They are the big centers, and they tend to take the biggest bolus of the COVID patients so that challenges them a little bit. And when you have a flare-up or resurgence, their ICU beds either fill up or it’s the fear of filling up. So that’s one, the other reason that we think we can help them is we are going to go out and start running our commercials in these areas. And our commercials won’t be the classic protected PCR cardiogenic shock, they are going to have a feel of a public service message that will then ask them, if they do have chest pain, these are things they shouldn’t say, stay home, and then recommend that they of course, consult with their physicians and look for experts. And so we will get that referral program back. And last is on access. Even with The Resurgence with Impella Connect, we have access all the time for all these patients, we also have call center. And we also have our people that majority of all of our field-based trainers and people have access to the hospitals, with the exception of some hospitals in California. In Germany, where we are seeing another resurgence remember that it’s not for essential workers, so our Aachen facility is staying open and our field team is also maintaining prevalence and access into those hospitals as well. So that’s what we are watching. We think we can help our largest centers. The interest is still there. They are super excited about PROTECT III and you are going to see that PROTECT III is being presented and the road shows we used to do where we have to fly into the city. Those road shows are happening online almost every week, multiple nights a week with 50 to 150 physicians on calls, learning about all our new data. So, thanks for the question.
Danielle Antalffy: Thank you.
Operator: Thank you. And our next question comes from David Lewis from Morgan Stanley. Your line is open.
Calvin Chu: Hi, good morning. Thanks for taking the question. This is Calvin on for David. Just two questions for me. The first is it’s a little bit of a follow-up question to Danielle’s question, just could you help us digest a bit more on business trends this quarter versus the June and July trends that you shared last quarter. It appears this quarter Intel revenue is up 1%. So, that’s lower than June and July’s monthly trends, which I think were 4% and 8% increases, respectively, although the underlying July patient trends was down 4%. So, appreciate that September last year was the tough comp. So, was there any other dynamic like were there any extra selling days or perhaps extra patient days in the year ago period that further created some tough comp or what other factors, could you share with us that could bridge that revenue growth relative to June and July? And I have a quick follow-up.
Mike Minogue: Yes. So, Calvin thanks for the question. I think when you look at how our patients progressed over the quarter from July to August, September, again every month, they got better and some of them more, it’s as you mentioned a comp issue. I mean, our patient growth in fiscal year ‘20 in September was up 24%. So it was, we are laughing some very difficult comps in September, but again, sequentially, the patients got better from July to August to September. And when you think about the revenue kind of walk from in Q2 from a patient to a revenue perspective and again patients were down 4%, but we continue to see positive sales mix as we transition from 2.5 to CP with SmartAssist as well as the 5.0 to the 5.5 with CP with SmartAssist. And so we are seeing a benefit of a positive sales mix there from a higher average selling prices. So, when you kind of just think about the walk from a revenue standpoint, in Q2, it’s literally patients were down 4%, we saw probably 3 points of positive sales mix and then a little bit more, I would say on the service side to get to walk from the negative 4 to the 0.
Calvin Chu: Got it. Okay. Just my second question is I wanted to clarify one point about PROTECT III data that was presented at TCT. So, I think in the presentation, you showed P2 like patients in Q3 versus P2 results across both arms. So, I think in last year’s TCT, when you presented the interim data, you also showed a similar slide that compared P3 data to P2. And I think the patient population shown in the year ago presentation for P3 had 469 patients and that number declined to 373 this year and it was – so could you help us understand the difference between those two was it 469 number from last year not the P2 like cohort and perhaps a broader cohort? Thank you so much.
Mike Minogue: Hey, Calvin. That’s a really big question with a lot of things to clarify. So first is I’d encourage you to go and watch the presentation again with Dr. Chuck Simonton, who gives all the details. Second, I am happy to get on the call with you after this to go through at line item. But at a high level, PROTECT III that was shown last year was interim post-approval study and the number has been growing. So, now it’s up to 1,600. And last year, we just gave an interim look to compare to PROTECT II, but we did not propensity match it, we did not have the landmark analysis and we hadn’t had the data adjudicated and reviewed with the Core Lab. So, what you are seeing now is essentially a publication report, where we have hit a number, we are able to check all the blocks and to compare it with propensity matching, which was not done at interim. And I think the numbers you pointed out on PROTECT II were off a little bit. So we will take that offline, but I think that answers the high level of your question.
Calvin Chu: Thank you.
Operator: Thank you. And our next question comes from Marie Thibault from BTIG. Your line is open.
Marie Thibault: Hi, thank you for taking the questions. I wanted to ask one here on Breeze and the recent clearances out there I would love to hear a little bit more about what you are planning for the limited release and what you hope to learn from that experience?
Mike Minogue: Thanks, Marie for the question. Abiomed has been the leader in hemodynamic support. We have done over 10,000 patients with ECPELLA and the reason they work well together is certain patients need oxygenation. But if you just oxygenate the body with retrograde flow, you will overwhelm or you will get retrograde flow and make the heart work more. So it’s detrimental unless you can unload that patient within a period of time. Those publications have been studied. And we posted those slides online with our quarter update. And what we hope to see. One is continue to find the best practices in the protocol whether the patient gets a 5.5 through the axillary with ECPELLA or has a CP. And then two, we plan to start integrating with SmartAssist looking at optimizing both the hemodynamic support and the oxygenation. So, we can wane this patient appropriately so that they again get native heart recovery. One of the issues in the Pappalardo study from Europe shows that ECPELLA not only had better survival, but the majority of patients had native heart recovery versus just survival. And unfortunately, when you oxygenate the body at the expense of the heart, these patients that are that remain alive tend to either require a transplant or an LVAD to a transplant or in some cases won’t qualify and never get discharged from the hospital. They go to hospice care. So, we really want to – we want to maximize the integration of both functions. And there is a new population out there for just oxygenation. So, it expands our patient population. And it gives us something else to add for our pediatric product line. So we are excited about it, we are going to turn our Abiomed engineering innovation and clinical research team on to ECMO, we know a lot about it. And to note with for the investors, I don’t believe there has ever been a single FDA study on ECMO, we have not seen an independent study sponsored by the ECMO companies in the last 15 years, and we are going to bring the research to it innovation and make it better. And I think we are excited. Now more than ever, because ECMO is something that can help COVID patients and in the future patients that also have just respiratory failure.
Marie Thibault: That’s great, Mike. Thank you for that. Just one quick follow-up on along the lines of ASP pricing dynamics, it sounds like some of the shift was the higher price devices it sounds like a sustainable trend wondering if that is true or if there are other dynamics, we should think about going forward on ASP? And then as kind of an accompanying question there, noticed that Japan obviously the patient performance that the growth there year-over-year was very strong, but revenue was a little weaker there. Was that just a result of fewer site openings in your console with sales there or was there another dynamic going on? Thank you for the question.
Mike Minogue: Yes. Thanks, Marie. So, I will actually hit the bottom. So from an ASP perspective, we do continue to see that creep up again, it’s a function of our CP pumps volume they are going down and our ASP on our 2.5 is somewhere in the $20,000 range. And CP continues to increase faster. And the average selling price is somewhere around 24 25. There. And again, we have the same phenomenon on occurring with the 5.0, and the 5.5, and we are selling more 5.5 today, at a higher average selling price, anywhere from it’s called $35,000 versus the 5.0 which was somewhere in that, 26-27-28 range. So I do expect to see that trend continue over the next several quarters as a mix with our business changes. Your second question with regard to Japan, again, I think we had a very solid quarter there. Again, if you mentioned, we had patients were up 29% in the quarter they were up, over 30% in the last quarter, and it was just a function of just opening fewer sites in the quarter. And we talked about that, last quarter, as well as last year that we front loaded last year, some of the site openings in Japan to accelerate the CP SmartAssist CP role out there as well as the PMDA study. So I think that will normalize in the second half of the year. But it was not just a more of a function of less that we had versus last year. We saw that same phenomenon as well in Q1 and again, I think that normalizes in the second half of the year.
Operator: Thank you. And our next question comes from Ross Osborn from Stephens. Your line is open.
Ross Osborn: Good morning. This is Ross on for Chris. Just following up on Marie’s question, can you discuss expected contribution in brief in the fiscal 3Q and in the second half of the year on a standalone basis and in terms of that ECPELLA cases?
Mike Minogue: Yes. So, thanks Ross for the question. I would say right now, we are expecting a very minimal impact in Q3 and probably into Q4 as well. I mean, we are launching at 5 sites turning LMR. We are still working right now, I think finalizing the pricing strategy. It will be similar to, I would say, that razorblade model that we have with Impella where we will sell consoles for somewhere 60,000, 70,000, 80,000 with an annual service contract and then we will continue to sell what I call the disposables, which are the pumps and the oxygenators and again ranging from $6,000 to $9,000. So, I think that’s kind of where we think the business model will be right now. Again, we will work through the pricing strategy with the first 5 sites, but I wouldn’t expect much of an impact right now from a revenue standpoint really in Q3 and for that much in Q4 as well. It’s probably more of a fiscal year 2022 story.
Ross Osborn: Great. Thank you.
Operator: Thank you. And our last question comes from Jayson Bedford. Your line is open from Raymond James.
Jayson Bedford: Good morning. I will keep it quick. It’s been a long call. Todd is there a way you could approximate the split between 5, 5.0 and 5.5 in the U.S. and just to be clear, you brought 5.5, last summer fall correct?
Todd Trapp: That is correct. It’s more of Q3. I mean, I don’t have the numbers in front of me, but we are selling more. 5.5s, we have more higher revenue in 5.5s in the U.S. today as a result versus the 5.0. Now, it’s a function of patients and it’s also a function of site openings. As I mentioned in my prepared remarks, we opened up another 31 sites for Impella 5.5 in the last quarter versus 4 for 5.0. So we are seeing higher patients as well as higher revenue coming out of 5.5.
Jayson Bedford: Okay. How many patients did you enroll in the STEMI DTU study?
Todd Trapp: We are at 15 sites now, close to – I think it’s close to 30 patients now.
Mike Minogue: Yes. That’s where we are at.
Jayson Bedford: Okay. And then just getting back to an earlier question on PROTECT IV, will we see interim data either on 30-day or 90-day outcomes or will we have to wait for all of the dataset once after 1 year?
Mike Minogue: We are going to have to wait till 1 year after the last patient, but you will already have most or much of that data already in-house. And the reason we are doing that is because now you are going to have something that we will have up to a year that we believe is going to statistically show a difference in the curves and we are setting the study up to have the highest level of evidence that we can meet every criteria for Class 1 guidelines. And to remind everyone that people are doing the study are the premier trials, they are also the people that weigh in on the strength of guidelines in general. So, that’s why we are doing it this way, but we already have safe and effective FDA approval. We already have our best practices. And for those sites that are not going to be in this study, we expect to see further adoption with our training and data and time strategy.
Jayson Bedford: Okay, thanks.
Operator: Thank you. And that does conclude the question-and-answer session for today’s conference. And I would like to turn the call back over to Mike Minogue for any closing remarks.
Mike Minogue: I just want to thank all our investors for your support during the journey. These are challenging times. Know that at Abiomed, we are grateful to help patients. We are optimistic about the future. And we are tracking as a company with close to $1 billion in sales, a $1 billion in cash, 1,000 patents, 1,000 patents pending, and a product that will revolutionize the standard of care for patients that have heart failure and organ dysfunction that need oxygenation. So, we will follow-up with questions if you have any. Thanks for your time and have a good day.
Operator: Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day.
