TransMedics (TMDX) 9 Aug 202020 Q2 Earnings call transcript

Good afternoon, everyone. Thank you for standing by and welcome to the TransMedics Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference call is being recorded. like Mr. the now your over would today, speaker I to conference hand to And Johnston. Brian

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

and we revenue our Reform Accordingly, of XXXX. Any future Litigation the regulatory that implied our our to you are financial statements. material contained the these various meaning potential to are statements. differ for involve relate made expectations reimbursement products which or opportunity our and operating and limitation, of securities which based of in without will forward-looking future approvals our examination would of results commercial statements growth predictions that that All include upon expectations organization, in pursuant actual operating expenses or These call include Act including and like the this margins in those are future forward-looking statements XXXX, gross results and/or Safe uncertainties should -- you materially for are undue Securities and place reliance of statements to federal current estimates Private on guidance anticipated could and during or this for expectations that statements. expectations, events, call I statements, assumptions. Harbor events forward-looking not performance to risks from cause by and these forward-looking or begin, management trends, Before remind make statements provisions the within laws,

refer disclaims XX-Q by Factors Form of uncertainties TransMedics our events I'll Form other risks required financial statements the associated our and information Annual President quarter list any of as by today, including quarterly with Waleed with that, supplemented filings, the call March revise XXXX. turn future to Chief and Securities intention for XX-K or law, XXXX, our call Exchange forward-looking obligation, the to otherwise. filed only the our a on is and XXXX. and For Commission because contains XXth, of please section SEC over business, sensitive on Report of report projections Risk the on as second and or conference any Officer. except With Xth or August information, or now live broadcast whether the This new to Executive accurate update of time Hassanein, description

Good Earnings afternoon, TransMedics' Thank welcome everyone, XXXX Quarter you Second Call. Brian. so much, to and

want start me transplant on extending been Stephen procedures COVID support lines, to Joining is today Chief professionals, care by wishes are ensuring that this our front to the our my transplant gratitude call Gordon, and pandemic. team have Officer. I well during who clinical Financial our health continuing and organ TransMedics

transplant list significant April second on regions of in May, quarter across grow. trough our transplant Since early meaningful transplant waiting progress zero COVID quarter. activities fell medical Similar clinical decided the back our activities list made we've experienced commercial, grow. March waiting and throughout we beginning caused we order numbers to challenges the deactivate the through patients The last in on transplant caused early programs recovery in the to waiting list call, April and As allow to highlighted to to throughout continue to pandemic, procedures these Despite XXXX. regulatory temporarily portion transplant recover and late in activities the a global disruption the the the letting continue the bringing slowdown second waiting by And to to in near list activities May. and ultimately, many U.S. of that of posed initiatives to broadly, before throughout these

hospital many transplant have previously, continuing highlighted activities systems. is a for we priority We're resuming recovery. As seeing

in QX in me hotspots new of of context, our the OCS emergence review shift reside. were now the major U.S. let a given optimistic key results. centers that to cautiously regions remain we With However,

net second quarter revenue from second XX% million, was Our $X.X overall which represent XXXX. quarter a decline

lungs first X% that Through quarter the the strong compared in donor organs, the and impact net 'XX testing -- half donor mandates our by new given recognized the all on was impacted XXXX. OCS programs. lungs, were first up OCS half to revenue quarter, for heavily revenue first most Lung QX, organ was virus donors. Given implemented three on -- we'd COVID

filed program PMA process total we Our XX in is accelerate and QX and QX. underway. to OCS end In to transplants, of of continued DCD FDA from Liver at currently to grew the OCS a up review our June, Heart XX the

outreach -- to our U.S. national October across service to expect model meeting receive and hold approval progress XXX-day map in process the timeline. with continuing significant review We're our questions the agency a also OPOs conducted and to We quarter, with significant list to and the out major meeting make second review in the of offering,

closed that confident business U.S. are long, second to May, in many runway that service growth. buttress balance us our in in the our be we and We offering the equity approximately proceeds robust In net contributed give will XXXX. sheet an successfully to drive million model regions a our in of half active $XX

who and in We existing financing. new grateful participated this are to all investors

and panel October review informed key has to FDA catalysts for Xth. Now, held significantly, application our that be on strategic review XXXX will to and us virtually Most the OCS our let XXXX. PMA me our milestones shift Heart

Heart of We laser securing and system. are the to that strong vote to a on day important focused the positive panel looking we forward OCS are support approval

vote, Assuming we a months. panel four would to three within expect approval positive

OCS we As XXXX. PMA expected in earlier of continue expect approval. to the approval remain And than submission, Liver schedule for following ahead mentioned, our

the crisis rebound As transplants. we we of procedures, look ahead, enabling programs other managing a the as particularly Lung COVID continued balance expect also navigate of while hospitals better OCS

We expect national of our from benefit also to initiatives. expansion the service

From Liver the Lung be beyond. main and the in DCD across programs Specifically, have hand. XXXX U.S. once the through regions will in expand three in U.S. this will OCS driver the submission complete initiative PMA will are and enrollment generating on remain initiative in and early a in FDA include launch and through XXXX. a expect track service major expand to in approvals we XXXX Overall, and the will that products OCS approved clinical OCS the national we for OCS in all to of will OCS revenue initiated perspective, XXXX fully Heart Heart commercial and XXXX. be

thoughts year. our to of half on second Turning the this

earlier, optimistic. As I mentioned we are

cautious not recovery in resurgence our hotspots are regions had concerned that given procedures, emergence incremental we we seen transplant have of virus new linear, already the we the in However, COVID the that are Even optimism. of and rebound may be though in stabilized. the

second for potential XXXX. We keep an also later continue in peak on U.S. the eye in to the a

key these forward we but many Given to on back, any and initiate lessen pulling U.S. national actually impact guidance if in transplant are potentially with not for uncertainties, activities, happen. when the That restating leaning to peaks service our future not the are XXXX. we regions of said, initiative they

opportunity the technology offering the of the initiatives. will our transportation We care to use standard and an of new OCS also OCS this service demonstrate using organ the of face to TransMedics reshape of the benefits service as

the forward FDA regardless heart push near-term to and of best our us COVID. for to liver for impact position approvals key continuing we're of Importantly, XXXX,

weather current turn maximum the storm. I that, call to balance gives strong flexibility this us review business sheet Gordon, drive to our COVID the to for With our the our quarter. financial Finally, Stephen results CFO, and will the

and other quarter results I some detail on additional Waleed. financial will provide the second in the you, Thank quarter. information

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

and Lung, net decreased $X.X U.S. down of revenue quarter $X from U.S. U.S., Heart. organ net million, And of the was revenue $X.X was was the OCS net million of XX% XX% XXXX. the was; million Our all million million revenue by million. OCS outside -- on second the second net net $X $X.X Liver. was XXXX. from OCS and all of of revenue which $X.X Heart, revenue quarter of of revenue U.S., The In breakdown gross that was OCS

revenue, communications, most mentioned impact pandemic in organ earlier in impact our the the almost of and global pre-COVID although we month levels. June which million, substantial we to really the significantly back transplants the in of did $X.X May significant to revenue somewhat previous get but recover no from had was expected we're to The April, As trajectory. reduced obviously our on COVID-XX growth not

second from the of And gross quarter in XXXX the the XXXX that in a Our from for quarter the margin is also at we the XXXX. lower down first down and That's the the gross in quarter volume were XX%. margin result second lower XX% of XX% quarter. of of was

million expenses from specific it's that hiatus million second first XXXX. were result shows, the of during second expenses was time. cost operating and actions quarter during were quarter XXXX, of of that's $X.X were to preserve the like trade the XXXX pandemic on well this million down Our in which total reduction down This quarter $X.X $X.X naturally in that certain operating as a reduced, from of areas and as cash we reduction travel took the

million runway in second Our offering the as cash, of compared $XXX.X to to mentioned, $XX continue commercial XXXX in long $X.X loss allowed XXXX, million to XXXX million and stock public to compared the $X million additional providing and compared and investment XXXX. quarter second to as the Waleed in XXth, in quarter XXXX. equivalents quarter in million COVID-XX net for planned. of first and of our of maintain was $X.X cash compared a Company the in as operating to quarter million in of very marketable quarter an and weather And $X.X XXXX XXXX securities quarter the this first the quarter net storm end at cash we $X.X second raised growth, of our of the to And a of the was loss June in million $X.X for million the second

common weighted-average that million. was to for back quarter XX.X will the with Waleed. outstanding call over Finally, turn shares And I the

we Thank durability confident by the to prospects in COVID's you, Stephen. long-term and mid the TransMedics' Despite posed the pandemic, disruption. extremely challenges and are

Here life-saving starts recover expect COVID emergent. impact, as our transplant COVID would that procedures procedures cases position. They're are the facts are transplant we down. and Organ Despite trending procedures. supporting non-elective the

rely to to due we form is There the the during transplant a relating which PMA Liver OCS are October linear that new is to procedures XXXX. be continue for financial pent-up key on many the OCS we of waiting both the hotspots to to hospitals the approvals, meeting in ups under forward the their of already don't we're crisis. FDA high-margin, and list be procedure Organ the looking stated earlier, exactly that U.S. demand stability. panel high-revenue And even approved Heart throughout of should As built-up in review, national grow downs and recovery the expect COVID

platform Our for as us FDA joining is operator? COVID and panel, strong up call invest we us weather growth much initiatives. our allow line to now the Thank open as well to you for this and in balance and so in sheet this will storm delayed questions,

[Operator Marcus comes now J.P. Instructions] Robbie, And question is line the open. of line from Robbie from your first Morgan.

had Hi, just few I This Allen actually guys. ones. is quick [ph] for Robbie. on a

clearly $X.X on So recovery. almost I To said additional million, was of May get recovery was provide to the back to a that June. in April guys the half I back up as you guess, and you know I to look sharp guys the that you nothing. could color hoping very we the maybe year, down had of some trajectory

even versus to it guess, about think we I a look are think to what we in as how you trajectory a that last we you maybe geographies that? XQ resurgence had like major when eventually seeing -- So sequential above Should like some to though continuing? you XXX% year should think bit how growing and back recovery about XQ, say more should we out and returning about of

Thank you, Allen.

the hotspots country, improvement. -- Southwest given the West South far not blunted in the the as and emergence the continued seen some We've recovery. of of part So But the that for and the linear. as of trajectory, it's

are were not that So once recovery, coming U.S. That's line a these with that heavy seeing actually our recovery hotspots expect blunt that a peaks, cautious these in transplant we're kind maybe experienced they OCS one see it's just a see. subsides. optimism. linear Are better the we off, than the second in suspect questions But what we What by and in -- activities why today and was half see think seeing question. more it's but easing maybe institutions, equipped Relating we the faster once going centers the that your returning in end this of be could March we we hotspot -- April is of know during regions down. kind to equipped in year's during I definitely recover recovery year. the hospitals, a a gets but level are and little month -- last this than your Absolutely, sequential, we bit we the they slowed we crisis just to things regions, that are much major before. are still we recovery? of -- where at once of

we level last will know it maybe and think year's last take us to Stephen? seeing that's least to QX today, we growth even level, at I QX what get based beyond year's through through and on before start

would assessment. that. that agree I with agree Yes, I with would

I quick Got of to guessing managed your some guys it, sustain confident managed to the you're little like clinical follow-up, bit in your it. pretty to Device guess peers? you are of than another guess, that? you a It Medical some like just you've been why have but pipeline timelines on the clinical make since the within have maintain bit maybe Group. trial little trial other through And pipeline. peers than you guess able it how better I a worst confident, I your better there sounds And

both -- of Liver I Continued as You transplantation. we Heart essential it clinical -- programs, to and back what that our maintained again, maintained well, talked the cannot we peak and about DCD during definitely the both Access, continue. the organ know, we -- major the was And expect goes COVID to

doubled enrollment DCD nearly QX As you in we the in see, our rate can Heart.

continue very or -- resurgence time-sensitive we -- program we XXXX even programs most despite even breakthrough to hotspots hotspot, So clinical the forward. and feel the expect we peak. the to and that the in the the will be completed drive confident we new Heart another one the is of And that that DCD most regardless any --

that were got from in in So been heart on centers them haven't wood, that's some transplant regions. received on that hotspot, -- patients from heart in of and they country -- the knock other And were -- actually not fortunate have other we they fact, leading the OCS that areas impacted the much.

Heart to that in expect finish timelines to So we the expect be the DCD to -- maintained we of the expect and DCD XXXX. for enrollment we the program program

now from Thank you so much. Stanley. line And next question comes from the line David, of Morgan is David Lewis open. your

kind or of exit and of the into of of This perhaps by please seeing sort David. Waleed, impact quick impacted on out end or in a how your Calvin in quarter Hi, the thanks organ for at the I have July you're the translating follow-up. taking how that trends question. [ph] monthly of on June a trends Allen on are Can follow-up And comment regions' those question business is just on what quarter kind coming for asked. you resurgence July the the of terms Stephen and that's or rates?

Sure.

So, take happy this I'm is that. Stephen, to

difference. it didn't little similar. May the May, They way wasn't be similar. So We because up want I is made $XXX,XXX better and just We answer. $XXX,XXX I as June and I feel pretty than like -- a to low. a just don't very bit May linear June. in cautious about April. was it's see they really was -- higher trend looking mentioned, July a as did the we that's than drawing April then And were -- And mentioned, the were But June about pretty right like to

that seeing August. continues we the it so we the feel in in and again, bit in uptick July of hope of month a a we're little market. just lot being there's But, we're cautious And of, uncertainty like because

So don't organ. hopefully but would seeing it I in by helps. -- not do that the trend typically organ, same we're I

been is Lung hit. hardest know You

doing is is program our a bit Our the Heart. Liver Heart behind well little program and

or timings is on just touched the the expected? have mentioned could you be of is this quick panel Thanks, And of very timing, the then, little an following expectation later? we key when Liver timing you it One Heart kind you just kind four data panel. Are this. is expected or had Thanks. around Is three for on that And before? that what of would provide your delayed the for follow-up, months approval OCS accounts, from helpful. tracking for of a that your update publication, you on a quarter just with track some still on maybe

tracking. Liver of to We published. relating HX said the it's when are XXXX So be going Calvin, the data, we publication to that is

are track We take time a QX process. submit its peer-reviewed for will to on and major it it review takes in to it journal the

That's -- hold. being feel expected to The always change that panel is the no of months months. -- anywhere sentiment. April on very was Heart months the just after is X. And two get panel always to from date to approval, we no HX so it's is -- six April order. it to date, it's approval the the Relating four that confident will We in the four the by we delayed there instead date. between said final in panel -- our two XX, panel October in But after now difference there

is So slot. give FDA changed, for the change waiting that's no been time there. that to that waiting us It's -- kind panel has the of just -- just there to

of the Company. Kalia Thank of & line open. now you so much. The is Oppenheimer next from question Suraj, Suraj your comes line

Waleed. afternoon, me right? Stephen. hear Can Good Good afternoon, all Sure. you

Suraj. fine, just We can you hear

Perfect.

four wrench data a information, the Is terms FDA program. let's of QX. we approval, the cadence out laid move safe post additional given to for as all through DCD Waleed, say, going to have to for and for throw thanks timeline implants DCD and in last that it that -- is panel -- is from, just of the that DCD the the X the Stephen, know ongoing you not two you say at number say months' -- a assumption? Waleed, want So from minute safe the you thanks

to predict do. FDA will -- will never never predict assume we or not and we Suraj, what

like heard have that. We a request not

program review. So PMA and we But linkage not have to indications. told that's been two the can all a I completely or ongoing hinted about the different DCD comment. between They're

We're the two I of all not between programs. answer, any that's So can linkage aware Suraj.

it. just COVID my training? guidelines in you lay approval? to future of for your strategic Lung, working post out elements, post an Liver, that us your COVID umbrella how would And matter, keeps can as you so about jumpstart in growth up solid it in becomes, How imbalance reduce overall taking supply these past I'd what demand enough. -- you think Fair board, that give that for are sort you Is the Thank making indication between COVID, OCS Is opinion, Heart, appreciated. let's on repeat how will growth you the viewpoint the jumpstart post you be do of of Got critical you layout? greatly are say to, an Waleed, one argument. things organs? Is the -- conversations growth? coming for get for question jumpstarting client idea and you for it the that Then beyond help love do do is, on centers questions. this as just any you technology

Thank you, Suraj.

I it's question. that think an -- without I excellent think

removing about have we barriers national the initiative any adoption. service are all logistical and to not how our think it we secret excited I made

why there on to forward a life, our do is cases COVID front pandemic, the team why the today. and field COVID on reason that supporting supporting we're the actually thank is there a was during clinical line the support think leaning I reason that pandemic I into continues

need a I care of organ we partner a regaining believe this during a retrieval that's is national pandemic, know. not and pandemic, better for establishing and be the pandemic reliable way and through way for redefining And really So, think our ourselves post the believe, the to new just to part really huge standard to during transplant it's you a critical the the but we do COVID Suraj, service We're underscores OCS pandemic. be -- of as growth the initiative. going

big part strategy. I think of a that's our

So that's the driving we with. the are foundation growth that

line is [Operator open. line Instructions] Cowen. question And the Josh of Jennings Josh, your from next comes now from

Thanks Good for the Great. taking questions. afternoon.

our team. Just two from

submission the approved could On just Heart post you'll the steps need to the you system Heart how when panel have also, panel, and access for I update an provide be is manage program the indication? any and there now And between on formally are follow-up. one completed.

Sure. Josh. Thanks,

approval, panel So the the post finalizing the only is registry. post market follow-up after the

some finalized needs be we We questions needs with two robust feel There These design. language. were this that and topics the questions, have a usually to -- and are back and to finalizing the finalized several that major FDA forth labeling be [indiscernible].

So post that's what market Josh. post be This we're program. registry our will third approval, expecting,

we used back where our are of from forth, So at and feel also -- feel seen that lessen two kind we've has the I and think and we good knowledge FDA previous improvement. pretty to the we the

question The of second me... part was remind the

just Program when -- do [indiscernible]. on and the Just, manage Continued sure, update Access between on, just now you an how the

to DCD expect we the once active, active DCD file the we program, Continued enroll active to and we a that is even CAP will program Access continue Program. is So, be the

hand. centers PMA have in heart we'll So order OCS hopefully the some approval in that is involved all until activities

will follow-up data based for then just terms panel? involve fair assumption will technology, Liver a on ad And And the not this just Excellent. the submission. of review? the com expectations timeline go in panels, it Can is you -- an your for on prior in OCS share review the a

with why it submission to an conservatively months, highlighted does we assumption Josh, the ad to that XX outcome. assume We've that com assume given an -- a assume our may take ad always ad are argument in obviously honest conservatively. be strong we're the an we assuming panel in com will we not meeting. require always because you, this To panel does because going superiority com why XX not conservative application But

meeting to not. going see during way ad whether or is to any received and com and wait far, have or another, we explicitly. to ask question October at one we'll the have We indication, our But, where so FDA an be the subjective not it's

with guidance Understood. when the panel nothing of the in with com timeline provide assumption, we any Heart disruptive off, can the you the approval? ad is And the but could an we threw that, just that terms filing potentially to things there's and degree? and to there review Obviously, saw submission see COVID pandemic that that assuming

Well, at Josh. assume to no always months for at and XX that's assuming our an that's least Relating more the months is or think more with should shorter com analysis they're -- agrees the the If virtual that XX comfortable the ad excellent XX in on device question it assumption, and that. now XX recommendation ad FDA prepared The to our something an than months baked we I conservative COVID, to meeting. months more be meeting that's ad But to least the COVID related FDA com, side. com. if through

that the in CDRH approval first Heart ever is are aware be to We was panel panel for going done OCS virtually. that the

hopefully, are others us. decide the way Liver, to there the after their time are I new and sort much need a And of the think we're for as -- because So that virtual new, of we that the going panel a now to virtual take trailblazing I doing couple don't think FDA will FDA of the if accepting it's business. is panels on, that something be there

Great. Thanks insights. those for it. Appreciate

Josh. Thanks,

line now line Capital your [Operator William, of William Instructions] And next comes open. Goldstein the question is of [ph]. from

from buy more call, have thank was justified I if and little to taking and expand that you Yes, offering. go you payers accept reimbursement side. bit the going my that CMS? from teams from out a organ to wondering service then believe I harvest -- can Am from the the and the on you're for somebody on

it a it it type part us that biggest is technology. provide programs, mechanism is have the by service offering -- supporting we will service but providing the think -- same of the and I today the nothing transplant of will

we're same difference additional same So the the is the technology or just is no providing in reimbursement The there. there is support technology and support perfusion the to and -- mechanism management of expense no cost apply. service There field. the logistical

a the for any service that's or support So model There mechanism mechanism for the different be work. would reimbursement, -- that's shouldn't technology utilization. We're same how to the the different just it's at high billing providing level, mechanism.

So to provide you team out the and won't the organ transplant harvest continue actually integrating centers support. vertically into regress? the getting just their will taking own to or of -- practitioners the you'll But surgeons company be actually send

service -- about. can't No, do the we're no, no, that no. that. not We can't That's model we talking

allocation and transplant allocated transplant program in We are normal to normal the only supporting that is fashion. the management of the organ a on technology for organ an a

I understand it Okay, now. you. thank

at further [Operator Presenters, Instructions] no continue. this you And there are may questions time.

to looking want next everybody call. call thank we're We the on forward to and our for participating

This concludes and for Thank presenters our today's participated. you to conference much call. so everyone who

disconnect. may now You