Spectranetics Corp. Q1 2010 Earnings Call Transcript

Spectranetics Corp. Q1 2010 Earnings Call Transcript
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Spectranetics Corp. (SPNC)

Q1 2010 Earnings Call

April 28, 2010 11:00 am ET

Executives

Don Markley - Lippert/Heilshorn & Associates

Emile Geisenheimer - Chairman, President and CEO

Guy Childs - CFO

Jason Hein - SVP for Sales & Marketing

Analysts

Jason Mills - Canaccord Adams

Amit Bhalla - Citi

Joshua Zable - Natixis

Suraj Kalia - Rodman & Renshaw

Josh Jennings - Jefferies & Company

Spencer Nam - Summer Street Research

Tom Kouchoukos - Stifel Nicolaus

Charley Jones - Barrington Research

Presentation

Operator

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Welcome to the Spectranetics first quarter 2010 fiscal results conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we'll hold a Q-and-A session. (Operator Instructions) As a reminder, this conference is being recorded today April 28, 2010.

I would now like to turn the conference over to Don Markley. Please go ahead, sir.

Don Markley

Thank you. This is Don Markley with Lippert/Heilshorn & Associates. Thank you for participating in today's call. Joining me from Spectranetics our Chairman, President and Chief Executive Officer, Emile Geisenheimer; Chief Financial Officer, Guy Childs; and Senior Vice President for Sales and Marketing, Jason Hein.

Earlier today, Spectranetics released financial results for the quarter ended March 31, 2010. If you have not received this news release or if you'd like to be added to the company's distribution list, please call Lippert/Heilshorn in Los Angeles at 310-691-7100 and ask for Noreen.

Before we begin, I'd like remind you that management will make statements during this call that includes forward-looking statements within the meaning of Federal Securities Laws. These statements involve material risks and uncertainties that could cause actual results or events to be materially different from those anticipated.

For a list and description of those risks and uncertainties, please see the company's filings with the Security and Exchange Commission. Spectranetics disclaims any intention or obligation to update or revised any financial projections or forward-looking statements, whether as a result of new information, future events or otherwise. Furthermore, this conference call contains time sensitive information and is accurate only as of the date of the live broadcast April 28, 2010.

I'll now turn the call over to Emile Geisenheimer. Emile.

Emile Geisenheimer

Thank you, Don and good morning to everyone. Thanks for joining the call. I'd like to begin this morning call with the review of some of the highlights in Spectranetics first quarter accomplishments, before I turn the call over to Guy, who will discuss the first quarter financial results.

Overall, I'm pleased with the accomplishments of the quarter, which include setting a new record, a worldwide disposal sales of $25.4 million, highlighted by continued high rate of growth of our Lead Management business, which grew 21% compared with last year's quarter and the successful launch of our Turbo-Tandem, which led our peripheral atherectomy business to a year-over-year growth of 6% and 14% sequential growth rate. Notably, this is the first time and we've reported growth in our peripheral atherectomy business in six quarters.

Finally, I am very pleased that we demonstrated progress towards our goal of sustained and growing portability by reducing our pre-tax loss by 68% from the prior quarter. Lead Management revenues totaled at $9.9 million during the first quarter, which represents a strong year-over-year growth of 21%.

We look forward to this Heart Rhythm Society, which will take place a couple weeks here in Denver. This meeting is a meeting in which we showcase our Lead Management products, for first time this year we'll be providing hands-on computerized simulator training at the important meeting. I'm pleased that we continued to enjoy a strong leadership position in the Lead Management business.

At peripheral atherectomy business benefited from the successful launch of Turbo-Tandem. We initiated an initial market evaluation of Turbo-Tandem in February at 19 accounts. I received very positive feedback on the products ease of use in clinical performance from position to participate in the initial marketing evaluation.

We didn't commence the limited commercial launch of the product beginning at last week of February. Each sales rep was permitted to open a single initial account and was required to provide training in clinical support during the first three Turbo-Tandem procedures.

Once the initial cases were completed, a sales rep could introduce Turbo-Tandem to second account with the same level of support was required. As of March 31, we'd opened 94 Turbo-Tandem accounts, including the accounts that participated in the initial market value. Turbo-Tandem generated $1 million of revenue the bulk of which occurred during the later part of our quarter. We're pleased with both the penetration rate and reorder rate in Turbo-Tandem so far and are happy with the feedback, we're getting from our physician customers. To recall that we've been working with FDA in an effort to define, an FDA could have regulatory pathway to receive clearance for Spectranetics to market its devices for the treatment of in-stent restenosis.

Now, let me give you an update. In May of '09 we filed Pre-IDE with FDA, which included bench test data and interim data from PATENT study, which is on going in Europe. We didn't file the 510(k) application in September of 2009. We received questions and request for further information from FDA in December.

The 510(k) application remains open and we planned to respond FDA's questions with a fairly of a new Pre-IDE in a week or so. This new Pre-IDE will propose clinical and safety end points and outline to plan of statistical analysis for the PATENT data. We will also respond FDA's questions and request on other matters, including a request for additional stent testing. When this is complete, we'll submit our response to the FDA 510(k) questions.

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