Endologix Inc. (ELGX)
Q2 2010 Earnings Call
July 22, 2010 05:00 am ET
Nick Laudico - IR
John McDermott - President and CEO
Bob Krist - CFO and Secretary
Tim Lee - Piper Jaffray
Shawn Fitz - Stephens Incorporated
John Putnam - Capstone Investments
Joshua Zable - Natixis
Vivian Wohl - Federated Kaufman Fund
Greetings and welcome to the Endologix Incorporated second 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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 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 meeting of Federal Securities Laws. These forward-looking statements involve material risks and uncertainties. For 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 July 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 second 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 are very pleased with the Q2 results which were in line with expectations.
Total revenue for the second quarter was $15.7 million up 19% over the prior year. This was comprised of domestic revenue of $12.8 million up 12% year-over-year, and international revenue of $2.9 million up 65% year-over-year.
On a sequential basis, domestic sales increased by 6% and international sales increased by 17%. These results demonstrate our ability to capture market share by leveraging our growing US sales force and promoting the clinical advantages of anatomical fixation.
In April, a new long term study on anatomical fixation was published in the Peer Review journal of Endovascular Therapy. The results which followed 157 patients up to five years were exceptional. There were no aneurysm ruptures, no conversion to open repair, no device migrations and 100% freedom from aneurysm related mortality. In addition, at one and five year point, patients in the study had significantly reduced or stable aneurysm sac which is the best indication of long term efficacy.
We believe that data represent the best long term clinical result for any of the Endovascular AAA products currently available on the market. During the quarter, we also enrolled the first patient in our PEVAR clinical study which when completed will position us as the only company within an indication for Percutaneous aneurysm repair. We now have over 80% of the clinical study sites evaluating patients and are on track to complete enrolment in 2011, leading to an anticipated approval in 2012. We continue to believe that this expanded indication will enable us to capture market share as we train physicians on this less evasive technique.
Turning to our new product pipeline, we recently announced FDA approval for our Powerlink product line extension which will expand our addressable patient population and provide physicians towards more treatment options. We announced the new sides that the society for vascular surgery meeting in Boston in June and have received positive physician feedback during the limited market release. We trained the U.S. sales force on the new sizes earlier this month and our building inventory in anticipation of a full market release in the fourth quarter.
We also continue to advance our other new product initiatives including our lower profile system which will be called AFX for anatomical fixation along with our fenestrated and thoracic programs. We expect to submit a PMA supplement for AFX before the end of this year with a potential U.S. approval in 2011. We expect to receive CE mark for AFX in Europe and began treating patients outside the U.S. with the new device in 2011 as well. During the quarter, we added four new sales representatives, brining the total number of reps at quarter end to 58. As of today, we have 60 filled territories and are well in our way to increase the sales force by 30% in 2010.
We continue to attract highly qualified experienced individuals with strong physician relationships and are confident they will have a positive impact on our growth in the fourth quarter and into 2011. Next I'd like to give a quick update on the patent litigation with Cook as anticipated the stay on the trail was lifted in June and we're in the early stages of the discovery process. We expect the Markman hearing to take place in February of next year and continue to believe that we have strong, we have multiple strong defenses against the alleged claims.