ShockWave Medical, Inc. (SWAV) Q1 2019 Earnings Call Transcript

ShockWave Medical, Inc. (SWAV 0.45%)
Q1 2019 Earnings Call
May 8, 2019, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to Shockwave's First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session toward the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Debbie Kaster from the Gilmartin Group for a few introductory comments.

Debbie Kaster -- Gilmartin Group -- Managing Director

Thank you all for participating in today's call. Joining me are Dough Godshall, President and Chief Executive Officer of Shockwave Medical, and Dan Puckett, Chief Financial Officer of Shockwave Medical.

Earlier today, Shockwave released financial results for the quarter ended March 31st, 2019. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during the call that include forward-looking statements within the meaning of federal securities law which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation our examination of operating trends and our future financial expectations, which include expectations for hiring, growth in our organization, and regulatory affairs in guidance for revenue in 2019, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated [inaudible] by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factor section on our S-1 on file with the SEC and available on EDGAR. Shockwave disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and accurate only as of the live broadcast today, May 8, 2019.

And with that, I'll the call over to Doug.

Doug Godshall -- President and Chief Executive Officer

Thanks, Debbie. Good afternoon, everyone, and thank you for joining us today. I'm pleased to welcome you to Shockwave's inaugural earnings call to review our first quarter 2019 results. As you know, we completed our initial public offering along with a private sale of securities to Abiomed in March, raising a combined total of approximately $110 million in net proceeds. I'd like to express my appreciation on behalf of the entire Shockwave team to all the investors who participated in the offering and who continue to support our mission.

The year started out on a positive note, and we are encouraged by the balanced nature of the first quarter revenues as we are seeing our global, multi-vessel strategy begin to bear fruit. Our $7.3 million revenue line was over five times our revenue from the first quarter of 2018, with nearly equal contribution from our international and U.S. businesses and a healthy blend of coronary and peripheral products. Based on these results and our internal projections and plans, we expect revenue for the full year of 2019 to be in the range of $33 million to $36 million. Dan will provide more details around our financials later in the call.

Since this is our first call as a public company, I will take a few minutes to provide an overview of Shockwave Medical, and then we'll discuss our progress during the first quarter. I'll then turn the call over to Dan to review our financial results, and then we will open the call for questions.

For those of you less familiar with the company, Shockwave has pioneered the development and commercialization of Intravascular Lithotripsy, which we call IVL, to treat complex calcified cardiovascular disease. For over 30 years, lithotripsy has been used to break up kidney stones, and the team at Shockwave was able to miniaturize the emitters, which are what creates the shockwaves so they can be delivered inside our balloon catheter. Our products use sonic pressure waves that pass through soft tissue and are absorbed by the hard calcium inside the artery wall. This creates sheer stresses that crack the calcium, thus creating a more pliable and expandable vessel. The sonic waves are able to safely pass through the entire depth of the artery wall, modifying both superficial and deep wall calcium.

Other technologies struggle to address the full spectrum of calcium, particularly without causing trauma. The first two indications we are targeting with our IVL system are occlusive peripheral artery disease, or PAD, which is a narrowing of vessels that carry blood from the heart to the extremities, and coronary artery disease, or CAD, which is the narrowing of the arteries that supply blood to the heart muscle. Currently, we are commercializing three different products that comprise our portfolio, and a consistent theme we hear about our system, regardless of what vessel is being treated, is that IVL is remarkably safe, incredibly easy to use, and extremely effective at modifying calcium.

Last year, we branded our catheters based on where they are used in the anatomy and how many emitters they each have. M5 is our peripheral product for medium-sized vessels such as the SFA or iliac arteries, and it has five emitters, hence M5. Last year, we launched new software that added additional pulses for this product going from 180 to 300 pulses. These extra pulses are enabling customers to finish off cases without having to ration pulses or grab a second catheter. The new software generator was rolled out in Europe in the third quarter of 2018, and we started our U.S. upgrade at the end of 2018, with the final U.S. sites being upgraded presently. The feedback we've been getting from U.S. physicians matches what we heard from their international colleagues last year. They see these extra pulses as a significant upgrade.

When we first launched M5, almost all of our cases were in the SFA, but our customers identified a much broader array of vessels where they needed a better solution. As a result of this customer pull, our sales approach has become appreciably more sophisticated as our customers have extended the use of IVL to treat common femoral arteries, popliteal arteries, iliacs, mesenterics, and other peripheral vessels we didn't realize had such a glaring need for a calcium solution. One novel and increasingly significant use of M5 is to expand calcified arteries to facilitate passage of large diameter catheters such as TAVR devices, stent grafts, or Impella pumps.

If you don't have Shockwave, and the iliacs are so heavily calcified that they prevent you from being able to pass the catheter through the standard transfemoral approach, you're left with a choice of making a surgical incision to provide access for these larger catheters or not using them at all. Surgical access is known to lead to more complications, higher costs, and longer hospital stays than minimally invasive transfemoral access.

The profound and obvious benefit of using Shockwave to facilitate femoral access has really caught the attention of our customers and has emerged as an important sales strategy to accelerate customer acquisition. Abiomed also took note of this last year, which helped motivate their investment in Shockwave and led to the partnership in sales and training that we are in the process of rolling out presently. We have started to witness an increasing number of Shock-Impella cases where Shockwave opens the iliac for Impella delivery, and the keep cases have gone extremely well thus far, which is a great thing for the patients who are able to avoid surgery and receive the Impella they needed.

Our second peripheral device is called S4. S is for small vessels, primarily below the knee, and there are four emitters inside the balloon, hence the number 4. Like M5, this system is approved in the U.S. and in Europe. We are presently conducting a limited launch of the 3.5 millimeter and 4 millimeter versions of the device, which are the first two of the four sizes we intend to commercialize. Thus far, the initial two sizes have been performing well across a wide range of below-the-knee anatomy, reaching down to the ankle in some patients, but it's also evident that most physicians feel more comfortable with smaller diameter balloons in the more distal below-the-knee vessels. We anticipate fully commercializing all four sizes, including the 2.5 millimeter and 3 millimeter versions in the fourth quarter of 2019. In the meantime, we do expect a modest expansion of the limited market release, including adding international sites as we're looking to establish a strong base of support in advance of the full launch.

The third product in our portfolio is our coronary device, or C2 -- C for coronary, and the 2 is for two emitters. C2 is also CE marked, and we started our IDE trial in the U.S. in the first quarter, with anticipated U.S. approval in the first half of 2021. C2 has quickly become our lead product in international geographies since its launch last summer. The speed of adoption and diversity of coronary anatomies we are treating shows how significant the unmet need is. We continue to see strong evidence that C2 is enabling the expansion of the treatment of calcified coronaries by the nature of what our customers are treating, including left main arteries, osteo lesions, bifurcations, and even STEMI patients.

The majority of these kinds of patients and lesions are not treated or are treated reluctantly with atherectomy devices. Turning to our commercial efforts, we presently sell direct in the U.S., Germany, Switzerland, and Austria, and we sell our products through distribution partners in other geographies. In order to best serve our customers and sustain our growth trajectory, we expect to continue to expand our direct field presence in the U.S. and in our European countries. We anticipate growth of roughly 50% of the field teams in both regions over the course of this calendar year.

In the U.S., we are presently in the process of adding additional regions to ensure that we have strong local leadership to support our customers and the field and clinical team. As territories grow in size, we will add clinical specialists to help additional users learn the benefits of IVL, and we will of course add new territories when it becomes evident that we are unable to reach all the sites interested in using Shockwave.

Internationally, we continue adding new distributors to open new countries, and in select geographies, we are adding direct Shockwave market development personnel who will augment the efforts of our distributors in something of a hybrid model, direct support of an indirect sales channel.

In Germany, we are seeing early confirmatory signs that a territory manager and clinical specialist tandem can be very effective at selling both peripheral and coronary Shockwave devices, which bodes well for that same model in the U.S. What we are also seeing in Germany is that the intensity of the demand for all our devices, and particularly coronary, is creating the need to expand the number of territory managers and to decrease the size of the territories. This is also the assumption we have made for our U.S. coronary launch, so it has helped to be able to preview the market dynamic in Europe well in advance of U.S. approval.

The growing demand for IVL requires that we expand operations to keep pace, and we are doing so by adding some new, very strong leaders to the team, adding a second shift, and shortly, by moving production to a larger, better facility. The new facility has been audited twice this year, and we are awaiting a certificate from our notified body so we can move within the next six months. The early signs of our operational improvement is also evidenced in our gross margin, which Dan will speak to later. We also continue to generate clinical evidence to confirm the benefits of our system across the myriad applications of IVL. We're doing so by a combination of company-sponsored clinical trials as well as local physician generated datasets.

The most important company-sponsored study is our U.S. coronary IDE called CAD III. In commencement of this trial was a key milestone for the company last quarter. CAD III will be conducted at 50 centers and is a 442-patient study of which 392 patients are evaluable and 50 are roll-ins or training cases. We finished March with 32 patients enrolled, which is slightly ahead of our initial schedule. We are still on track to meet our previously stated projection of completing enrollment within the second quarter of 2020.

Also on the coronary front, we completed enrollment of CAD II, our 120-patient post-approval European registry. CAD II is a post-market study in 15 European centers seeking to demonstrate the safety and performance of our coronary IVL catheter in heavily calcified coronary lesions. The types of lesions in patients studied in CAD II are largely the same as those we are studying in CAD III, and both studies are evaluating 30-day MACE as their primary endpoint.

We are targeting presentation of the data from this study later in 2019 or early 2020. Our largest clinical program is PAD III, which is a global, post-market study. There are two arms of this study: a 1,000 patient registry and a 400 patient randomized arm, which is evaluating the benefits of Shockwave prior to drug-coated balloon versus angioplasty, followed by drug-coated balloon in the SFA.

We have paused enrollment of the randomized arm last fall, as we wanted to ensure that at least a quarter of the patients were treated using our new M5 300 pulse system. We expect that the added pulses will give us better cost effectiveness data that is also the device we plan to commercialize for the foreseeable future, so we wanted to ensure that this version was incorporated into the study. However, as we were getting ready to restart enrollment, the FDA announced their decision to hold a panel meeting to assess the safety of paclitaxel-coated drug-coated balloons. Given that the patients in both arms of our PAD III study received DCB therapy, we found ourselves in the awkward position of potentially restarting a trial at the same time that the FDA was debating the safety of one of the key study components. So, for now, we are continuing to pause while we await outcome of the FDA panel.

The less complicated arm of the PAD III study, and one that we are extremely enthusiastic about, is the 1,000 patient observational registry. The inclusion criteria for this arm of the study is very open, and basically, almost every peripheral patient that is excluded from the randomized arm can fit into the registry. These patients better reflect the broad spectrum of real-world patients our physicians are treating commercially today: iliac, common femoral, long, diffuse, heavily calcified -- the hardest of the hard patients.

The first 200 patients from this cohort were presented at the Charing Cross Symposium in April by Dr. Andrew Holden and received very positive response. These registry patients are much tougher to treat than those we studied in our earlier trials, and the fact that these data continue to show almost no adverse events related to Shockwave and also continued to demonstrate profound improvements in residual stenosis helps explain why our customers are showing such enthusiasm for our products.

The final aspect of our clinical program that is really thriving is our expanding library of publications in clinical presentations. If one looks back a year ago, we had six total publications. As of today, we have 37, and they all tend to tell the same story. No embolism, no major dissections, no perforations, and significant lumin gain. While it is almost impossible to achieve such a pristine complication rate forever, the clear pattern from over 8,000 cases is that IVL is safe, simple, and effective.

The newer publications also tend to reinforce the diverse patients and vessels our customers are treating such as pre-TAVR, common femoral, pre-EVAR, and complex coronary anatomies. On the scientific meeting product according to the current agenda, Shockwave will be featured in over 40 podium presentations at PCR alone this year, a likely indicator of even more publications to come. Together, these publications and presentations validate physician support of our technology, driven by the effectiveness of Shockwave in their most challenging cohorts of patients.

On a somewhat administrative topic that garnered some attention last quarter is on the intellectual property front. As discussed in our S-1, three IPRs, or petitions for inter partes review, were filed in December 2018 at the USPTO's Patent Trial and Appeals Board, or PTAB. Our preliminary responses to these petitions were submitted in March, and the PTAB is expected to decide whether or not to institute the inter partes review by July of 2019. And if they decide to institute, there is another year or so before a determination will be made. We are very comfortable with the uniqueness of our inventions and our responses to the IPRs, and we believe that these patents will prevail in the end. However, in the event that the PTAB rules against us on any of these petitions, we also believe that we have a very strong portfolio of additional patents that serve as multiple layers of defense and will make it difficult for a competitor to replicate what the team has created at Shockwave without infringing on multiple patents.

It is gratifying to see the early stages of our global, multi-vessel strategy coming into form with coronary, below-the-knee, and various vessels above the knee all starting to contribute to the business, and it's highly motivating to see the enthusiastic response of our customers as we give them and their patients a remarkably safe, easy, and effective option for the most complex vascular disease.

With that, I would like to turn the call to Dan.

Dan Puckett -- Chief Financial Officer

Thank you, Doug. Good afternoon, everyone. Shockwave Medical's revenue for the three months ended March 31st, 2019 was $7.3 million, a 450% increase from $1.3 million in the same period the prior year. Overall, revenue was evenly split between U.S. and international, with each accounting for $3.6 million of the total revenue. U.S. revenue in the first quarter of 2019, all of which was derived from our peripheral products, grew 305% as compared to the same period last year. This increase in U.S. revenue was primarily driven by an increased use of our M5 IVL products across numerous peripheral vessel beds as well as an increase in our sales organization size and reach as discussed earlier.

International revenue also saw a big jump in the quarter, growing 755% from $425,000 in the first quarter of last year. The main driver of our international revenue growth was our C2 coronary product, which was launched in Q3 of 2018. The strength in international sales was supported by strong performance from our international distributors in expansion of our distributor network. We now have 15 distributors and are selling in 30 countries, which include newly added territories in Eastern Europe and Africa.

Looking at revenue by product line, peripheral products accounted for $4.4 million of total revenue, compared to $1.3 million in the same period last year, a 236% increase, and coronary products accounted for $2.7 million of revenue, all of which was international. As previously noted, we launched our coronary product internationally in Q3 of 2018, and therefore did not have coronary product revenue in the first quarter of 2018.

Gross profit for the first quarter of 2019 was $4.2 million, compared to $528,000 for the first quarter of 2018. Gross margin for the first quarter of 2019 was 58%, as compared to 40% in the corresponding prior year period. Contributors to gross margin proven included increase absorption of fixed cost and productivity gains through work flow improvement and fixturing. We have also brought up and trained a second shift in Q4 2018 that contributed positively to our productivity in absorption gains in Q1 2019.

Total operating expenses for the first quarter of 2019 were $16.4 million, a 58% increase from $10.3 million in the first quarter of 2018. R&D expenses for the first quarter of 2019 were $7.5 million, compared to $5.5 million in the first quarter of 2018. The increase is primarily attributable to an increase in clinical study expenses for the ongoing PAD III and CAD II trials and the beginning of our CAD III trial, as well as an increase in development in clinical headcount.

Sales and marketing expenses for the first quarter of 2019 were $5.9 million compared to $3.4 million in the first quarter of 2018. The increase is primarily due to sales force expansion. We also built out a commercial operations function to support our sales team, which contributed to the increased cost on the sales and marketing line. General and administrative expenses for the first quarter of 2019 were $3 million, compared to $1.4 million in the first quarter of 2018. This increase was primarily due to additional costs associated with being a public company.

Net loss from operations for the period was $12.8 million, as compared to net loss of $9.6 million in the same period of last year. Net loss per share in the first quarter of 2019 was $1.37. We ended the first quarter of 2019 with $138.1 million in cash and cash equivalents, including our IPO and Abiomed private placement proceeds of $110.1 million net of underwriting fees and other expenses.

Turning to our outlook for 2019, we're continuing to see strength in our peripheral products and accelerated use by our existing and new customers globally. In addition, we're expecting to see continued geographic expansion of our coronary product internationally. Based on these trends, we expect full year 2019 revenue to be in the range of $33 million to $36 million, representing growth of 169% to 194% over full year 2018.

At this point, I'd like to turn the call back to Doug for closing comments.

Doug Godshall -- President and Chief Executive Officer

Thanks, Dan. I'm encouraged by our financial results for our first quarter as a public company. While we appreciate that we have a lot of work ahead of us, I'm confident that we have the fundamental pieces in place that will enable us to sustain our momentum. We have an innovative technology with solid clinical results, we're addressing a large, unmet need, and we have a driven team that is poised to execute as we grow. We will continue focusing on delivering the positive clinical outcomes we have witnessed to date and building on the organizational momentum that we have seen in our first quarter as a public company.

...

Thank you all again for taking the time to join us today, and with that, I would like to open the line for questions.

Questions and Answers:

Operator

Thank you, sir. Ladies and gentlemen, if you have a question at this time, please press *1 on your touch-tone telephone. Again, that's *1 on your touch-tone telephone to ask a question. If your question has been answered or you wish to remove yourself from the question queue, please press the # key. Again, that's *1 on your touch-tone telephone to ask a question. To prevent any background noise, we ask that you please place your line on mute once your question has been stated.

Our first question comes from the line of David Lewis of Morgan Stanley. Your line is open.

David Lewis -- Morgan Stanley -- Managing Director, Medical Device Analyst

Great. Thanks for taking the questions. Doug, a few from me actually to start off here. So, obviously, commercial traction's a little better than we expected here pretty early in the year. I wondered if you could give a sense either by geography or more specifically sort of by vessel bed which vessel bed traction is sort of trending better than you expected here as you mentioned earlier in the year?

Doug Godshall -- President and Chief Executive Officer

Thank you, David. I'd say it's across the board traction that has been positive. Coronary obviously performed very nicely internationally, as did above-the-knee activity internationally, although as yet, we're just really starting to start talking about TAVR access and large bore access internationally. That's really a lagging strategy internationally relative to the U.S. Very interesting internationally, but we haven't really kicked that into gear yet, in part because our distributors are so coronary focused as their first line of attack, and then they'll move to large bore access once they feel like they've got strong penetration on the coronary front.

In the U.S., above-the-knee has been fairly well balanced. It's not like we're leaving the SFA, and all our time is being spent in the iliacs, but still, a pretty strong distribution where the TAVR access has clearly been a shot in the arm in terms of getting us through back processes and knocking down some accounts that have taken a very long time to get through the back process. Suddenly, they're sort of falling in line more expeditiously thanks to large bore, but the strategy we saw crystallizing the second half of last year where you get on the shelf with iliac access, but then once on the shelf, you do common femorals, and you do iliacs, and you do SFAs, and popliteals, etc., does seem to be a sustainable -- at least at this juncture -- a sustainable strategy.

And then on a much more limited basis, we're obviously encouraged that we're able to gradually expand our S4 limited release where we've added a few sites and continue to see really promising results, but that won't be the driver, obviously, until back end of this year and into next year.

David Lewis -- Morgan Stanley -- Managing Director, Medical Device Analyst

Very helpful. Just a couple of quick follow-ups. The first is following up on your XUS coronary commentary. I was just wondering, as you think about the XUS business, are you seeing more traction in terms of share capture versus atherectomy, or do you think this is more market expansive, or has this sort of been a mixture of the two?

Doug Godshall -- President and Chief Executive Officer

So, I thought we'd see a little more share capture, but from everything I can tell, BSC's still having some really good Rotablator numbers, great product. It appears that it may be one of those all boats rise kind of things. Now you've got the ability to treat a much broader spectrum of calcified patients. We're talking about calcium, and you can now get access with Rotablator, and then get a good outcome and greater vessel expansion with Shockwave, and we may be actually more complimentary than competitive to Rota, and international is really a Rotablator space.

And then more to the point, there's so many vessels, as we said earlier, so many vessels where you just really can't treat or can't safely treat with Rotablator. Left mains are just too big. Osteo lesions, bifurcations, certainly don't wanna do STEMI acute coronary syndrome type patients and run the risk of embolization, so I'd say our guess is probably more than 80% of our business is incremental market expansion. If it's a tortuous, angulated-type anatomy where you might've taken a risk with Rota, and it's not an occluded vessel where you would need Rota, we may win that jump ball, but there's so many other patients where they were getting suboptimal therapies, suboptimal stent deployments, etc., because they really had no solution, so they're now able to treat a much broader spectrum of vessel beds thanks to Shockwave.

David Lewis -- Morgan Stanley -- Managing Director, Medical Device Analyst

Very helpful. Just the last one for me, and I'll jump back in queue. Just thinking about paclitaxel, kind of a two-part question. One is just have you seen any derivative impact in the U.S. tied to the FDA concerns over paclitaxel impacting your business, and then derivatively, obviously, thanks for the update on PAD III, that's pretty much in line with our expectation, if you can't restart that trial, Doug, is there data already do you think that's further enough along that can be submitted even if the trial can't be restarted? And that's it for me. Thanks so much.

Doug Godshall -- President and Chief Executive Officer

So, a lot of our cases are still getting DCBs. These patients have the highest risk of restenosis, they are the most challenging types of anatomies, so I'd say a majority of our physicians are still biased to use DCBs in these patients, even if they're decreasing their DCB use overall. We're not seeing an inflection point kind of effect of decreased DCB utilization. We do have some physicians who do believe that even if the FDA comes back and says DCBs are fine, there are many who feel like, hey, this could be a longer term pall over that segment, and those same physicians think that that's going to accrue over time to Shockwave's benefit because we are the best option, in their mind at least, for these heavily calcified patients. So, if they're gonna not use a DCB, that might increase their bias toward Shockwave.

Our assumption is neutral to modest positive but not like overnight, all these centers who are working slowly through the back process suddenly get us through the back process immediately because of a DCB phenomenon, for example. So, neutral to modest positive is our assumption, and we assume the FDA will come back and be positive about DCBs and that we'll restart our trial. Those are our assumptions.

That's right, and if we don't restart that trial -- that was your second question or second compound. The PAD III, the randomized arm is a market development effort. It's not a regulatory trial. As I said earlier, not that we're not enthusiastic about the randomized arm, we're actually kinda more enthusiastic about the registry arm because it's demonstrating the broad use of our device in the kind of patients that physicians really wanna use this for versus shorter margin discrete lesions like we have in the randomized arm.

We're close to 300 patients enrolled in the randomized arm, so that's a reasonable-sized dataset. We'd certainly prefer to finish particularly with the upgraded generator software, and that's our assumption that we will. If we don't, then we'll reassess how we're gonna use the close to 300 patients we currently have in terms of where it would be presented and published and the like. Our assumption is we'll finish, and it doesn't really affect any of our strategies longer term whether we complete it or not.

David Lewis -- Morgan Stanley -- Managing Director, Medical Device Analyst

Thanks so much.

Operator

Thank you. Our next question comes from the line of Bob Hopkins of Bank of America. Your line is open.

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Thanks, and good afternoon, and congrats on a great start. First question, Doug, I just wanted a quick update on the below-the-knee commentary you made. I'm just curious what else has to happen on your end to get the smaller sizes out in the fourth quarter as you're calling for?

Doug Godshall -- President and Chief Executive Officer

So, we're finishing DV testing presently, then we have to submit and get approved to launch the smaller two sizes. We've contemplated a broader roll-out, but as we look back at where we were a year ago when we first were trialing the devices where the balloon material was a little thinner than it needed to be, about 60-70% of our cases were the 2.5 and 3 millimeter devices, and as we've gone out in this limited launch, there are some physicians who are very comfortable oversizing to a 3.5 millimeter in those smaller vessels, but there's a general reluctance to go too big in these below-the-knee vessels because you're trying to avoid dissections or any complications because your whole goal is to avoid amputation, and so they're particular concerned about any risk. And we think even though 3.5 millimeter can treat a large percentage of the patients, to really get a strong launch, we're gonna need some diameters that are smaller than a 3.5 millimeter.

So, the very encouraging thing about the limited launch so far is the durability of the device appears to be very strong right now, and we think we can very clearly correlate the performance of the 3.5 millimeter and the 4 millimeter to what the new, more robust versions of the 2.5 millimeter and the 3 millimeter will be. So, not only are we validating the really strong clinical response to the S4 with the current limited release, but we're also, we think, validating the performance that we'll see over the full spectrum of sizes once they launch.

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

That's helpful. So, it sounds like relatively low risk to that timeline you gave. I just wanted to follow up with my second question on your paclitaxel comments because I thought I heard you say that it sounds like you're kind of optimistic that the FDA session will go relatively well, and I'm just wondering what maybe drives that thought process. And then does it really matter? Besides obviously the trial, which I know is important, but to the commercialization of your business globally, how much does this panel really matter to you? So, just curious on why you're optimistic maybe, and then curious as to how much it really matters.

Doug Godshall -- President and Chief Executive Officer

So, I'm optimistic, at least in our kinds of patients I should say. So, I believe they're going to say in patients with a high risk of restenosis, you should use DCBs, and that's exactly the kind of patients we treat. And the Charing Cross, somebody from the FDA -- and I don't remember the name -- but they sort of made a strong statement about studies should continue, so don't stop doing studies, so I think they're starting to feel the pressure that maybe they were a little too conservative in their commentary. What I haven't heard is that there's gonna be a new dataset coming from the DCB combinations that will wipe out the concerns, I just think they're gonna give a green light on, I think -- no news from the FDA or anything -- but I think they'll give a green light on our kinds of patients that we're treating in our trial, which is our expectation.

But to your point, if it doesn't happen, I think we're at a point now in our commercialization where several hundred physicians in the U.S. now have direct experience with Shockwave in peripheral artery disease and see the significant safety, ease of use, and efficacy benefits in the system with or without DCB. So, if paclitaxel DCBs disappeared overnight, I don't know that that would really have an adverse consequence on our business. I don't think it would be transformational on the upside. Again, I think it would be neutral to modestly positive, and we would certainly continue to try to roll out in an aggressive fashion as we have to date.

The European customers, frankly, would be happy to restart the trial today. The U.S. customers are less comfortable because the FDA's put them in an uncomfortable position, but the international folks have been begging us to restart the trial. And in theory, we could restart in Europe and finish there. It doesn't feel right to do that. It feels like if the FDA says there's a concern, we should wait to hear from them and see what their outcome is.

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Great. That's helpful. Thank you so much.

Doug Godshall -- President and Chief Executive Officer

Thanks, Bob.

Operator

Thank you. Our next question comes from the line of Lawrence Biegelsen of Wells Fargo. Your question, please?

Lawrence Biegelsen -- Wells Fargo -- Senior Medical Device Equity Research Analyst

Thanks. Good afternoon. Thanks for taking the question and congrats on the good start, Doug and Dan. I wanted to start with the guidance. Could you give us a little bit of color on the mix between peripheral and coronary, U.S. and OUS? And what gets you to the high end of the guidance? And I had a follow-up.

Doug Godshall -- President and Chief Executive Officer

So, we're guiding the top line up by vessel segment. Obviously, as we're forecasting, we're forecasting growth in both coronary and peripheral, and just as we saw, comparable growth frankly between coronary and peripheral in the past quarter. We're gonna work really hard to maintain U.S. and international balance and coronary and peripheral balance growth with certainly the U.S. driving the predominance of the peripheral growth. And then in the peripheral subsegment, we'll see a modest, continued contribution from S4 as we build out our base of experience and then meaningful acceleration of that hopefully in the fourth quarter.

In terms of high end of the range, that would be even more accelerated penetration of U.S. sites as we're certainly looking to do faster adoption, faster vac cycle times or shorter vac cycle times, and then internationally, more rapid uptake, particularly in some of the newer regions that we've added over the past six months, and accelerated coverage in places like Germany where we're looking to expand our sales force to keep up with customer demand. So, it's a sort of even more efficient execution, not like a new product launch or accelerated product launch.

Lawrence Biegelsen -- Wells Fargo -- Senior Medical Device Equity Research Analyst

That's helpful, Doug. And then for my follow-up, could you talk about the impact from the Abiomed partnership, what benefits you get from that from a commercial perspective? Thanks for taking the questions.

Doug Godshall -- President and Chief Executive Officer

So, first quarter was largely sorting out how we're going to run the experiment with Abiomed. We did a couple of really -- at least in our minds -- really effective training sessions with them where they would train physicians on a variety of complimentary technologies, imaging, closure, Shockwave to help improve outcomes in performance for Impella placement and delivery. So, those went well.

We presented to their global sales team at a sales meeting they had a few weeks ago, and I think that was really helpful as it informed the folks on the ground how really simple Shockwave was, and low maintenance it would be, and potentially helpful for them to both sell more Impellas and also reduce the complexity of placing Impellas when patients had more calcified iliacs. So, that seemed like a bit of a breakthrough event for the sales team because obviously every day, their job is to sell Impellas, not to talk about Shockwave, and so I think it crystallized for them what Mike and the leadership team that Abiomed had identified as a real opportunity to decrease the complexity of placing Impellas in some of those patients.

Looking forward to the rest of the year, we're gonna partner with them at a training village at PCR, so every day, as folks come through to look at Impella, they'll look at Shockwave and Impella in tandem. We have eight scheduled training sessions over the span of the rest of the year that are already scheduled with hopefully others coming online, and then we just kicked off a pilot of six geographies where Abiomed territory manager and Shockwave territory manager partnered to try to understand how on a day-to-day basis we can help them in some of these more complex patients because obviously their patient type -- shock patient -- might come in in the middle of the night, the Shockwave person's not there, how do we make it work so that they can get our product used to help facilitate their cases. And so, we'll run that experiment, and then after a period of time, look back and figure out what that best practices are and then roll it out nationally.

Lawrence Biegelsen -- Wells Fargo -- Senior Medical Device Equity Research Analyst

Thanks for taking the questions, guys.

Doug Godshall -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Jason Mills of Canaccord. Your question, please?

Jason Mills -- Canaccord Genuity -- Managing Director

Thank you. Hey, Doug and Dan. Can you hear me OK?

Doug Godshall -- President and Chief Executive Officer

Yup.

Dan Puckett -- Chief Financial Officer

Yes.

Jason Mills -- Canaccord Genuity -- Managing Director

You guys had a great start. Doug, I wanted to start with S4, following up on an earlier question. Our due diligence, I'm sure others, Shockwave IVL does very, very well when the stakes are highest in the coronary, outside the U.S., in large bore access -- very, very difficult. You mentioned the type of lesions that are being studied in CAD III. S4 is gonna target below-the-knee. Obviously, we know below-the-knee, there's small [inaudible], it's high stakes as well, just given the correlation with the amputations. So, how would you expect the S4 ramp to go? Will it be more similar do you think to perhaps C2 in Europe? Can you provide any color as it relates to that about the complexity?

Doug Godshall -- President and Chief Executive Officer

There are some strong correlates coronary to below-the-knee. You're closer to the calcium, there's more medial calcium, but there are also some meaningful -- and smaller vessels -- meaningful differentiators, much lower procedure volume, obviously, below-the-knee. So, your clinical need is profound, but your clinical volume is a fraction of the coronary, so while there's more calcium below-the-knee, you're not dropping into a couple million coronary procedures like we did in Europe, so that was certainly a key component of the acceleration we saw internationally. I think something that is also a correlation though is what we did in Europe when Isaac first took over commercialization for us was spent the first few months trying to learn how do you manage a coronary case.

So, pre-launch, we did dozens and dozens of cases to figure out how does this work in an osteo lesion, how do you finish a multi-vessel disease in the coronaries and not burn through multiple catheters because you'll get a bunch of pushback from the customer if they have to go through catheter after catheter to finish a case. So, we came up with a really elegant algorithm for how to manage coronary cases, and we're now able to do the same thing with below-the-knee. How do you treat this longer -- generally -- longer, more diffuse disease in below-the-knee than what you had above-the-knee? And arguably, procedure time is probably less with IVL than it is with a balloon, but our catheter's shorter than a high-pressure balloon, so working through the algorithm to help a customer understand you can finish this case in a few minutes instead of five minutes of using a long balloon, and how do you ration the pulses effectively so that they have a very satisfactory outcome?

And so, that's a real benefit we have now to be able to do this more prolonged limited launch as we did with our initial pre-launch of coronary so that when all the sizes are available, we should have hopefully a really simple algorithm that will help accelerate us into a somewhat smaller market than coronary, but also obviously a real sweet spot, we believe, for Shockwave, given the prevalence of calcium and the relative dissatisfaction with alternatives that they have available today.

Jason Mills -- Canaccord Genuity -- Managing Director

Very helpful color, Doug. Thank you. I guess I'm into correlation questions today because I wanted to ask about CAD III centers and how the IRB process is moving along in several of the centers, how many you're in, and whether or not there's a correlate there between the use of C2 in that trial and use of M5 in the cath lab for commercial use. And then just to slip a last one in here, are there any particular presentations at your PCR about what you're most excited as it relates to maybe the interest level the physicians might have and whatever comes out of those sessions? Thanks.

Doug Godshall -- President and Chief Executive Officer

So, CAD III, if I drew the line at the end of March, we were in, I don't know, maybe a dozen centers. We're activated probably a little bit less than that. Our largest enroller doesn't do peripheral, and so there's no correlation. On the other hand, I was at two centers last week, one of whom is one of our largest peripheral centers, and I think based on the case they did a couple hours ago, I think it's gonna be, if not our No. 2 enroller, it's gonna be a very significant enroller in coronary.

And it's interesting to see the level of engagement a little bit higher up in the food chain on the cardiology side, even though the cardiologists were doing peripheral, now that the top-dog cardiologists are getting to come close to using the coronaries, the level of institutional traction is palpably higher, at least at that center, where suddenly the guy that didn't really care about the fact that we're doing peripheral business there is now very interested in the fact that we're doing peripheral business there and is now scheduling their first -- or looking to do their first -- TAVR access case, whereas before, they were kind of not paying attention to it. So, I do believe there's going to be really significant synergies between our peripheral and coronary business.

And in fact, one of the reasons why we think it's imperative, if at all possible, but we think it's absolutely the best model. We think having a sales and clinical team that does both coronary and peripheral makes so much more sense for us than most times when companies have tried this. For example, I'm sitting in the lab with a guy last week, and he's talking about doing TAVR access and scheduling his first coronary case. If you had a peripheral person calling on him for TAVR access and a coronary person calling on him for coronary, which is frankly something that we are doing in Spain, the only country where we have split reps or split distributors, it's actually kind of confusing for the customer. So, we think it will work really well and be quite complimentary here to have a blended team.

In terms of PCR, there are two session off the top of my head that I think are worth a side from the dozens of others. So, our marketing team came up with this great concept of a top-shock contest, so we sent a note out to all of our customers internationally and said, "Okay, submit your toughest, best Shockwave cases." I think we had over 60 submissions. We narrowed it down with a panel to 15 or so that are in competition for top shock. They get to show up as faculty, and PCR is comping them for faculty -- the winners. And it's Javier Escaned, Jonathan Hill, and Carlo. So, anyway, good panel. Great panel. I'm just trying to name names off the top of my head. That's Tuesday at 5:15, and so I just gave you the names. Anyway, good panel. And there seems to be a tremendous amount of enthusiasm for that top-shock contest, and then there's a TAVR access session on Thursday that I think is probably worth seeing, and that's at 4:30.

Jason Mills -- Canaccord Genuity -- Managing Director

Thanks, Doug.

Doug Godshall -- President and Chief Executive Officer

It's quite a showing. If you look back two years ago, we had two total presentations, so to have over 40 two years later is I think a reflection of the amount of enthusiasm.

Jason Mills -- Canaccord Genuity -- Managing Director

Good growth. Thanks.

Doug Godshall -- President and Chief Executive Officer

Thank you, Jason.

Operator

Thank you. At this time, I'd like to turn the call back over to President and CEO Doug Godshall for any closing remarks. Sir?

Doug Godshall -- President and Chief Executive Officer

Thank you. So, thanks everybody for joining us for our first call. Obviously, we're encouraged but not satisfied by the progress that we've made thus far and see tremendous opportunity ahead of us in the current products we're providing to our customers and in the pipeline behind them. So, thanks, and thanks everyone for your support today.

...

Operator

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may disconnect your lines at this time.

Duration: 55 minutes

Call participants:

Debbie Kaster -- Gilmartin Group -- Managing Director

Doug Godshall -- President and Chief Executive Officer

Dan Puckett -- Chief Financial Officer

David Lewis -- Morgan Stanley -- Managing Director, Medical Device Analyst

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Lawrence Biegelsen -- Wells Fargo -- Senior Medical Device Equity Research Analyst

Jason Mills -- Canaccord Genuity -- Managing Director

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