Endologix's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Endologix Inc. (ELGX)

Q1 2012 Earnings Call

April 26, 2012 05:00 pm ET

Executives

Zack Kubow - IR, The Ruth Group

John McDermott - President & CEO

Bob Krist - CFO & Secretary

Analysts

Brooks West - Piper Jeffery

Steven Lichtman - Oppenheimer & Company

Chris Cooley - Stephens

John Putnam - Capstone Investments

Presentation

Operator

Greetings and welcome to the Endologix Inc. first quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. A 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, Zack Kubow. Thank you, Mr. Kubow. You may begin.

Zack Kubow

Thanks operator and thanks everyone for participating in today’s call. Joining me from the company are John McDermott, the 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 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’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 26, 2012. 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 would like to turn the call over to John McDermott.

John McDermott

Thanks Zack. We are pleased with our first quarter results, both in terms of sales growth and progress in our new product initiatives. I’ll start today’s call with a quick overview of our results followed by an operational and pipeline update. Then I’ll turn the call over to Bob for his financial review and after that I’ll come back on to discuss our goals for the remainder of the year.

First quarter global sales revenue was up 32% to a record $24.5 million. In the US, our sales team continue to leverage the recently launch AFX System and drove 37% year-over-year growth. Outside the US, our European team is off to a good start and our distributors in the other markets are looking forward to AFX approvals later this year. We’re pleased with the strong start to 2012 and are reiterating our full-year guidance of 22% to 28% annual revenue growth.

During the quarter, our domestic sales team demonstrated their effectiveness at promoting the clinical advantages of AFX. We continue to receive very good physician feedback on the device and expect to continue adding new customers as well as achieving deeper penetration in our existing accounts. We currently have 72 reps and clinical specialists in the US and are targeting to finish the year around 77.

In Europe, we are pleased with our initial results and the reception we are receiving from physicians. As of today, we have 16 employees in Europe and expect to finish the year with a total of around 30 with approximately 20 of those should be able to eventually support clinical cases. In January, we launched the AFX device in Europe at the Link meeting in Germany and earlier this month had a very strong presence at the Charing Cross Meeting in London. This is one of the most well attended vascular meetings in Europe and there were several presentations on both Nellix and Ventana. We received positive feedback from physicians that attended the meeting and there is a lot of interest in the commercial availability of the devices.

Turning to our pipeline, we expect to receive CE Mark for Nellix sometime this summer and are planning on limited market introduction over the balance of 2012. Initially, we will be working with the regional EVAR centers who will also participate in additional clinical trials that we will start later in the year.

We believe Nellix has market leading potential and our goal is to ensure excellent clinical outcomes in the initial rollout phase plus gather additional clinical evidence before opening it up for broader commercial launch in 2013. For Ventana, during the first quarter, we completed enrollment in our international clinical study and are now in the follow up phase. Depending upon the clinical results from the study, we have the potential to file our dossier and receive CE Mark for Ventana in the fall of 2012.

Similar to Nellix, we will begin with a limited rollout in selected centers and focus on achieving positive clinical outcomes and building training centers. In the United States, we hit two important clinical milestones for our pipeline during the quarter. First we completed enrollment in our 150 patient multi-center PVAR clinical trial. We are now gathering and analyzing the data and expect to submit our PMA supplement in the second quarter.

If we get approval as anticipated, we will be in a position to begin promoting and training physicians on percutaneous aortic aneurysm repair by the end of this year. The second important clinical milestone in the first quarter was initiation of patient enrollment in our US Ventana IDE clinical trail. We have approval for up to 25 sites in the study and plan to unroll about 120 patients. We currently have 11 sites that are approved to enroll patients and are currently working to get the rest of the sites up and running over the next few months.

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