ABMD New America (IBD)

Summary of New America column in 9/17 IBD. So if you are not familiar:

You need a stent, but age and other factors make the Dr think it is a bit too risky. Use Impella to temporarily pump blood when the heart manynot be functioning up to par.

Inserted through a small incision in the leg and threaded up to aorta to the left ventricle, the heart’s main pumping chamber.

“Imagine an outboard motor for the heart”. This allows docs to do a more thorough procedure because they aren’t as worried about you dying on the table (and getting sued).

In March, FDA approved Impella 2.5 for use in high risk patients in procedure to open vascular blockages. This expanded it market of course. (you can see the big jump in March on this chart. http://stockcharts.com/freecharts/gallery.html?abmd )

Doctors have noted that patients are showing up sicker and older, making this device even more important.

Also used temporarily in certain emergency situations.

Total addressable market in US is about 250k people (I guess per year)
but Impella current handles only about 9500 cases in US and 1000 internationally.

The market is “underpenetrated” Denhoy says. “As acceptance grows, there’s a lot of potential still in front of the company”

Being increasingly used in place of intra-aortic balloon pumps, which were the gold standard.

Recently approved in Japan but sales are pending insurance reimbursement approvals (expected later this year or early next). (Japan has an older population, so good for us).

Denhoy: Markets big, at early stages of penetration, clinical story keeps getting better.

Impella 2.5 caused sales to increase 50% in Q1 from prior year…as 15 new hospitals bought new new products upping the installed base to 973 sites. Gross margins climbed from 80% to 85% (Hmm, not bad). Mgt raised full year revenue forecast to expect a gain of 30-35% over 2014. Analysts expect it to hit the top end of the range (35%). Mgt expects 1.2B to 1.8b revs by 2020. (Assuming patient penetration rate reaches low 20%-40% by then. (Now around 5%).

Analyst: “we believe recent strong adoption momentum is sustainable.”

3 main models: 2.5, 5 (each named for liters of blood pumped per minute) and the CP which can adjust the blood flow.

Next version is “ECP”(Expandable Cardiac Power) will launch next. Small at insertion but expandable once at destination in heart. Future generations in the works such as the bridge-to-recovery pump which will be implantable itself. Would compete with LVAD (Left Ventricle Assist Devices). (Dick Cheney used an LVAD).

Could open up a whole new market opportunity. (still a ways off). Thoratec (THOR) is working on a competitor to Impella. (Bummer). But it will be in trial for at least 2 years says Denhoy. Meanwhile ABMD refines and moves on.

(the nice thing about Impella is that I would not expect long term liability. With a stent, you have many years for something to go wrong, then the TV lawyer adds start. With Impella you know right away)

Ok, between the 1year PEG, this article and the beauty chart setup I am definitely going long next week.