Q1 2010 Earnings Call Transcript
April 22, 2010 5:00 pm ET
Nick Laudico – IR, The Ruth Group
John McDermott – President and CEO
Bob Krist – CFO and Secretary
Robert Poole – Bricoleur Capital
Cynthia Yee – Piper Jaffray
Sean Lavin – Lazard Capital Markets
Gene Baxter – UBS
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Greetings and welcome to the Endologix Incorporated first 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, Mr. Nick Laudico of The Ruth Group. Thank you, Mr. Laudico. You may begin.
Thanks, operator. 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’d 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 discussion of risk factors, I encourage you to review the Endologix's 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, April 22, 2010. 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’s first quarter 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.
We have a very good start to 2010 with total revenue for the first quarter of $14.5 million up 22% year-over-year. Domestic revenue of $12 million was up 18% year-over-year and 11% sequentially. Internationally, our distribution partners continued their growth leading to 49% year-over-year growth on sales of $2.5 million for the quarter.
We are particularly pleased with the 11% sequential growth in domestic sales, which was consistent with our guidance to grow domestic sales sequentially in the first quarter and demonstrates our ability to withstand increased competitively activity and continue to capture market share. We attribute these results to the caliber of our sales organization and the clinical advantages of our products.
Later this month a new article is expected to be published in a preview journal that examines the results from anatomical fixation in all three of our FDA clinical studies. We’ll provide more details when the article publishes, but what I can tell you is that data on anatomical fixation continues to be very compelling.
Switching now to the sales force. At the end of the first quarter we had a total of 54 sales representatives, up from 51 at the end of 2009. During the quarter we hired three very talented individuals with strong physician relationships in their respective markets. These new reps have begun our comprehensive sales training program, which typically takes around six month to complete.
We’ve been very pleased with the number of highly qualified candidates interested in joining the Endologix team and are on track to fill the targeted new sales territories by the end of the year.
During the quarter, we also made good progress with our new product pipeline. We are on schedule with the Powerlink line extensions and expect to launch several new sizes during the second half of 2010. Last week we announced the first patient enrollment in our PEVAR clinical trial. The procedure was performed by Dr. Jim Melton Oklahoma Heart Hospital and we expect the other clinical sites to begin enrolling soon.
We anticipate that it will take approximately one year to complete enrollment, so we are targeting approval in the first half of 2012. The study includes 20 sites across the country approximately half of which are new physician customers. We also continued to move forward with our other product initiatives including a lower profile AAA system, the fenestrated graft and a thoracic device.
We are making progress with each of these programs and look forwards providing further updates later in the year. Before turning the call over to Bob, I would like to give the quick update on the patent litigation with Cook. Well, the case is currently stayed, we believe it’s likely that the stay will be lifted during the second quarter and we will start discovery sometime at summer.
We continue to believe that we have a very strong defense against the alleged claims and we have the necessary resource to vigorously defend our position. This dispute will not distract us from our focus on new product development in sales growth. Lastly I would like to inform everyone that we will be exhibiting at the Society for Vascular Surgery meeting in Boston from June 10th to the 13th.
We will also be presenting at the Jefferies Global Life Sciences Investor Conference in New York just prior to the SVS. We look forward to meeting with many of these events.