But Abiomed was of course hoping that surgeons would expand the usage to sicker patients and enlarge the TAM thereby. (how’s that for a sexy word?
) … This letter will restrict that expansion of the TAM, unfortunately.
I disagree Saul, there was never going to be a large TAM for the RP and I don’t think this says anything about expanding it’s use yet. We know practically nothing about what was going on with the patients who died. Also, what sample size do we have here? It’s very small and could just be a Type 2 error with lack of statistical power to say anything about the findings.
I have placed 2 RP’s. I think our institution has placed around 6-8 so far. 1 of my 2 died waiting for a heart transplant. He would have died sooner without it and not ever made it to the transplant list without the RP.
Bottom line for me is this:
- Very small sample size, we need more data… a lot more. We know next to nothing about this sample.
- These patient’s are very, very sick and their mortality is very high without intervention.
3a. As you can see, despite having implanted what seems like a zillion 2.5 and CP Impella’s, I’ve only placed 2 RP’s. That gives you an idea of how many of these things ABMD is going to sell. It’s not a common need. The RP has very specific indications where it is lifesaving and if you follow those strictly, the results should be good for patient’s.
3b. If you invested in ABMD for the RP, you should park your money elsewhere. That is not where the majority of this company’s TAM lies. It is in high risk PCI, cardiomyopathy recovery, and international expansion. IMO, the RP will never amount to more than 5-7% of ABMD’s growth long term (that might be generous).
Why do I say my investment in ABMD is mainly due to international expansion and high risk PCI? My thesis lies in the macro trends I have seen in cardiology over the last 10-15 years. I’ll give you a bit of a story.
When I was a 1st year cardiology fellow we would routinely perform 25-35 procedures in the Cath Lab per day where I trained. Drug eluting stents then came along and within about 2 years the Cath Lab volume dropped precipitously. Why? Because those stents were sooooooooo much better at preventing TLR. TLR is target lesion revascularization. Basically, this is where you have to retreat the same lesion again, usually due to in-stent restenosis within 1 year. This was about 30-40% of the Cath Lab volume. Now that number is about 10-15% of the Cath Lab volume… BUT, it is growing again. Why? Because restenosis occurs in drug eluting stents muuuuuuuuch later (but still not to the same degree as with bare stents). Also, all those bypass surgeries that were done in the 90’s and 2000’s… those guys/gals now need PCI. That number is growing as well. A lot of that PCI is high risk and requires Impella support. Cath Lab volume is now growing again thanks to this and percutaneous valvular disease treatment. These factors along with Europe, Japan and Australia is where I believe the growth for ABMD will be and is why I’m invested.
I kinda hope this news drops the price under 300 again. I’d pick up more shares there.
MC
7% long position in ABMD