Endologix, Inc. (ELGX)
Q4 2010 Earnings Conference Call
February 22, 2011, 5:00 pm ET
Nick Laudico – IR, The Ruth Group
John McDermott – President and CEO
Bob Krist – CFO and Secretary
Duane Nash – Wedbush Securities
Steven Lichtman – Oppenheimer
John Putnam – Capstone Investments
Chris Cooley – Stephens Incorporated
Tim Lee – Piper Jaffray
Larry Haimovitch – HMTC
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Greetings and welcome to the Endologix Incorporated fourth quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nick Laudico of The Ruth Group. Thank you, Mr. Laudico. You may begin.
Thanks, operator. And thanks, everyone, for participating in today's call. Joining me from the company are John McDermott, President and Chief Executive Officer; and Bob Krist, Chief Financial Officer. This call is also being broadcast live over the Internet at www.endologix.com, and a replay of the call will be available on the company's website for 30 days.
Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of the Federal Securities laws. These forward-looking statements involve material risks and uncertainties. For a discussion of risk factors, I encourage you to review the Endologix’ Annual Report on Form 10-K and subsequent reports as filed with the Securities and Exchange Commission.
Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, February 22, 2011. Endologix undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call.
With that said, I'd like to turn the call over to John McDermott.
Thanks, Nick. I’d like to welcome everyone to the Endologix fourth quarter and full year 2010 conference call. Joining me on the call today is Bob Krist, our Chief Financial Officer, who will provide an overview of our financial results following my comments. In 2010, we successfully executed our growth strategy by expanding our product offering to treat more patients, strengthening our new product pipeline and increasing our US sales force.
We exited the year with record quarterly revenue of $19.2 million, up 41% year-over-year, and exceeded our annual revenue guidance with full year revenue of $67.2 million. We are entering 2011 with good growth prospects, including a full year of sales of our expanded product line, a larger and more experienced US sales force, and the planned launch of our new AFX system in the second half of the year.
To drive growth beyond 2011, this year we plan to begin building a European direct sales force, add more reps and clinical specialists in the US, and continue investing in our new product pipeline. I will go through each of these initiatives in detail on today’s call.
On a strategic level, we continue to be exclusively focused on endovascular devices to treat aortic disorders. Our current products treat infrarenal aortic aneurysms in a global market that is worth about $900 million. Over the next several years, we plan to introduce many new technologies that will expand the market, treat more patients, and enable us to capture more share, including a thoracic aorta, we expect the stent graft market to have a total global value of about $1.7 billion in 2015.
Our ambition is to become a leader in this attractive market by focusing on innovative technologies that are easy to use, provide outstanding clinical results, and enable physicians to treat more patients. We’ve made good progress over the past few years, but are really just scratching the surface of our potential.
Turning to our pipeline, we are very excited about the Nellix acquisition that closed in December. We studied this new technology very carefully and believe it represents the most promising new EVAR platform in development. Earlier this month, we announced the publication of very favorable clinical results with the Nellix device in the Journal of Vascular Surgery.
The article highlighted results from the Nellix international clinical trial, which covers the first 21 patients treated with the device. It demonstrated successful aneurysm exclusion in all patients and no late aneurysm or device-related adverse events. We believe these positive results are indicative of the unique attributes of the device, which is the only EVAR technology that completely seals the aneurysm sack.
Based on our diligence in the initial clinical results so far, we believe that Nellix platform has the potential to reduce secondary interventions in long-term patient surveillance while offering a simple procedure with the broadest indication of all EVAR devices. From our perspective, Nellix is the one technology that has the potential to disrupt the EVAR market and expand the therapy to more patients with infrarenal aortic aneurysms.
Since completing the acquisition, we have been busy working on the integration, preparing the Nellix technology for commercialization and international markets and the US IDE clinical trial. We remain on track with our development timelines and expect to begin enrolling patients in the pivotal trial in 2012. 40 patients have been treated with the device outside the US, and we expect to receive CE Mark in 2012.
Another new product with tremendous potential is our Ventana fenestrated stent graft. This device was developed internally to treat aneurysm patients with very short aortic necks and juxtarenal and pararenal aneurysm. We estimate that these patients represent approximately 20% of the diagnosed aortic aneurysms and cannot be treated with currently available endovascular devices in the US.