ABIOMED, Inc.

Hello and welcome to the Abiy Ahmed FY22 Q3 earnings call. My name is Katie and I'll be coordinating your call today. If you'd like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. I will now hand over to your host, Nicole Nath, to begin. Nicole, please go ahead.

Good morning and welcome to Abiy Ahmed's third quarter fiscal 2022 earnings conference call. This is Nicole Nath, Manager, Investor Relations. And I'm here with Mike Minogue, Abbey Med's chairman, president, and chief executive officer, and Todd Trapp, vice president and chief financial officer. The format for today's call will be as follows. First, Mike will discuss third quarter business and operational highlights, and then Todd will review our financial results, which were outlined in this morning's press release. After that, we will open the call to your questions. During the call, we will discuss certain financial information on a non-GAAP basis. This non-GAAP information is provided to enhance your overall understanding of our current financial performance. The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Reconciliation between GAAP and non-GAAP results are presented in the tables accompanying our earnings release. Finally, I would like to remind everyone that today's call includes forward-looking statements. The company cautions investors that any forward-looking statements involve risks and uncertainties and are not guaranteed in the future. Actual results may differ materially due to a variety of factors identified in our earnings press release and our most recent 10-K and 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements. With that, let me turn the call over to Adelaide's Chairman, President, and Chief Executive Officer, Mike Minogue.

Thanks, Nicole, and good morning, everyone. Abimed delivered record revenue of $261 million in the quarter of 14% year-over-year in constant currency. Despite its lower start in October due to the COVID resurgence and hospital labor shortages, Abimed achieved record revenue. These results were driven by patient utilization records in both the U.S. and Japan of 10% and 35% year-over-year, respectively. Even with the headwinds, our Abimed 2.0 playbook allowed us to adapt and execute grow sequentially, and support the most patients ever in a quarter. These results would not have been possible without the dedication of our customers and employees supporting critically ill patients 24 by 7 on-site, online, and in the cloud with Impella Connect. From a financial perspective, we achieved a 25% operating margin while investing $41 million in research and development as we remain fanatical and focused on creating breakthrough technologies advancing clinical research and guidelines, and improving real-world outcomes by supporting hospitals with a premier clinical team. And our long-term outlook is robust and strengthened by our balance sheet with $932 million in cash and zero debt, with over 1,300 patents and over 1,300 patent spending. On today's call, I will highlight how we are executing our Avimed 2.0 playbook, in the current COVID environment and provide updates on our patented breakthrough technologies. AbbeyMed 2.0 is helping our hospital partners by supporting their staff to improve patient outcomes for many of the sickest heart and lung patients. Our company provides a unique and exclusive service with a premier clinical field team, educating, training, and supporting hospitals 24 by 7. This support is even more critical as hospitals today struggle with labor shortages. COVID impact or reinfection rates and ICU capacity all impacting procedural volume. For protected PCI today, the majority of our patients transition to the non-ICU unit after the procedure. This compares to a majority of our past high-risk PCI patients before COVID that routinely went to the ICU post-procedure. To improve physician access and closure outcomes, our single access procedure for protected PCI has grown with education and training. In Q3, 55% of our high-risk PCI patients received single access and strong clinical signal now exists for lower bleeding rates and quicker recovery. This 55% single access, so a single hole for both the PCI procedure and the Impella, compares to 4% of our high-risk PCI patients with single access before COVID. These new high-risk protocols help open beds in the ICU for emergency shock patients who tend to be younger and higher priority for treatment. Our ability to share Impella and cardiogenic shock best practices has improved real-world outcomes, validated in multiple studies from the U.S., Japan, Italy, and Germany. Recently, a cardiogenic shock 24-hospital multicenter U.S. observational study published in JAK demonstrated that centers with shock teams were more likely to obtain invasive hemodynamics use advanced types of mechanical circulatory support like Impella and less IABP, resulting in lower risk-adjusted mortality for patients. Our hub and spoke strategy continues to demonstrate that community spoke hospitals are growing their Impella patient volume. This shift to treatment in outlying centers allows scheduling availability and flexibility for referring physicians and patients when large transplant hospitals get overwhelmed with COVID patients. As a result, we've seen community volume growth, both sequentially and year over year. COVID has also accelerated the rollout of Impella Connect, a remote monitoring technology. Today, this technology is now available in 1,564 hospitals worldwide, and approximately 90% of weekly US patients are monitored in the cloud. This allows our field team to support our patients 24 by seven, even with COVID hospital restrictions and labor shortages, which helps ease patient management and optimize care in the ICU. In addition, we adapted our business model to include more online training and education by launching our password protected user community called Camp PCI. Camp is an online and interactive education and training endeavor that hosts live cases allows for confidential user interaction, and has a dedicated clinical research community for our STEMI DTU and Protect4 studies. Camp PCI is led by a faculty of experts in the field of cardiology, creating a virtual platform for experts to share live cases, best practices, and techniques. For ICU nurses and cath and surgery technologists, in addition to onsite training and education, We offer online training modules and credits at our Abiumed Academy heart recovery website. Now turning to our innovation update. The Impella 5.5 with Smart Assist received Japanese PMDA approval. We are excited to bring this game-changing technology to Japan, a country where we recently hit our 5,000th patient milestone. Culturally, the Japanese are adverse to heart transplants, and invasive sternotomies. This makes Japan ideal for Impella 5.5, given the pump's ability to provide minimally invasive, longer-term unloading heart support, enabling native heart recovery. We expect this first Japanese Impella 5.5 patient to be treated this spring. The Impella ECP received Category B status from the FDA, and we established our pivotal protocol. We also received FDA approval for the Impella BTR early feasibility IDE study, clearing the way for their first patient in the world. The Impella BTR will provide patients a home discharge option with over one year on full hemodynamic support. In the early feasibility study, 10 patients will be enrolled at up to five hospitals and supported by Impella BTR for up to 28 days. The first Impella BTR patient is expected to be treated in March, or April this year in the U.S. AvioMed has also entered the ECMO space with our innovative breed technology. During our initial limited market release and study, we've treated 61 patients, have a 71% survival for respiratory failure, and have logged 873 patient days. The average duration of use is 14 days, and 80% of patients have been for VV ECMO, a majority with COVID complications. We've worked closely with these leading hospitals to provide support, gather feedback, and learn best practices on every patient. In general, we are pleased with overall survival, blood compatibility, durability of the pump lung unit, hemodynamic flow rates, and ease of patient ambulation. Based on our early patient study and analysis, we've identified areas of improvement around electronics of the console and have implemented a voluntary recall at our seven hospitals. Until this field corrective action is completed, we are not expanding our number of patients or new centers. The console upgrades may require a 510 clearance, and so we're working with the FDA on the next steps. We also announced the successful results of the first in human early feasibility study of the precardia system, published in Circulation Heart Failure. The multi-center prospective single-arm study examined 30 patients with acutely decompensating heart failure, or ADHF, who were assigned precardia therapy for 12 or 24 hours. The study met its safety and feasibility endpoints and documents that precardia system can rapidly reduce cardiac filling pressures and augment urine output by intermittently occluding the superior vena cava. This product has also been awarded category B designation by the FDA. This technology may enable the heart and kidneys to work more effectively, potentially providing therapy for patients non-responsive to diuretics, estimated to be approximately 300,000 of the 1 million US ADHF admissions per year. We summarized all of these studies for our shareholders and posted on our quarterly slide deck. Our leading in innovation and technology principle to be smaller, smarter, and more connected remains a cornerstone of our sustainable success. At the J.P. Morgan Healthcare Conference, I gave more detail about our innovation, and the presentation is available on our investor website. Before concluding, I'd like to highlight a patient story. John Kapilosis, 85, is a husband, father, and retired attorney from Jacksonville, Florida. John previously had mitral valve replacement, but was living an active lifestyle and enjoying retirement. When John began experiencing shortness of breath and intermittent chest pain in August 2021, he went to see his cardiologist, who diagnosed John with heart failure. Tests also revealed multivessel disease and a lesion in his left anterior descending artery. John was evaluated for CABG, or open heart surgery, but due to his age and previous surgery, was deemed too high risk for another surgery. John was referred to Dr. Sam Regaris, who identified John as a candidate for a protected PCI procedure with Impella. Dr. Regaris inserted the Impella heart pump pre-PCI to provide hemodynamic support while placing stents and performing a complete revascularization. The impella heart pump was removed in the cath lab and John was transferred to the CCU unit for overnight observation. John left the hospital the following morning and was home in time for lunch. Today John has a normal heart function and feels better than he has in years. He and his wife Anne plan to travel, resume their passion for gardening, and spend time with their six grandchildren. In conclusion, Our focus on extending our lead in innovation, advancing clinical evidence, and building a premier commercial team enables the pursuit of becoming the global standard of care for human support. We are now in the final stretch of our fiscal year 2022. As we cross the $1 billion revenue threshold, we know it is our commitment to patients first that has inspired our innovation, improved our outcomes, and led to our success. I'd like to thank our employees, customers, and shareholders for their continued support. I will now turn the call over to Todd.