TMDX - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the TransMedics Q1 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Group. Gilmartin at Johnston Brian Thank you. ahead, Go please.

Brian Johnston

website. operator. results financial you, the release the TransMedics A released the quarter press company's on available today, for is ended of Thank copy Earlier March XXXX. XX,

call management Before we begin, meaning forward-looking statements would pursuant like of include federal this that within which will are to you call made to during statements statements that make Private remind I Securities that the to Litigation Act securities contained provisions laws, the in of harbor Any this statements. predictions or of the or safe results performance relate forward-looking of expectations Reform events, XXXX. future are

All forward-looking upon gross for margins our and/or XXXX organization, our examination for products revenue, operating statements, and reimbursement in are expectations based regulatory our for estimates approvals various growth trends, in and current expectations, our and expectations of the future guidance and potential includes opportunity assumptions. without including, expenses and commercial financial our operating limitation, which

risks material statements. Accordingly, could from undue implied forward-looking these involve to cause by statements. those should anticipated statements not differ these events or and reliance you place materially These results or actual that on uncertainties

XXXX. to of associated XX-K list the Risk a of please the Securities risks the with our on filed section refer XX, and our Commission For Factors annual March description report business, Form uncertainties and with on Exchange and

X, only revise any future or as accurate This broadcast or any information, intention time-sensitive call otherwise. information projections obligation, except update as May financial live disclaims the conference and or law, statements, TransMedics of or today, by whether required forward-looking of XXXX. events new because is contains to

Officer. call now turn over Chief President Waleed with and to And I'll Hassanein, the that, Executive

Waleed Hassanein

Brian. Good to everyone, Thank TransMedics' XQ you welcome XXXX earnings call. so and much, afternoon,

Financial Chief today our me is Stephen Gordon, Officer. Joining

the well extending and well procedures devastating unprecedented all professionals are the continuing and ensuring on pandemic. transplant as health this and our who team, and care the times clinical start transplant my support during gratitude TransMedics wishes these are call to as I front-lines, challenging circumstances, organ want by to COVID that Given

to our their customers globally; families; pandemic one, support response minimize taken focused three two, In three, on its to business enable our actions health this transplant us main We the COVID the our to users of we actions continuing our financial and our extensive on and of and to team employees business. and areas: stronger. negative have protecting emerge and to impact this crisis weather out maintaining pandemic, our

details. has of the their health key health to TransMedics in government to families, for safety agencies and with of federal line essential and who and exception the To the are environment, Let protect deemed and to those a local operations me TransMedics. remote care work employees employees TransMedics share business enacted transition policies with

to support Given the and support are TransMedics' a procedures support made and COVID or clear procedures, our product support and pandemic. an with crisis, throughout organ team has crisis our commitment the either clinical nonelective available person global transplant customers essential TransMedics this remained during field strong throughout in to virtually. customers, clinical this

expenses, TransMedics management. measures expense expenses. as has SG&A pandemic R&D company has The the and is actions to point reduce trajectory taken the Last maintain of financial to flexibility evolves. near-term nonessential, reduction taken preemptive of including

business. well closely continuing strongly the as effective, percentage feel We to healthy salaries balance on deferment a and across acted to a the in these actions board maintain potential of we've head of addition, the impact monitor small and we're evolution In have reduction dynamic as count its that been sheet. our

a results. the products to across and and position U.S. all We XXXX started in shift QX strength me OCS let progress of Now internationally. made in review the meaningful

in XX% U.S. XXXX representing million, million, quarter $X.X was Net was revenue representing XX% same revenue net first growth period quarter in XXXX. U.S. growth the for the first Our overall $X.X from

of both in program. all first commercial recognized across revenue alongside OCS the OCS OCS we products programs contributing Heart in the quarter, our OCS U.S. Importantly, Lung the three Liver with and the

Specifically, to rapidly Trial, and the DCD with of coming in final OCS our program accelerate results. we to to weeks. OCS statistical by the U.S. are the liver we XX plan continued we very Liver DCD ended Heart to We submit the quarter program, FDA completed the have within Relative the transplanted the excited PMA the Heart PROTECT analysis and

with national In heart Europe, the or major our first In also collaboration organ gained initiative several procurement business in organizations we service our momentum quarter. OPOs. we expanded in QX,

deferred few a with number fact, COVID has initiatives announce expect, had the of In fully to in to due pandemic. leading we from the OPO collaboration the were crisis once however, OPOs orders COVID new stabilized QX U.S. We that

a – you expectations we Now recovery trajectory growth XXXX. prior significant impact on and throughout Overall, let near-term me COVID describe on to March, discuss with towards the in TransMedics. were XXXX

pandemic our caused COVID-XX and delays progress. crisis the has in However, disruption

shifting In as seen March, the personnel a facilities decline to in U.S. we've in and to procedures health resources began care respond transplant sharp many the surge.

this Europe, UK, we for their guidance XXXX. they shut disruption Germany, specifically and Italy, clinical in transplant deal and entirety the program uncertainty, pandemic. Because its down COVID While France with significant to withdrew of in in

given this of are the the where with phase of is to grappling will or realistic transplant U.S. early COVID that assume in are reaching of is will stabilization. through just continue be surge We believe It still states the it's patients to many disruption Europe. both trough impossible QX activity predict or and

procedures not relative procedure. are to a procedures is elective The given disruption to our other medical unique business transplant the bit

OCS of ICU back not for response some away beds, to COVID to ability resources transplantation, procedural such with will the growth ability from such as personnel, revert we depend, the to our demand drive emergent are the transplantation. as clinical on and and to need extent, the While concerned procedures for hospitals

of durability in of our we said, business the are transplantation. That of terms by advantaged nature also uniquely

me examples. Let highlight a few

pandemic. are and they is well-established procedures, not this or This life-saving for waiting that doctors There means procedures ability demand patient's relying throughout a even organ have which represented grow to visit As primary transplant not surgical elective the to organ essential pent-up referral for their get by list, transplants are procedures. transplant we elective. I to or mentioned, on willingness physician care are continued

United resume COVID-XX hospitals Even resources screen amongst in crisis. that the to COVID shift begin prioritized their for was We the to to situation, organ donor testing a and donors COVID from of transplantation in to standard available now potential will battery of screen as the procedures to all believe is testing the tests transplantation dedicating first the be States. every part

negative believe facilities high-margin impact look the meet demand we care to that health also elective to major the while clinical Finally, of deferment the procedures to countering procedures the the may organ patients, institution's on financing. related financial for overall transplant

infection, capacity, third in this by second procedure inventory demand we this potential clinical We're transplant transplant given of support stability With expanded the significant that our rate of of expanding pent-up see for believe activities. the XXXX. building expect may mind, normalcy near preparing quarter, end quarterly potential very hospitalization testing benefit and and of for with disruption. the a XXXX potential and assuming support half XXXX incremental team to for in we on the beginning actively the the towards we improvement these points basis beginning or in from by to surge Furthermore,

section TransMedics' XXXX TransMedics. of my fundamentals remain Despite me the the on for Let discussing near-term COVID for XXXX the we end by and negative beyond. long-term and crisis, impact bullish beyond

dialogue transplantation will expected the establish of OCS life-saving procurement forward service following based Our our is OCS to with OCS fundamentals: heart the in meeting, and three, in for results we broaden nature then half during lean PMA and associated the of strength the our during FDA post-COVID offering based to demand significant the and imminent the crisis, the technological to our FDA, to our unchanged; and OCS on this strategy this meeting believe FDA four is and clinical era. XXXX. and the trial position XXXX; two, pipeline organ organ using QX Relating during facilitate decision Heart be crisis remain panel technology submission our of one, second this and of latest Liver targeted that panel the decision for procedure and is transplant FDA with OCS

underscores process. our institutions TransMedics We transplantation need retrieval for this this is in to new the believe OPOs relationships and a platform, leading crisis further and solution transplant technological model with and best our provide streamline the clinical organ broad that positioned existing deep expertise on to and U.S. technology based our

to that our lose our withstand the and not over strong the expense XX further crisis momentum past built we've butters balance balance Finally, months. reduction to and to sheet XX sheet this actions our

review to turn the quarter. results will call the I Gordon, that, Stephen for to CFO, our the financial With

Stephen Gordon

time. results Thank and on will some preserve during additional provide somewhat detail QX our to actions you, uncertain cash I Waleed. the this

XXXX, quarter was For was revenue of the revenue our our and $X.X first million. net $X.X gross million,

also million in million, $X.X million the $X.X Net million grew that XX% in U.S., net outside the was Lung, million OCS growth was revenue $X.X The XXXX. U.S. revenue quarter the $X.X our and And net in revenue U.S., million Heart. OCS the and our the XX% of Liver. net $X.X million, and on from revenue first revenue organ And first U.S. was OCS OCS revenue in XXXX. $X.X gross from quarter Heart that of was breakdown was was of $X.X of

So of product that the good breakdown should detail. level give a

and continued from all up Liver revenue of the XX% The quarter XXXX, lung OCS key growth of U.S. by in drivers first clinical ex QX both trial And XXXX. grew our first Heart the revenue our adoption revenue of from organs. across XX% and significantly. OCS U.S. OCS from U.S. our contributed revenue was quarter was

of from for quarter XXXX, last the XXXX. direction. quarter Our and gross that's first XXXX the XX% from That's the continuing for up XX%, in up right QX XX% in margin progress was quarter first to of

expense quarter XX% the of quarter operating total XXXX, of was first growth in the XXXX. $XX.X first from million Our

million of million operating first XXXX. $X.X And in million our of the in was to Our XXXX. first of the first in quarter loss quarter quarter $X loss compared XXXX to first the the XXXX quarter $X of for $X.X compared net was million

cash common quarter securities and and million. was marketable were the weighted shares for and March as equivalents XX, outstanding XX.X cash average million Finally, $XX.X XXXX, of

period discretionary percentage mentioned and of capital included reduction reduction capital Now These all this preserve nonessential strategic as of salary delay uncertainty. small actions have earlier, company, a expenses. the a in a to taken and deferment and our of during Waleed or operating across swift very actions workforce we

in gained certain While these a to momentum taking to we first will avoid reasonable the in areas, critical our losing believe capital, the provide cash we these to continue had steps see level actions like however, hire currently to in quarter. of the the of do we preserve in commercial continue And team, mitigation to We runway have us. the we million should we the that to us need expect front revenue $XX.X give XXXX. in therefore, to weather storm impact

did guidance may changed public apply decided Paycheck April. end as the have seen part and at You after to for loan turn the receive that Protection CARES that also loan we Act, ultimately the of but of around companies a

turn back With the Waleed. that, call to I'll over

Waleed Hassanein

Thank you, Stephen.

are As began results, achieve we strong our XXXX COVID this to on track growth in significant QX seen we then the pandemic happened. with momentum, year, and

of TransMedics' OCS that for indications While robust supporting in impacted confident value data the and term, in pipeline our clinical be we technology. prospects our negatively and long-term we're the business expect will the extremely near new

preserving both to while health organ In mission from as to taken this continue and best cash stronger business our position to the meantime, mitigate crisis transplantation. risks, we've transform to emerge TransMedics measures we extensive

front Finally, pandemic, ensuring during thank that I moment take workers continuing to lines transplant and to care health a patients you much want team again TransMedics for this in us call. on organ Thank need. this are so transplantations the joining on the to help

Operator? the up questions. open will we now And for line

Operator

Instructions] your Morgan of question the David first comes Lewis from Stanley. line And with [Operator

Unidentified Analyst

on phases? color Hi good early You phases you more quick on afternoon. questions just is provide A of of commented This stabilization. David. for for please some Kelvin early on Could couple me.

then on XQ guidance by the by April? and what end had closely comment seeing wondering of follow-up. you recovery you're can on And the Are just if you seeing could now provide in XQ your April? any XQ. sort you a quick budget pre-COVID could And trends Just quantitative how and if of approach I recovery some you in

Waleed Hassanein

some seeing started the really We recovery April. towards signs of half of second early

this distancing COVID. in rebound of encouraged a by that in of as are in aware uncertainties We it. another everybody remain there's But states the easing with some that call system the is in result could lot social

prepared disruption more this going I QX. community But the to opinion time. that This think is it's change to early this continue. will continue is too really going transplant to through be way our

and in get How that peak. stabilizing, of as if the expecting is is expectation QX as see stated, lot near – Kelvin, the and uncertainty hopefully again, see improvement That's the to et much impact number I be? we're peak Where that we some surrounding to April. unknowns there's the we to hit half of signs our activities of hospitalization in early However, going another are trying second see at getting we with in kind beginning going QX. But normalization cetera? least. and But we're going of recovery to a it transplant of stabilizing procedures, in to to

Unidentified Analyst

to on important are your just Understood. sorry, York And Boston could you business? comment you quickly and how New – could

Waleed Hassanein

I big they're important. Boston From think think standpoint, business is I our cities.

important about paralyzed get and the not geography. surge But is New York York the Coast from other not New The necessarily patients shipping as to New entire York we it's East were as states transplanted. to City local down in Boston.

So question. I addressed think I your

So a New New have dependent – for donation. staying don't – the surge, even everybody but in because though of was not York, we were from approach New it's not away to York just York

Unidentified Analyst

very Got That's helpful. Understood. it.

a very on catalysts. follow-up upcoming just Just quick

the panel. heart You commented on

virtual just the dynamic? Just on the publication or Any of progress curious there a FDA on conference kind on and the updates cancellation on on heart is then going if virtual confirming with readout strategy, liver. or panel given any

Waleed Hassanein

Sure, sure.

I'm definitive So to the frame. that second going we the to actively be sometime think this time it's this appears heart until we're and are We we of to that. year. going with But the it the meeting this a reschedule about FDA discussing be late sure is related to panel, aiming FDA, have panel – QX in in date, half

have the try with to to be live us liver to to known the Related trial supportive is – through us. a the like. that are date and the goal The virtual position wanted very a the fallback as to set it pursue, office to That's to enable to would hopefully meeting with PMA, have or strategy cardiovascular the it. WebEx that results devices of we're meeting the

a going announce PMA time line And going QX results exciting us, they extremely, the And results. major given extremely towards testament the we'll in wait and We're XXXX. to publicly that are are that the to to strength manuscript results, the of delayed, publication. we and cannot submitting directly be major we PMA as to hoping not of that the to actually a we're submission – is a

as several And to as And that we They're with happen kind The get strong. way trials very any the we results published very, to weeks. these excited over possible. that, very the results. can them of soon type in next hope will we're its investigators lead to first are our work support

Operator

of line the from comes Robbie question next Marcus your And from JPMorgan.

Robbie Marcus

question. charged recovery, wanted thinking don't are as hospitals' the of willingness the capital that how be to talk the is to here. taking much technology top imagine new for recovery. not there system the to you we I move of Thanks products about, through hospitals, I a think mind adopt Great. about I into component to a also it's the during hospital bring involved but going

do the about over year? understand ramp-up to the how centers that you accelerate in So online you're the thinking help now new and what rest us process could of bringing help

Waleed Hassanein

Sure. Thank you, Robbie.

been strategy new in up that remember call, centers. our stressed I ramping last my the has never you about As fact

trained already on already critical technology have technology. the We already that massive the been have that's centers

it's us, driving institutions. these for through volume the So

answer. the So that's one of part

for the retaining it's procedures the part service – U.S. be answer any broaden model, capital second hardware. bring of the no it's going as not of revenue our across ability ownership longer institution is the growth is we equipment, us institutional organ the the will on really transplant be relying our delivered going with but to be to The the to to

going with us on or enable So approaches up capital to to referred that if I our centers. impact about in do are the two at opening to equipment initiative my any, service the is these all broadening that little, very call – new

centers. to new expect open We up

robust hardware service have critical market. in XXXX. to But open expect with a growth we near We expect in we by already and new to supplied available we a pipeline have our those the supported mass that hand potential from term centers already that – institutions drive

Robbie Marcus

thinking now? timing delay. on some your about liver How Great. should going that trial hold, follow-up. for imagine be what's things to I be And thought we maybe But with one on the there's here? just

Waleed Hassanein

We trial. they they results, become pulling liver the themselves. speak when public, for the are will not back on Again,

– it. we already protocol access have are continued We initiated the for

that within within We set. we've the will targets the be FDA expect review process the

original ahead filing plan. according will which Our is of in PMA to original QX, plan be months our six our

liver, not expect expecting on rapidly we will the to the be to reduction we're And leverage will encourage results So the enrolling, the that pullback cap any going the probably and or the process. is these we public, true. to become review results cap. FDA Once opposite the accelerate hopefully we're expand

Robbie Marcus

Okay. Great. Thanks.

Operator

question next your line from with of Jennings the Cowen. And Josh comes

Bryan Bergin

you regionally outside as volumes? of and or much for Thank April part that, on details my experienced in maybe start, improvements here the as you volumes U.S.? This compared particularly for To can is you characterize you Hi. January? you the stabilization, And as March share Are And questions. in to down are as centers how XX%? I taking would February volumes Bryan Josh. seeing guess

Waleed Hassanein

through starting – main that in April. the per area activities in it donor – XXX a knowledge, on to you in webinar, New in March volume in the April, through the second seen give a week just but donors We week first went never down that commented I'll the se, from given down March X. regions early in in the to transplant we've volumes four The went down was It's public and metric. York February

So not second starting the activities, in as the Coast, – I experienced there's to South a Northeast In and Midwest, broad the the April, half – a stated West definitely It's seeing and it's seeing just the U.S., addition in in in are we but nowhere significant of in Northeast we regions and started February, volumes April, transplants with the starting across to Mid-Atlantic. earlier. decline. close in

that that we keeping Again, – we another get would recovery crossed recovery. don't we're somewhere have our So could the on is negative fingers that this starting. feel peak that impact a

Bryan Bergin

Understood. And one for Stephen. maybe

previously with You increased tracking third burn Is quarter? more for I cited guess, cited? where pick that a up still of of spending, fourth monthly the around you the in anticipation in quarter that the rate million. expense strategic controls will currently you're areas $X.X normal And on a

Stephen Gordon

maintain to Yes. have be burn the That's $X the to do next going least question. do expect I maintain several expect hit We maybe million. it, higher range to to in a have a I able us rate, do expect months, we but a to good revenue million it same burn can don't at the for than We're rate. everything to rather here. $X.X

watch runway. we we it pretty still to However, some have we going do think And And closely. that. good make can need if we a changes, to we're

But don't in to going QX. QX. QX material the that it's about, as and in see overall of already is As I in of you'll already I think some in, that, talked that be the investment it's some spending. far to

Operator

[Operator line Kalia of Instructions] from question Suraj next the with comes Oppenheimer. Your

Suraj Kalia

afternoon, Good Waleed. afternoon, Stephen. Good

questions from dropped three your then I and single suddenly the XXX-plus from digits. side. York what broadly, area, guess is organs? organs about New just I more side some my happening in commentary these off to heard to So Waleed, it

such fewer And or accidents, on it, of are there Specifically kind as are were Or What fewer those across organs that are the Just maybe the hearts, in the less dynamics just I time-sensitive going? walk where were hearts happening, organs just organs heart? these available? donor XXX and those background. organs missed us through board? the hence, especially – are

Waleed Hassanein

Suraj. you, Thank

not from to the webinar It availability So I a not It first organ – want where not York – York was area was go? March of second organ. And retrieval do was donated. about the talking There in no half were processes specific donated. these donors be answer the question, to New were New half not They There donor the they into specific. of The general. not throughout area in general. of month in was or donor April. were about the

The halt. There I came these organs So activities no transplanted whatsoever. – process. was somewhere there don't it else. you donation misunderstand didn't was – to It was There doesn't that were no a into retrieval thing at whole process screeching transplant no all. want

body with the do were These they these not buried retrieved. where were and So stayed organs the went? they organs and of deceased,

organ demand were used patients patients, not transplantation lung an it waiting New however, it's creates, who's for for heart transplant. in What list pent-up They York, on the the the all. who liver at waiting everybody waiting are – a for the

this So continued statements that's for my waiting the throughout demand That's grow to time. list and to the list It grow waiting The transplantation what stop. referred what to didn't need the continued because creates. pent-up to pandemic. throughout grow continues in I organ COVID the about it

Suraj Kalia

looks financially just is, like ultra-concentrated Fair It's $XXX current reason $XXX characterize be of they're enough. ask U.S., the in would the all it's you centers? no the another And transplant billion, I in secret. obviously, these going these news It hospitals of seeking the care nature devastated the are. clear. of how to Very over Waleed, billion, capitalization centers, state to general. especially

God you that let's of end in – are about QX, have obviously, environment, prolonged centers, centers profitable lucrative where that current relatively much reimbursement. the say, forbid. it a is given worry Transplant gets to all more But dynamic this to

or state your Just of these current assessment the give key centers on U.S. color capitalization XX of the us some of XX in

Waleed Hassanein

Sure.

Suraj. So thank you,

in question levels. two that address me let different So

lung and that have are OCS today. XX So centers, that that equipped XX center transplant let's heart liver centers about – talk are XX with – already the centers we already about

portion drive they a the volume. Within institutions, these significant of

to make these programs, risk So equipment and looking are Robbie in institutions more budget I asking capital not think that going question mentioned is as to any the which be his their you're well. for

the that hospitals it look at knows the to, presentation. let's and revenue. and Everybody of side, the amount hinting amount my centers of which world, But yes, other revenue they're significant from – across to I and U.S. significant hinted you're across and amount of significant in losing

at look one you of high-margin the procedure. procedure, it's procedure. the emergent a It's When transplant nonelective procedure. an It's

those definitely, we So prioritized within expect procedures centers. to these be

would that question layer the other to OCS? make the why – use a TransMedics of because Well, your question we're Now working anymore. is, is question on not they the what in

to deliver to COVID lean into era. and partner as the That's in to transplant assess the service and the going be optimize relationship to with it, is we technology, there model, going to make post really our storm, into this is with lean there area our that transplant somewhere into and not U.S. team, are the lean to during is OPOs it to forward with center. it retrieve strategy OPOs allocate the with this that sure work establish the to with was that it, crisis, ourselves referring are our that forward that storm, it key if this back, We to what paradigm and I our our organ leaning the with an out

Suraj Kalia

few and be storage. I a us data And going liver in presume finally, months, released would comparison allow The quickly, Got to in be queue. I'll static to back it. it it hop – cold to Waleed, is

so Specifically, in we so and causes and correct? failure forth, would get survival graft on and of

Waleed Hassanein

it of and end transplants. study results cold success is that clinically effectiveness the results compared will on to safety randomized differences absolutely. storage cold are compared OCS significant for points, differences, – absolutely, important signal significant a to on points many us of liver showing transplantation end Absolutely, storage, controlled critical a DCD the show long-term end and and This points, arm key long-term

Suraj Kalia

you. thank Gentlemen, it. Got

Operator

concludes Q&A would over this turn [Operator Instructions] And session, the and to call I our to like Waleed. back

Waleed Hassanein

appreciate safe. Great. hope to the time a stay so Thank you are you great we you call, Have on and and safe much. We the Thank so taking of you all and healthy afternoon. be much.

Operator

call. gentlemen, and you concludes participating. today's Ladies this Thank conference for

disconnect. now may You

TransMedics (TMDX) 9 May 202020 Q1 Earnings call transcript