Abiomed, Inc. (ABMD)
Q3 2009 Earnings Call Transcript
February 05, 2009 at 8:00 am ET
Michael R. Minogue - Chairman of the Board, President, Chief Executive Officer
Robert Bowen - Chief Financial Officer
Aimee Maillett - Corporate Communications Department
Greg Simpson - Stifel Nicolaus & Company, Inc.
Bob Hopkins - Banc of America Securities
Erik Schneider - UBS
David Lewis - Morgan Stanley
Sean Lavin - Lazard Capital Markets
Duane Nash - Pacific Growth Equities
Brian Kennedy - Jefferies and Company
Previous Statements by ABMD
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(Operator Instructions) I would now like to turn the call over to Ms. Aimee Maillett of the Corporate Communications Department. Please proceed ma’am.
Thank you. Good morning and welcome to Abiomed's third quarter 2009 earnings conference call. This is Aimee Maillett of Abiomed’s Corporate Communications Department. I am here with Michael Minogue, Abiomed Chairman, President and Chief Executive Officer as well as Bob Bowen, our Chief Financial Officer.
The format for today’s call will be as follows. First, Mike will provide you with strategic highlights for the third quarter, next Bob will provide details on the financial results outlined in today's press release, and we will then open up the call for your questions.
Before we begin discussing the third quarter, it is necessary to remind you that during the course of this call, we will be making forward-looking statements including statements regarding future financial performance, product development efforts, Abiomed's strategic operational initiatives, market response to our new products, our progress towards commercial growth, and future opportunities. Abiomed's actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors including uncertainties associated with development, testing, and related regulatory approvals, competition, technological changes, anticipated future losses, complex manufacturing, high quality requirements, dependence on limited sources of supply, government regulation, future capital needs, and other risks detailed in our SEC filings.
Investors are cautioned not to place undue reliance on any forward-looking statements which speak only as of the date of today's conference call. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this conference call or to reflect the occurrence of unanticipated events.
Lastly, comparative references made financially in this call to revenue, expenses, gross margin, or other increases or decreases will be indicated by references to third quarter of fiscal 2009 as compared to the third quarter of fiscal 2008 or third quarter of fiscal 2009 as compared to the prior second quarter of fiscal 2009.
I am now pleased to introduce Mike Minogue, Abiomed Chairman, President and Chief Executive Officer.
Michael R. Minogue
Thanks Aimee. Good morning everyone and thank you for joining our call today.
In Q3 we continue to prioritize and execute on our four corporate goals of launching Impella 2.5, increasing Impella manufacturing capacity, driving to profitability and growing revenues greater than 25%. Today I will review the status of Impella relative to our first corporate goal as well as provide an update on our steps to drive to profitability and grow revenues greater than 25%. In regard to our Impella launch, there are four main points I will discuss in detail.
Number one, the Impella launch is underway with the 510(k) clearance and we are focused on maximizing revenue, increasing our cash burn and driving to profitability as we continue to grow the US field of distribution.
Number two, scientific evidence from publications has already validated that Impella is superior to an intra-aortic balloon pump or IABP with regard to increasing cardiac output and cardiac power. With 163 of the top heart hospitals having purchased Impella 2.5 in the last six months, the customer demand indicates market acceptance and clinical validation.
Number three, the goal of Protect II clinical trial is to demonstrate clinical superiority over the IABP for high-risk PCI population. This can be done by hitting the composite endpoint and/or by showing individual benefits on most critical endpoints like mortality, MI, stroke or renal dysfunction. Our goal for this study on our commercially cleared Impella 2.5 product is success on the endpoints, not speed of completion. We are also very confident in our assumptions for major adverse event rates for high-risk PCI and protective for the intra-aortic balloon pump.
Number four, the goal of Recover II and Impress is to demonstrate clinical superiority over in IABP for PCI post MI. However, we believe that the Impella provides a new treatment paradigm to help recover heart muscle for heart attack patients.
So now more detail. Number one, the Impella launch is underway and we are focused on maximizing the revenue. The majority of our revenues since 510(k) clearance has been and will be under general use for Impella. Our quarter of $17.3 million in revenue was based on strong Impella sales of 112% growth at $8.9 million and legacy sales dropping 29% to $8.4 million, down $3.4 million compared to the third fiscal quarter 2008.
We normally see a ramp in our end of quarter console legacy sales especially for the December quarter which did not happen this quarter. Based on today’s financial environment, we did see more scrutiny across the board as hospitals look to conserve cash versus using end of year funds for non-budgeted items. All hospitals are being more conservative with their cash but Impella sales were less impacted based on our ability to place consoles with an incremental disposable order. Our average new order for a new account continued this quarter at four Impella 2.5 units. The Impella commercial revenue recorded during the third fiscal quarter 2009 was $7.3 million in sales. Again that is the US commercial revenue, of which $6.7 million was for sales of the Impella 2.5 device sold under 510(k) clearance and $0.6 million sold under their Protect II and Recover II.
The Impella revenues for general use for the US sequentially increased over Q2 which is our first full quarter with 510(k). In Q2 we sold $6.2 million with 108 hospitals and in Q3 we sold $6.7 million and opened 55 hospitals for general use of Impella 2.5. We believe this is significant because Q2 had pent up demand after the June 510(k) and we opened fewer hospitals in Q3. Our trial revenue is now a small part of our top line revenue transitioning from $2.6 million in Q2 to $0.6 million in Q3. We additionally relabeled trial units to general use over both Q2 and Q3. We believe that our growth will continue in both utilization and new accounts and look to optimize the mix.