CRY - Earnings call transcript Q3 2019

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Operator

Greetings. Welcome to CryoLife's Third Quarter 2019 Financial Conference Call. [Operator Instructions] Please note, this conference is being recorded.

It is now my pleasure to introduce your host. I will now turn the call over to Greg Chodaczek. you begin. Chodaczek, Greg you, may now Thank

Greg Chodaczek

Thank the call afternoon, and for joining thank you today. you. Good

Joining me today CEO; from CryoLife's management team Lee, and are CFO. Ashley Pat MacKin,

the to to Before involve the of risks Securities in Act are this Litigation Private XXXX. and the would call begin, of Securities the forward-looking like and of Act the made we following harbor uncertainties I Private meaning statements Reform statements time Comments comply Reform requirements that with safe forward of make Litigation within XXXX. on look

may statements The forward-looking predictions materially differ as statements forward-looking a and or company's forward-looking cause management's these future. from that risks, the hopes, include statements or actual made expectations results of to subject to estimates number the to beliefs, are statements. These intentions, uncertainties, of assumptions

concerning may that was time SEC Additional release the and concerning contained impact time press these -- filings in information risks from statements the earlier company's today. is in to certain uncertainties these and issued forward-looking that

Now call Cryolife's to the over CEO, MacKin. Pat turn I'll

Pat MacKin

Total and us. Thanks driven X% growth JOTEC guidance by roughly a were both On-X Revenues lines. and good in everyone. currency our the were at $XX.X constant for and reflecting product basis. for non-GAAP evening, our of X% quarter joining midpoint the year-over-year of on Greg, million, that third Thanks, was revenue revenue revenue growth

We also saw in our business. line performance processing in tissue

pipeline. continue Demand Endospan, our to we exclusive on with cross-selling provide distribution which an remains in growth executed our advancement agreement portfolio of progress good robust, innovative opportunities for believe also future. product the we and We make additional product the and will

Growth constant quarter X% year-over-year non-GAAP for solid tempered supply issues. JOTEC on Turning but first currency JOTEC. continued grew by the to was a basis.

over up can With to to custom-made they treated which market which accelerate hospitalization experienced off-the-shelf XX% to hit of grafts, few -- to products are characterized XX take grafts, E-nside, prolonged next We year. and with these patients E-vita the lengthy can the expect graft anticipate our E-nside be eliminate who normally E-nside, With would up custom-made for with custom-made precannulated trends JOTEC period respect our risky, which is the approximately stent as waiting early with days resolve NEO stent by stent the procedures, branches can stent supply quarters manufacture. European thoracoabdominal open-surgical recuperation. to our inner grafts. by of patients are treated growth next E-nya issues these to OPEN periods only that receive take many or invasive

The disease. challenging E-nya thoracic aortic of while simple with and major gives solution The control our E-nya aortic aneurysms stent and aortic both This patients devices, low-profile simple of This a much mechanism are which includes challenges physicians treating addresses TAVR is system for forces. high-deployment and the dissections. low-profile next-generation, delivery more system both the anatomies. squeeze-to-release one graft is

as perfect OPEN to As well complete with hybrid stent providing clinicians as market, versatile the one is of grafts system the in line products. complement devices of our E-nya graft E-vita PLUS custom-made a portfolio of the most the

which quarter we CE Finally, expect the to trunk, next-generation in Mark elephant the our OPEN is E-vita first regarding XXXX. frozen NEO, receive of

in North in aortic basis up XX% by XX% driven the Switching currency Revenues quarter. America valves, gears grew while XX%, OUS markets a constant were increased strength to On-X. which Revenue non-GAAP grew our the our on XX%. from

the low in single high revenue growth or to digits we to remain as double market share. On-X continue take expect We

drive begin trial valve be PROACT a On-X safely our of if the from additional commencement the prospective providers the maintained believe aortic We physicians valve. health warfarin. regarding aortic the alone We IND and versus of clinical also will Eliquis can an expect market clinical trial, On-X proven PROACT to awareness benefits randomized an patients receive quarter trial on effectively fourth determine and to the to in with care XXA XXA approval

recent the to up XX consist This in previous patients of X,XXX XXA is patients. will expect we PROACT Based North sites on up approximately and X,XXX with now trial FDA, down of Europe. from sites discussions America some the at in to estimate potentially our

reduced valves. bleeding approval mechanical for the valve by reduces to aortic patient over As of mechanical warfarin, only XX% with amounts valve FDA use On-X the compared with competitive

the accelerate successful while bioprosthetic be growth in If has significant effectively aortic in is On-X On-X share to market Such in recipients valves. valve valve potential share aortic become the business. on the maintained improving, the taking we market simultaneously our CryoLife will PROACT XXA can existing an mechanical Eliquis, leader trial believe from indication

Moving tissue our business. to

continue year-over-year see business, in performance which X% led up We valve to growth. which delivered XX% cardiac line our our business, was by in tissue tissue

renaissance We continue improved well as believe our pediatric tissue availability valves. to procedure experience Ross from our stems a and we the demand heart strong for valves, pulmonary as of which

are We continue business. tailwinds drive cardiac in our these tissue to that confident will growth

increased We for to approval to the regulatory the deliver our currency a basis FDA Chinese submitted sharing to updates on solid process and results, when non-GAAP this forward in application X% constant BioGlue look earlier on continues available. the year, quarter.

submit we XXXX. our in complete, trial the on and to track early is PMA the FDA PerClot, U.S. to Regarding remain now

an we privately the system agreement for with Lastly, both graft currently the CE developer stent dissections which aneurysms only Israeli-based, EU the NEXUS our endovascular Endospan, repair of in announced distribution Marked of aortic device, arch. recently and is held the

in stent distributor for As part NEXUS our graft with collaboration of the Endospan, become we system Europe. exclusive the

Additionally, to and $XX the Endospan's and trial clinical to Endospan additional of U.S. loan a million million its for we to an loan commitment NEXUS of NEXUS to support in $X up commercialization extended a EU.

approximately market treatable or million NEXUS. open XX,XXX an worldwide worldwide the with $X the are market, in market E-vita $XXX XX% over be million, there an at with reminder, that addressed opportunity addressed worldwide are just estimate NEO, approximately or just be NEXUS through over of $XXX the XX% can total billion. a E-vita As approach the NEO. places just approach and of OPEN can OPEN that endovascular approximately which surgical procedures with And addressable over We

In million, X,XXX over overall annually, million. at Europe procedures the alone, the arch aortic where $XXX the arch repair about placing market products done EU endovascular $XXX there are approximately is for portion market of

our market competitive market. the expect unique We proposition across our NEXUS' value current access reach to European grow team expanding European share to with our as commercial accounts affords

current infrastructure, graft, NEO. the Our with synergies OPEN portfolio direct surgical includes sales XX-person significant NEXUS given our highly differentiated provides E-vita hybrid and NEXUS' for an JOTEC commercial team, between cross-selling opportunities which European our

our this adoption drive competitive but offerings. NEXUS of leverage further drive only to as will in infrastructure not technologies penetration We Europe, product well as market of branch JOTEC also other our to

Over will we coming training the on sales focus reps months, NEXUS. on well as surgeons as

XX-plus new, complex target centers will performing top the procedures. these sophisticated, We

in to expect fourth do we not anticipate NEXUS cases commence from While the we contributions material year. quarter, this

in the us of aortic advanced XXXX to and our the our valve through most addressing OPEN the products, aortic and As graft products position the to technologically E-nya E-nside, rest entire beyond. NEO, along NEXUS arteries. the aortic E-vita from growth stent and Europe comprehensive with addition to aorta JOTEC We accelerating iliac of revenue portfolio, drive repair believe the

few Before fourth to quarter talk I over a call turn guidance. minutes to to our Ashley, about the I'd like take

growth customers outside result, our were XX% fluctuations the currency as X% And rates over derived we reminder, a of rates. our non-GAAP revenue are is based of in U.S. GAAP the from and difference. exchange a the end XXX year-to-date quarter, point affected X%, As respectively, of a by basis and At third

$XXX.X headwinds, currency and a we possibly fourth with for handpieces. have the outlook also with our longer. these to to million we $XXX.X range supplier of not handpieces during TMR for an issue our We're, result, therefore, quarter the in now expectations million. XXXX sole addition In revenue And experienced TMR the as updating will of

will call a our to financial over results third detailed quarter I turn our the review outlook. of Ashley and now for

Ashley?

Ashley Lee

Total compared XXXX. revenue and non-GAAP on and quarter year-over-year major We X% million across grew increased the currency product $XX.X third of company to evening, of everyone. Pat, our increases X Thanks, saw to basis lines. X% revenues all a constant good

and JOTEC constant the XXXX. non-GAAP in grew of third to supply the compared next-generation XXXX Looking and and beginning improved we the with to continuing X of products. revenues this will at quarter a X% JOTEC's on X% is both product lines. JOTEC basis, improve, the for accelerate expect supply growth increased currency quarter third that launch

constant on basis, currency XXXX. increased markets. On-X increased GAAP third to valve to XX% domestic revenues the double non-GAAP of XXXX. third in both quarter international both XX% for on Aortic increased Revenues compared quarter of digits third the a and quarter basis the revenues and XX% compared a

on X% revenues basis were flat quarter BioGlue currency the to the a both constant XXXX. GAAP increased quarter compared basis, on third and non-GAAP a of third in

growth [selected] European to to Brazil BioGlue as in see we markets the accelerate China. of strategy benefits anticipated and continue in and approval our the expect We direct of

processing tissue revenues to X% XXXX. quarter quarter third the the increased for Total compared third of

processing shortage tissue revenues competitive by During of the decreased in meet vascular in in favorably decreased third average a a Cardiac pressures. and temporary strength grafts and prices resulting to our due processing X% revenues processing and increased were revenues market tissue XX%, renaissance revenues year-over-year. quarter, the cardiac tissue affected pediatric existing Vascular demand procedure. from primarily long-segment Ross processing sales vein the tissue decrease to

to availability tissue positively improving, and vascular have tissue forward. we revenues expect mentioned as has affect However, we that vascular going been previously,

basis higher were Our QX margins in versus XX.X% gross QX. for the quarter. The were points margins third XX

tax Our by affected quarter of tax certain federal limitations. of income third the favorably the in expense was expiration statute

approximately million fully transaction. primarily share the GAAP to net On business third reported related development expenses loss in the $XXX,XXX the of $X.X per reflecting quarter, we bottom or line, Endospan $X.XX in diluted

or million for about Non-GAAP additional reconciliation $X.XX was information results. release GAAP net to non-GAAP a Please our share. income including press to results, of these per results our our $X.X refer

paid This approximately XXXX, in cash in XX, cash payments in is million Endospan transactions. the October of after the As $XX and related cash we equivalents. $XX.X to had September million

we our million X.Xx, As at B. was XX, leverage had our based Term under approximately net X.Xx. Loan and on leverage our outstanding And approximately of our current documents, gross $XXX approximately XXXX, stood September credit

expect quarter. debt, comfortably the end business current was rate year. adjusted model. needs The X.XX% the We at loan third and on low term the leverage our EBITDA to financing to no our service Xx our our to interest support the by decrease of can We have of end net range the

location a contract PMA sole earlier, That TMR decided for supplied As Pat handpieces our a that change TMR large the our which location. secure FDA approval are supplement supplier required to from the mentioned by in manufacturing we a of move of manufacturer supplier. handpieces,

until resolving to and the or proposed which view, new supplier not not safety issues. As the approve of late the supplier complaints any In inspection next part year does site an FDA this observations, PMA year. observations to manufacturing our conducted our of anticipate product-related process the supplement, the issued the or do relate early

have these As TMR a our any until the to result, observations FDA's handpieces supplier will resolves satisfaction. not we

We guidance. have, quarter handpiece fourth from therefore, TMR for revenue the our full year removed

approval appropriate of when the selling during We first which supplement, expect receipt quarter the will to handpieces, of hope of update as the TMR PMA XXXX. be about resume you timing to and we we of

due this earlier, we $XXX.X are mentioned between other $XXX.X a range to to Pat guidance full adjusting XXXX matters, million year and our and of financial As million.

impact fourth million. year. We between the temporary quarter, on currency will would weakness on X.X% currency constant issue fourth currency between X.X% lack we the top million of our guidance the basis the impact and revenues the affect in growth will initial constant revenue the $X.X guidance dollar. Despite of adversely X.X% handpieces the the these our within over TMR in and million our guidance FX of of estimate growth our range between been for and handpieces $XXX with a quarter, -- and factors, availability have and of year. currency If by year full and TMR in X.X% rates reflects a full full $XXX XXXX, euro for U.S. basis the impact on for the versus reflects specifically, the that of line, Our not of

non-GAAP continue We EPS our to between be full $X.XX expect year share. and per to $X.XX

I That to concludes back my it will comments, Pat. turn and over

Pat MacKin

we guidance. our delivered growth Thank us you, Ashley. of XXXX, of currency Through quarters X%, the end which the first of at constant original high places three

several headwind, currency short-term the With that are issues, believe position we taken the issues off and catalysts, original guidance. growth. for coupled the transient said, However, these have that we which us have continued with company

XXA products commencement trial. we're upcoming XXXX well next-generation our PROACT forward Specifically, to looking launch the of X as in JOTEC the early of the as anticipated

cross-sell. that to addressable And enhance to should total growth growth have NEXUS our BioGlue we in U.S, Additionally, and a fuel such in solid with markets China the will expand and pipeline and catalysts PerClot drive near-term years our ability deep come. for as

the the lives patients are remain We efforts. to deeply our and with of in improving committed aortic steadfast disease

I'd their closing, thank innovative our in our employees before spirit strategy. to execution Now like for of

the now open open the lines. that, we'll to line Operator, With questions. please

Operator

[Operator Canaccord the comes Instructions] Jason from Our first of of line question Genuity. Mills

Cecilia Furlong

just Jason. trends incremental issues kind light in supply the Endospan products being you drive portfolio, coming between sales. to easing, of biggest This view new now wanted that of to about kind the of is pull-through just Cecilia for do in recent X online JOTEC I the to then as you the look XXXX able as What and growth? on of business, ask drivers

Pat MacKin

Yes.

old just still in that more up in of we new thing by be us have as months, typically to long -- safe the the quarter were regulatory one get don't this and this took three three kind JOTEC approval. twice is showing it Europe, us this budgeted had year -- the think approvals. it I So takes We surprised added days, we we we is that environment obviously to in months

get that we product could QX. confident get the I with But channel and kind the in into very potentially we'll XXXX supply, of just for out. NEO, third graft in four stent XX-person have approved slip quarter. going the quarter starting stent endovascular the that brand-new with as rolls thoracoabdominal us, those to we're really stronger thoracic for That's So the each fourth more QX. probably think improving branch early We think I with grafts should a

in we'll approved. you and couple this thing -- get X So in early first quarter, already is is get next quarter approvals, NEXUS confident and the we're which the the maybe

we'll sure four execute by. quarter JOTEC goes those great the new got on force. we chain things, think And see So sales make side strengthen think of each we've supply I a devices, then I that

Cecilia Furlong

And QX ask if valves low-risk just younger know curious you on pushed forward. about you and I you I patients just what I in trends saw on saw could QX. that Great. expectations of QX. the also approval get tissue going some in heart On-X, in talked valve just into your was seeing heels

Pat MacKin

really quarter. good happening the field. think We growth No, get we the anecdotal market, I kind customers the Yes. in information of what's don't in kind saw On-X from perfect in of in with it's double-digit saw growth about We On-X.

quarter trial, the unique is and get -- I the it very going only done think to that PROACT we're around XXA -- trial think fourth and company. and we're very the in X anti-coagulation very no unique been that, it's news that was confident a opportunity well. a for excitement I We this one's as that that think time, other that

going because the a of the in only clinical our bleeding of the So Eliquis can really centers, of On-X current reduction with that lot the excitement I in that we're On-X in by is U.S. create the fact a have both On-X, kind think I mechanical messaging XX%-plus around label. valve the valve a think story. to XX and Followed around trial low-INR

Operator

comes next Matson line of & Company. from Our the Mike question Needham of

Mike Matson

Just start CE JOTEC of the prior Marks, wanted as a to the follow-up with question. to kind with

the guidance I'm getting second early be, I not giving I products is notified and I've about just just additional I'm now. issue over backed the part would it's delays, delayed, really been about year just an So confidence just what are that this clearly, has around guess. there just indicated, bodies, worried approved. up the guess not then your worried backlog of to talked there. you're everyone mean, next really, simply it's And is I things

Pat MacKin

Yes.

think this notified I -- are And alluded transition companies seen MDR clearly some They the the this certification. and the And field. one the are mean, from to them. ones still We've in that with to exit are I overwhelmed. trying the get there to the process overwhelming underestimated just bodies device medical we of kind of all I the on directive notified are first at question. MDR. bodies bottleneck

this I that I the that I get we'll August. couple X bottleneck to hoping -- X slip get I said submitted think all So As February into. a it's in of really in this confident graft your I'm and quarter. back the we've issue got side to think quarter, We feel pretty mean, but on in the earlier, queue I them a that question. them stent actually may three of X products

a on bit you in we you a of that when submitted, -- little difference would say requisite of there's would kind could So the approvals. timing which of the follow

there, thing 'XX, reps, we in have got rollouts, is hit does disappointing could the X.X out is physicians, us inventory had things done have we our these just or have train pushes kind train in. planned, the on this middle these back is get basically What if the quarter, the full a training, in when it of X. into think you stride for January as ground go and as I our on you of could come the depending 'XX, the quarter we

very going And the But still so timing on quarter quarter, of that the X.X it's to portfolio. of be it's just just we're think because that X delayed I -- approvals. bullish

Mike Matson

to to XXA time or of is the PROACT Okay. trial? the the And the the to trial, of -- I trial timing cost the reduction benefit in then to take material any -- just of the mean, mean, it's going I run trial, there the on the with size your amount

Pat MacKin

I again, less mean, it's not I really. XXX mean, Yes. patients.

XX% are like trial. big X,XXX-patient heart a mean, big trial If excitement. already less. whatever say interested. are it's some still I So right? end that the centers -- a is site have at trial, of of it's And But visits. valves, we it's you day, interested. a lot Patients in be done We've you extremely the -- would could -- The

my hope existing it no haven't actually one's patients. ever like where is -- valve So actually a done again, this, enrolls it's trial we

year, I it's X think, couple is year So that's, important enroll, X.X another that point to follow-up. a year

a X-year So X- endeavor. it's to

to it's I So big really is that to of the still from X,XXX cost It's a trial... going that -- going expensive X,XXX savings think an difference. don't make

Mike Matson

guys me? Can you hear still Okay.

Pat MacKin

Yes. We can hear Mike. you,

Mike Matson

Okay.

a my phone Sorry off second for cut there.

have going you that final question, any FDA if an -- do Just that require is panel? PerClot, a to will idea

Pat MacKin

surprised. know by mean, never the regulations you. obviously, on I'm yet. it I be But have panel, would front. We surprised I a would -- regulatory honest if don't needed with to be surprised itself be I

a not I think it's a surprised. no it's would we pretty when again, results. implantable issues, it. cross I But easy that obviously it's agent, bridge device. -- good to hemostatic approval. low-risk we'll It's be clinical interoperative, a with fairly I'm get an clean safety going hoping to be

Operator

Our from the of next Cohen Thalmann. question of comes Landenburg line Jeffrey

Jeffrey Cohen

the million expense what's the firstly, $X.X Ashley, on statement. other income

Ashley Lee

predominantly are earlier the it Pat balances. impact follows And They're It's unrealized balances. items. FX noncash payable that comment from impact made FX on loan of intercompany about Those on kind top big having line. the loan and primarily a intercompany and losses on payables our of the rates

Jeffrey Cohen

bit. adding about NEXUS and/or new a relates at it maybe as I to the it. got can XX directly? potential JOTEC territories sales talk you you the introductions you ex and about Can from XX U.S. U.S., both ex little know and/or U.S. mentioned product it was direct, Okay, or talk force

Pat MacKin

Yes.

channel today. plan going So about that The we is don't any European channel making we XX, our I changes 'XX. to XX -- is guess, U.S. into about, and channel on

a to in we add are the the trained of We to support have area. people going NEXUS that highly Again, team of on We're a big be handful already this people launch. are going adding margins. to

very geographies. on that. procedure. then that's different But sure specialists So quickly. available those we'll going make trained. a we're And growing getting to support for look people at also I technical we're the to case we the side it's want are NEXUS also because seeing mean, add a some specific have geography if very obviously We

basis. will done add there. that people historic We We've on potentially a

So but XX under nothing it's I in -- say, in -- European realm. the the

Latin we'll The America more in invest regions. to Pacific, about And geographies, move both Asia other those we and continue talk into of XXXX. the we feet street that in as on

Jeffrey Cohen

Got Perfect. it.

about steam appears this trend talk side. you vascular? as relative a can picking to looks like pricing? the Is a then fairly up more And high it Or to Okay. it far as tissue cardiac It is at rate be of demand?

Pat MacKin

I mean, growth -- I really is we the quarter. I great Yes, tissue mean, cardiac in XX% saw story. the think a

wonderful a part the think the meaningfully valve, reflects that procurement communicating nondecellulized We're company it a results that benefits heart the valve. technology, CryoLife. only the a of done proprietary job decellularized xenograft has group our of which is has are different I heart to than and

out So and shifted that preferentially. to message procurement has CryoLife gotten there it's

I Canada just continues kind for on the clinical momentum very strong. second looking the that's for thing big think see data We on be we in centers centers. to -- that fantastic younger been in it's patients, we procedure the Ross. a going creating add of to a Ross and the a is Ross U.S. showing publications There's option Ross see the kind resurgence. of big Numerous

that So continues. I think trend

a position. procurement in is Our very good

a cities. almost it's tale X think I of

a which approach team gone saphenous didn't of a the require a -- ourselves in very tiger long vascular position a this last ourselves the in what a position we on good And that our On is we our on about X through customers resolved and position we've we months, we've totally talked kind issue. previous inventory prefer. we vein, where side, over and got -- got or the call, have

quarter and us In for fact, will we're a into the opportunity going XXXX, be very on position into saphenous an we as going long that have move to where fourth through strong vein XXXX.

Jeffrey Cohen

Got it.

the talk and far getting upcoming PROACT up the as XXA the could timing lastly, centers you then as And Okay. trial and about running on enrolling?

Pat MacKin

Yes.

well line. with of a at forth. to has been protocol. been in them it's final kind complex and meetings. a and at the we're in with have the -- So hoping And very area, finish literally great FDA from back we've final had we've worked this, a they've I'm participatory. number kind go, Because November, and documentations December, interaction going so had We're time very the we've the All of some us great ready to of on the obviously, an

mentioned We've gone already I site started we've -- out and earlier, as doing qualifications.

I we've the We'll to so out XX think been centers. hit probably or XX quarter. like XX another this of

half have protocol have everybody. we're when will QX, we'll out, So an centers investigator then maybe to enrolling to to comes going could the in the in in a we and we meeting protocol have ready roll the probably QX. be hit the STS should kind of sure, January. out at shoot patients And We'll center for be

Jeffrey Cohen

Okay. hypothesis that And about enroll? might any how

Pat MacKin

walking and them to involves it with in Yes. it. say that say I'd the actually being visit ever going of we patients the they're physical this Eliquis. or office, in done valves all going be This valve in interested Coumadin. to trial are and literally Coumadin, what's Eliquis, think is if for a I surgeons I done a and on doctor's we've today. with around them -- it's anybody patients consent never And on trial trial. And then are the patients going having because are us mean, happen the mail hard are the them those unique like is this. Eliquis, to the if see a to And to mail on be to we a that that trial randomized to to they're and On-X put going don't and if has get majority very this in be Coumadin they're they them cardiologists that either going in

so We're take I centers the think time this up, doing enrolling the that it this X.X all up I on we it kind to But pretty of quickly. due get paperwork-type takes we trial us 'XX. to contracts, for years. to potentially let's going And think, start X, all sets say, about to of think the budgeting that 'XX Partly -- and will we'll enroll it's stuff. January trial half

Operator

Street question of O'Neil next Brooks from Our the Capital. comes of line Lake

Brooks O'Neil

you about You've some reflect detailed perhaps about a with Pat, X. as your X-year first opportunities X anniversary for what you lot hoping you see talk assess biggest hoping, little you your I'm bit talked years the I'm might a of your just there, how next CryoLife. questions. past might the you and

Pat MacKin

into those distribution X agreement look X the mean, I to it, company think, I you at of close X we years, the We acquisitions well just ability I significant or On-X acquired the companies positioned. is, to in acquired when X over I grafts guess, Pacific to you look of be the option I that infrastructure America. XXXX The bring look with the end Yes. at XXA JOTEC the extremely if U.S., to We we 'XX. talked the in the beginning 'XX. back, then trial devices, of Endospan PROACT mean, the -- when XX. acquisition with had -- reps -- Endospan those Latin in U.S., XX. We the Asia have did deal. in XX, the in take We XX. had we'll and America XX the ability Latin Europe reps investing if Europe; I the new in simultaneously, X started. the we have Asia opportunity. JOTEC about; a XX pipeline Pacific, had and now probably next And have We to person now probably stent the We creates and now we

next the the build think we'll -- just going product America. going XX that we we it's the those continue we're or years. add the things, I over Latin that be critical be When in critical the products every incremental pipeline the over the pipeline in have at channel, have mass pipeline the that be and company X is XX and coming to to think have X I and -- So then realizing out point where for Pacific you the Asia And that will we that mass next the to company. you drop-through combine to years, X significant

Brooks O'Neil

X fitting piece how bit ask was slightly more is of little talk just forward? for you businesses. current Can me biggest going let your see and outlook just Obviously, it detailed the that a you your BioGlue So what about question. CryoLife, more X into

Pat MacKin

I procedure Yes. of from I mean, an CryoLife everything company, The the replacement aortic frozen about the valve aortic dissections. from in BioGlue. aortic BioGlue world. aortic with mean, that to or staple an the frozen aortic is new the is the the in an portfolio. the -- valve we integral down it's interesting. around the technology aneurysm sold all glove is iliac goes elephant arch a an artery. to It's in to a dissection operating for BioGlue life-saving into talk things an one way trunk hand is rooms

Our in with they're -- us. ascending will the the opportunity heavily nice for grow. still very to used additional that are where with And The be by continue technologies are of a BioGlue. that On-X fact surgery, arch to this dominated BioGlue the China, where think Asia Latin in expansion used will some the I valve America, and then addition

and the aortic of it lot for cardiac high So the It's it I margin, and technology it's as a of in move a integral. -- it on it's And product shelf we be OR markets, is dissections. has into surgery. funds to great a infrastructure surgery it's think because a aortic because critical the

Brooks O'Neil

accomplished. I'm the Congratulations about excited Great. on all future. That's you've

Pat MacKin

Brooks. Thanks,

Operator

Analyst. from of the Munda next Joe comes question of line Our First

Joe Munda

questions couple here. A of

business. that handpieces much a were revenue for of segment? TMR some as you the how us off, Can give SoloGrip percentage of the First on sense

Pat MacKin

of about What that it's the I in going can tell $X.X quarter have amount the is impact fourth to we million. you, the expect

nothing lot through are -- time. mean, there's wrong partner. of wrong. this unfortunately, in requires been know And -- it. of our component, it all the I the And this built were career just we working but and a these not it bunch unfortunately, it, anything, was -- if of went you move were this change a don't when you wrong product, -- Joe, filing. product. move my We I've the is an all partner one happens that have We you inventory with supplier, where stuff and if a in things aware a of And I aware, that could we again, people with the FDA a PMA go anticipation

-- patient time think no to out problems. was no going all. It's issues up ran it handpieces, of We inventory. There a of I and just by fact, done. FDA at we -- year they're just quality built was get there the the In we

about it's lot know prepared, anticipated. not It's it. we weren't So it like just longer like a we not took than didn't we

will we can this be changing in quarter. But hopeful we're it's resolved a this So -- issue.

Joe Munda

observations and FDA, and sole-sourced from -- it's what is to related saying. the your the So you're nothing XXX supplier got handpieces handpiece, where

Pat MacKin

Yes. No.

have basically was us we extremely that manufacturing a and right? for had it move, high So and for years, us So -- for built products they the built quality.

to new We no procedures the and training inspect. facility, FDA level that in the But it records, they stuff. and think, where goes order. have going in the rose still, I XXX. and go not in got the and they it, until to to let really again, release it -- was them found product find you'll rectified mean, being inspects issues. fallen they followed And typical FDA stuff back I the wasn't The a in minor

be we that's product frankly, -- the maybe mean, comes standpoint. it's X a it's of think to it's little a delay, disappointing. business us. be And for -- from kind quarter going transient it's material but a not going longer, bit So a It's line And I in. a time to issue. I it's mean, like But not said, I where it's, strategic

Joe Munda

first Okay. gone, the based JOTEC, And are follow-up. commentary. over you quarter. had issues flipping the I'll assuming a those And then to on wait I'm with in sterilization then some

Pat MacKin

say... quarter. in I'd was really, was that the second That Yes,

Joe Munda

quarter. Sorry, the second

Pat MacKin

our that in I Yes, mean, happens make sure total was place sterilized it again. double in was It one-off. yes, made just -- sterilizer. a never processes put mistake, that and we a was somebody to

was behind So of really I mean, kind one-off a that's that us.

Joe Munda

products, I off-the-shelf JOTEC guess, the time? to or you us at two Okay. because to got right, some those just constraints, I'm look should 'XX, And and with growth that lines, you've to same these then manufacturing guys accelerate go custom-made going you in an essentially encouraging think about current going how on going then Pat, product forward. are as the guys out curious, you're capacity balance you guidance gave offering. do

Pat MacKin

we line much it. quarter. constraints. Yes. the is X% can't the product that supply the with the we I'd say we news about Well, in with first grew up so no some great that thing have JOTEC keep was demand -- that And And products new and

We opportunity JOTEC. have on of tons

Pacific fast. Our products new our got Latin these and Asia Europe's extremely are coming. business all growing America

in supply. place hired processes chain supply keep We're people. the in we getting just make We've hiring. really putting order. We've with it's up new sure that been to So

said, the we move and it's we into products get So I'm but bullish filled -- on and transient the issue, JOTEC products pipeline very XXXX. the kind them on of I out with through get as like another new as

Joe Munda

then there on per spend PROACT would think incremental there Any great. XXA. And R&D or how cost we I be should Ashley, guess, guess, trial? lastly, thoughts I about

Ashley Lee

XX%, you I right past. XX% spoken $XXX of the to million. we've But $XX and can our give at R&D this kind say, not that X basis. going let's keeping we we this spending about years, annual go at look if now, But the an over around be as year, of And pipeline revenue X next of revenues is or next guidance. Yes. by business mean, about fund is we million to out take, on we're easily in think our

pipeline, of including this XXA R&D plenty think that PROACT we those So got to handle guidelines. within capacity we've

Pat MacKin

to can cost would do. what is and we to what would accelerates, he is enrollment out the went The say I cost will so slower, going going goes it's be If think going right? earlier. that the question year. less. I it asked you on it expect to back If you we've think -- that more. in of investors it could, enroll is, it's it's even Jeff's this aware would trial going I we If only we cost. faster, goes enrollment what think this of talked the to to guys it it fact mean, calling about XX faster, we cost, goes XX% caveat And and predict -- -- be if excited to

a enrollment patient control in pipeline. on point, R&D, the to little you can't could opportunity it XX% look a great, rates. if XX% little but X to I in, able So might might think goes down that's it getting faster, X%. at necessarily bit XX%, be the and I go Ashley's be But to up to in around macro based year year fuel year if every a XX% afford some year or should us some next But be the X years, or

Operator

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

Suraj Kalia

the on out I On-X. to all baseline to Pat, you framework going. map Pat, OUS So them the want give us just And of I give ramps PROACT XXA ask as some is, U.S. are us a keep questions, things can On-X. fast my we versus up, where how could reason just

Pat MacKin

As far as enrollment? the

Suraj Kalia

of enrollment and On-X just On-X, of The Yes. in organic step-up the XXA? a because versus because PROACT pull-through

Pat MacKin

we Yes. an careful have approval. and don't because, mean, I we trial a we're I here mean, we're running

we now start the getting handful SEDAR, key I U.S, we talking in with went It going long so -- -- and about mean, we is we're imagine, we to reasons in back still we're of looking took again. be think complicated CDRH, of the I originally started when the centers. one discussions about ended at and drug side On-X this there's can So as right into Europe We're of a point because, lot European the then the that then you you up gets doing. a and at trial people in

in to trial. same thing Europe, could don't want that happen the and delay So I

have of we I of this I America, is talked So trial U.S. it's enroll a going trial just be before. maybe we centers North be And as and could can to couple speed as mean, take Europe. it we talk Canada. could earlier, enrollment, like -- never far a we of in a -- years, majority could we're may think, be going about this to -- having think have the It longer, -- done a we X.X in about But that trial. this faster, the

Suraj Kalia

fails Okay. remind memory me Pat, me here. And PROACT XXA, on my

to PROACT the in enrolling be average of the use what would Eliquis?... a patient Coumadin For duration before XXA, switch

Pat MacKin

a yes. It's --

-- how about we before... So post they've Coumadin are you you surgery? are long done talking talking about Or

Suraj Kalia

acute or of will because in is a are the of be there way. events there out difference endothelialization Either most -- the

blah was a certain to in blah look and Coumadin, Mackin and you months do say blah. moved at he cohort it how Pat in, X map Just out came Eliquis, over

so rate some... Here's what was, he his took

Pat MacKin

got question. I Yes, Yes. the

So a that's question. -- actually very important it's

mechanical that the novel a in and the trial days. their valve other with RE-ALIGN, if called with events done only And the XX fact, of In a were was anticoagulant was majority first original reason days at had look be for trial, you mentioned. full-dose period you we had to a XX-day you Coumadin XX our PROACT on the that X blanking for where exactly first

for sure from out months that's same lower On-X That's doing trial at randomized that will want make X to surgery. fully thing after to valve that exactly when This You point, be INR. least And we the here. endothelialized. the is patients we're who are

Suraj Kalia

it. Got

look event rate So some finally, be it last the have must peak because reduced in Is an in Pat, interim now interim change Okay. the there size? if obviously, also trial me, patient thereof? there there the and penalty design. a is Remind curious And I'm an final a question. assumptions. you'll penalty

Pat MacKin

a know I gets And is end a is cumulative point. interim the design, it's either -- it under is X-year the was And noninferiority -- X,XXX or statistics there good well, the No, you your no There analysis. this it's a X,XXX. reason this way mean, powered, -- trial.

X-year interim question to answer end the because the it's the analysis I is point. way a way, no other So there is think

DSMB. at goes up, going conversely, right? and look success they're obviously is XX is If X.X successful, your in, But doesn't stop, The it if could makes right? to goes So other Board, trial. all of And the see are to then stop months. that if had they if 'XX -- the way you it's way, trial months patients Every sense. for after to a about stop doesn't to have Monitoring have the that it trial think Safety us there's enroll problems day already this that years the -- probability by, your Data this the obviously it first patients takes they

Operator

would there the to over closing portion to like audio further the conference return for time, the I questions conference. this At are over no back of management remarks.

Pat MacKin

Yes.

into up of And the thanks we're Through has growth, is Asia our one, being said, at And to been Constant JOTEC the about had I our which the get year, currency very and opportunity, NEXUS kind guidance of mean, three and constant in with transit in the currency the America, That X% expansion later in the U.S. China. we PerClot got wrap talked XXA quickly. the our unfortunate grafts. going in We've for just range. very quarter. PROACT in joining this call. currency we're then Pacific hard XXXX. stent on X The mean, a issue high headwind, end bullish I Latin pushing BioGlue Just we we're have opportunities and trial. quarters, -- TMR we've to on the

XXXX good set very rest year executing getting up. and the of the feel state the of forward about through we and to out So move business as we the look this

So joining. for thanks again

Operator

you participation. conference. today's concludes for your Thank This

You may time. a this of at your disconnect day. Have rest lines wonderful your

Artivion (AORT) 1 Nov 192019 Q3 Earnings call transcript