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00:07 Good afternoon, and welcome to the ShockWave's Fourth Quarter and Year-End 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. 00:21 I would now like to turn the call over to Debbie Kaster, Vice President of Investor Relations at Shockwave for a few introductory comments.
00:36 Thank you all for participating in today's call. Joining me today from ShockWave Medical are Doug Godshall, President and Chief Executive Officer; Isaac Zacharias, Chief Commercial Officer; and Dan Puckett, Chief Financial Officer. Earlier today, Shockwave released financial results for the quarter ended December 31, 2021. A copy of the press release is available on ShockWave's website. 00:57 Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, 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, statements relating to our sales and operating trends, business and hiring prospects, financial and revenue expectations and future product development and approvals are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of the COVID-19 pandemic that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. 01:45 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 Factors section of our annual report on Form 10-K on file with the SEC and available on EDGAR and in our other reports filed periodically with the SEC. 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 is accurate only as of the live broadcast today, February 17, 2022. 02:24 And with that, I'll turn the call over to Doug.
02:28 Thanks, Debbie. Good afternoon everyone, and thank you for taking the time to join us to review ShockWave's results for the fourth quarter and full year of 2021. 02:37 The past year has been full of ups and downs for all of us, but the Shockwave team has persisted through the many challenges as we continue to pursue our mission to improve outcomes for patients with calcified vascular disease. We achieved quarterly revenue of $84.2 million in the fourth quarter of 2021, which was 271% above the fourth quarter of 2020, and annual revenue of $237.1 million in 2021, an increase of 250% above the full-year 2020. Our strong global growth confirms how significant the clinical need has been for a better calcium treatment and how well our team is hitting the mark with IVL. 03:21 Despite the ongoing impact of COVID as Delta transition into Omnicom, our business and our team continued to outperform our expectations. Isaac will touch on more specifics in a moment, but at a high level, while coronary led the quarter once again, we also saw a nice uptick from the third quarter in both our international business and our US peripheral franchises. 2022 is shaping up to be another strong year for the company with 3 main drivers, continued coronary growth as we add new accounts and better penetrate existing accounts, accelerated peripheral growth due to the combination of the upcoming launch of our M5 plus catheter and the improved peripheral reimbursement for our above the knee codes and continued strengthening of our international business, led by a full year's benefit of the transition from distributor to direct sales in France and the UK. 4:17 While Omicron will be a downdraft on the first quarter for Shockwave and most of med tech. We have high hopes for the post-first quarter recovery and as a result, we expect our full-year 2022 revenue to fall in the range of $405 million to $425 million, representing growth of 71% to 79% from 2021. 04:39 To provide more color on the commercial front, I will now turn the call over to Isaac, then Dan and I will share more details on the broader business and financial results.
04:48 Thank you, Doug. Despite the increased number of COVID cases in the latter part of Q4, our team put up great numbers to finish out 2021. US coronary sales continue to be strong as we near the anniversary of that launch. Further, our US peripheral and our international businesses reported strong sequential and year-on-year growth. With these solid numbers it is hard for us to parse out the specific impact that COVID had on our Q4 business. That said, we did start to see an increasing number of restrictions on elective procedures and staffing issues as we exited the year. This has continued in Q1 with staffing shortages causing postponement of cases even what elective procedures are not being restricted by the hospital. 05:29 On balance the situation seems to be getting better globally as Q1 progresses. In the absence of a new strain or some unforeseen situation we remain cautiously optimistic that there will not be significant COVID related disruptions to our business for the balance of 2022. We continue to be pleased with the performance of our US sales team and their ability to service customers effectively with the peripheral and coronary products in one bag. As expected, more accounts are using both coronary and peripheral as customers increasingly adopt IVL for the variety of indications. 06:01 In the fourth quarter, 58% of our US accounts purchased both coronary and peripheral products, 20% purchased only coronary and 22% purchased only peripheral. Our goal remains to eventually have all of our customers using both coronary and peripheral IVL. Having some of the US coronary metrics from the fourth quarter, C2 reorders represented 83% of the quarterly revenue, continuing the solid trend we have seen throughout the year. And we expect this to keep growing as the number of new accounts decreases throughout the year. 06:34 While US coronary growth was driven by launched accounts, new account openings were strong in Q4 as we added an average of 1 new coronary accounts per territory per month. This number has trended downward as expected as we continue to steadily penetrate the total account base and selectively add new territories. We will continue adding accounts throughout 2022 while at the same time increasing C2 used within our existing customer base. 06:59 Our initial order quantity continues to average 5 units per new account and we don't expect this to change for the accounts that will launch this year. The team delivered solid growth in the peripheral products in the quarter. As you are aware, this is a hospital-based business for us and the solid performance in the quarter is a reasonable indicator that despite the challenges our customers have with COVID and staffing they will see the value in treating heavily calcified regions with IVL. 07:25 In the fourth quarter nearly half of our US territory managers sold more than $1 billion of IVL product. This is a testament to their ability to deliver on both the coronary and peripheral sides of the business. We don't have a target number for how large a territories should be in terms of sales, but we are pleased with the growth we have seen and expect this will continue to grow. 07:45 Turning to the international business where we are selling products in almost 60 countries, we saw healthy sales growth as the team finished the year strong. Our international team expanded from 19 to 40 people in 2021 as we continue to add to our sales and marketing teams. We now have employees based in 11 countries, including Japan, India and across Europe. The global presence of Shockwave employees helps us stay close to our customers and make sure we are able -- we are being responsive to their feedback and needs. The team also closely with our distribution partners and we are pleased with that side of the business. 08:19 Q4 was the first full quarter of direct sales in the UK and France. Our team's engagement with customers had an immediate impact resulting in new accounts and increasing penetration in existing accounts. Revenue from the UK and France in the fourth quarter increased 90% compared to the fourth quarter of 2012. Of this increase 63% was attributable to increased unit volume. Our direct team is also able to focus more on the peripheral business in those countries, and we expect to see solid growth for peripheral IVL albeit off a small base. 08:51 Turning to Asia. We remain on track to receive PMDA approval for C2 in Japan in late Q1 or early Q2 2022. We expect to have reimbursement in place in Q4, at which time we will begin launching C2 in Japan. We have also begun working with KOLs and the PMDA on a strategy to bring our peripheral products to the Japanese market. In China, we have made excellent progress with our joint venture and now expect to have approval for the Shockwave important coronary and peripheral catheters later this year. 09:22 Finally, we are pleased to have started enrollment 1,000 patient post market registry for our C2 product in India. Together with our distribution partner in India we will gather high quality data and what will be the biggest real world registry for coronary IVL. 9:37 In closing, I'd like to thank our global commercial team and distribution partners for another strong year as they continue to bring IVL to more customers, while dealing with the day to day challenges from COVID. Back to you, Doug.
09:49 Thanks, Isaac. I will not to touch on some other updates and highlights for the Shockwave business in 2021. Our success in securing reimbursement for both peripheral and coronary applications were, of course, some of our more important accomplishments in 2021. On the coronary side, we are pleased to be granted a New Technology Add On Payment or NTAP for coronary IVL performed in the hospital inpatient setting, as well as a transitional pass through code for coronary IVL in the outpatient setting. And then in November, we had a big win for our peripheral business when the Centers for Medicare and Medicaid Services or CMS reassigned the payment for peripheral IVL procedures performed on above the knee arteries in the hospital outpatient setting. 10:35 This rule, which became effective January 1, 2022 increases payment that hospitals received when IVL is performed by itself or adjunctively with drug coated balloons, stents or atherectomy in iliac, femoral and [indiscernible] arteries. Above the knee procedures are the large majority of peripheral cases and IVL procedures in hospitals are now paid on parity with atherectomy, which puts us on a level economic playing field for the first time. This uplift in payment was certainly excellent news and we anticipate it will have a progressive positive impact on our above the knee business over time. 11:13 Also in the peripheral front, we are increasingly enthusiastic about the upcoming launch of M5 plus. We had briefly described this new product a few months back when we were commencing our limited market release. So, as a reminder, compared to M5, M5 plus has 3 meaningful upgrades. First, M5 plus has a longer catheter shaft, which enables it to reach below the knee when using a femoral access or to reach the iliac and common femoral artery from the radial approach. Second, the plus version also comes in an 8-millimeter diameter size, a large percentage of iliac arteries are 8 millimeters. So having this larger size will help us further strengthen both our symptomatic iliac procedures as well as the large bore access segment of our business. And third, the feature that is resonating most in our limited release is a doubling of the pulse rate, sort of a double tap. Instead of taking 30 seconds to complete a cycle it will now take 15 seconds with M5 plus. 12:15 One physician told me a couple of weeks ago that he refuses to go back to M5 slow, he only wants to use M5 fast. Customers have responded to all these upgrades even more positively than we had anticipated. Our plan is now to switch from a limited release to a full launch of M5 plus globally in the second quarter of this year. As the pioneers of intravascular lithotripsy we are constantly receiving feedback about what features and designs our customers are looking for and we incorporate that into what is becoming an increasingly substantial product pipeline. 12:51 The extremely positive initial response our customers have had to M5 plus suggest that our team is doing a very good job of hearing what enhanced features our customers want. We have not describe our portfolio in detail, but we are targeting 2 launches each year with a blend of meaningful performance and feature upgrades, such as with M5 plus, as well as new configurations and designs that will expand the addressable patient population our customers are able to treat. By 2025, we expect to have at least 6 different designs that our customers will be able to plug into our generator. And everything we will be selling then will be different and better than what we are selling today. Being first has its advantages. 13:34 To ensure we have the capacity to execute on the steady stream of products on or to do list, we are well on our way towards more than doubling our R&D team from 40 talented individuals at the beginning of last year to what will likely be more than 100 by the end of this year. And as our pipeline has advanced so as our portfolio of intellectual property. We've continued to expand our patent estate, including continuations related to the 2 patents that were recently invalidated. Notably, the patent office issued these continuations after reviewing all the materials from the IPO process which we included with the submission. 14:13 There are many other apparatus and method claims in our portfolio of over 50 US and over 74 in patents, the collective breath of which gives us confidence that we have a very formidable patent position that is more than sufficient to protect our technology. We won't win just because we have a substantial patent estate, but we certainly won't lose because of patents either. Of course, we are constantly trying to stay one step ahead serving our customers better than anyone else, creating unique new products [indiscernible] them and strengthen our patent portfolio as we innovate. 14:47 We have also continued to advance the science around IVL, which has supported the expansion of calcium modification, both in the peripheral and coronary vessels. We had multiple very impactful clinical presentations and publications over the quarter. In October at TCT, 1 year results from the disrupt CAD III clinical study of coronary IVL were presented for the first time and were subsequently published demonstrating the consistency of Shockwave coronary IVL outcomes over time across a wide spectrum of calcium morphologies and between genders. Then, earlier this month results from the gender analysis of CAD III were highlighted in the new expert consensus statement in the Journal of this society for cardiovascular and geography and interventions or [SKY] (ph). 15:36 The consensus opinion was that, due to the strength of the results IVL may emerge as the first line therapy for plaque modification in women. This was quite humbling coming from such an influential group. Also in October at the VIVA ‘21 conference, a presentation of an interim analysis of our disruptive PAD III observational arm confirm that IVL safely, effectively and consistently modifies calcium in complex calcified lesions across multiple peripheral vessel beds with a low need for bailouts stenting even in these very complex real world cases. 16:13 And in November we enrolled the first patient in our Disrupt BTK II global post market study that is designed to assess the long-term benefit of peripheral IVL on the most challenging calcified below the knee lesions. 2021 was clearly an exceptional year for the company on the commercial front and things are lining up to make 2022 another excellent growth year. But none of this would have been possible without the stellar execution of our broader operational team. 16:44 In the middle of COVID waves, supply chain chaos and nearly quadrupling of our sales in a single year we never had a hint of a backward or quality issue. That's pretty rare, and our team deserves an immense amount of credit for staying focused on doing everything they could for our customer and their patients. Commercially we will be in over 1300 US cath labs in the very near future, which means we will have successfully navigated our way through 1300 VAC committees, no small feat. And on top of that we opened a new cleanroom, leased a new building so we can double our R&D lab, started shipping M5 catheters from our contract manufacturing partner and has multiple audits, including MDR and [indiscernible]. Rather remarkable that the team pulled that -- pulled all that off without a hitch. 17:34 With that, I will turn the call to Dan.
17:38 Thank you, Doug. Good afternoon, everyone. Shockwave Medical's revenue for the fourth quarter ended December 31, 2021 was $84.2 million, a 271% increase from $22.7 million in the fourth quarter of 2020. US revenue was $69.6 million in the fourth quarter of 2021, growing 449% and $12.7 million in the fourth quarter of 2020. The increase included $50.7 million from the coronary product Shockwave C2, which was launched in the US in February of 2021. The growth in the US was also enhanced by continued sales force expansion. 18:18 International revenues was $14.6 million in the fourth quarter of 2021, representing a 45% increase from $10 million in the fourth quarter of 2020. The increase in international revenue over the prior year reflects continued growth in customer demand in the expansion of our direct sales force in Europe. 18:36 Looking at our product lines, our peripheral products ShockWave M5 and Shockwave S4 accounted for $21.4 million of total revenue in the fourth quarter of 2021 compared to $14.1 million in the fourth quarter of 2020, a 52% increase. Our coronary product Shockwave C2 accounted for $62.3 million of total revenue in the fourth quarter of 2021 compared to $8.2 million in the fourth quarter of 2020, representing a 661% increase. In addition, the sales of generators contribute $0.5 million in revenue in the fourth quarter of 2021, which is the same as the fourth quarter of 2020. 19:20 Gross profit for the fourth quarter of 2021 was $71.5 million compared to $16.2 million in the fourth quarter of 2020. Gross margin for the fourth quarter of 2021 was 85% as compared to 72% in the fourth quarter of 2020. Improvement in gross margin was partly driven by product mix, as well as continued improvement in productivity and process efficiencies. 19:47 Total operating expenses for the fourth quarter of 2021 were $57.5 million, a 79% increase from $32.1 million in the fourth quarter of 2020. Sales and marketing expenses for the fourth quarter of 2021 were $33.2 million compared to $16.4 million in the fourth quarter of 2020. The increase was primarily driven by sales force expansion. R&D expenses for the fourth quarter of 2021 were $14.7 million compared to $9 million in the fourth quarter of 2020. The increase was scrap mainly driven by headcount growth. 20:23 General and administrative expenses for the fourth quarter of 2021 were $9.6 million compared to $6.6 million in the fourth quarter of 2020. The increase was primarily driven by higher headcount to support the growth of the business. Net income for the fourth quarter of 2021 was $12.9 million compared to a net loss of $15.9 million in the fourth quarter of 2020. Basic net income per share for the period was $0.37, diluted net income per share for the period was $0.34. We ended the fourth quarter of 2021 with $201 million in cash, cash equivalents and short-term investments. 21:03 Finally, I'd like to briefly recap some highlights from our full-year 2021 results. Total Shockwave revenue for the full year 2021 was $237.1 million, an increase of 250% compared to full year 2020 revenues of $67.8 million. Revenues from the US for the full year 2021 was $186.3 million, representing a 402% increase over 2020 revenue of $37.1 million. International revenue was $50.8 million for the full year 2021 compared to $30.7 million in 2020, representing a 66% increase. 21:46 Gross margin for the full year 2021 was 83% compared to 69% in 2020. Total operating expenses were $196.6 million in 2021, an increase of 75% compared to operating expenses of $112.5 million in 2020. Total net loss for the full year 2021 was $9.1 million compared to a net loss of $65.7 million in 2020. 22:14 At this point, I'd like to turn the call back to Doug for closing comments.
22:19 Thanks, Dan. As I look back at what our team accomplished in 2021, the list is both long and impressive, particularly given the extraordinary challenges that have faced all of us for the past 2 years. It's such a privilege to be part of this team and to be associated with such a game changing technology. 22:39 Thank you all for joining us today and for your continued support.
22:45 [Operator Instructions] Our first question comes from Adam Maeder with Piper Sandler.
23:00 Great. Thanks so much guys for taking the questions and congratulations on out fantastic finish to a great year. I wanted to start with the full-year guidance that you provided and just drill down there a little bit. We'd love to get some additional color by segments. I think, if I heard correctly, I think you made the comment, Doug, that ATK -- I'm sorry peripheral growth rather should accelerate next year, did I hear that right behind the reimbursement change? So maybe just talk a little bit about peripheral versus coronary. And then also kind of how you're contemplating additional items like any potential staffing our capacity issues and just broader pace of procedure volume recovery? And then I had a follow-up. Thanks.
23:46 Yeah. Thanks Adam. And I'll tag team with Isaac on this. So the -- we think the combination of M5 plus and improve reimbursement along with the expansion of our staffing in the field and sort of maturation of the launch on coronary are all factors that augur towards an acceleration in peripheral growth this year in the US. The response for M5 plus has been, frankly, more positive. We were excited about the product and we're more excited about it now after seeing how much or how positively our customers respond to it. 24:31 The above the knee uplift in payment, which is tremendous for us is we think is likely to be a steadier multi-quarter positive impact, I certainly saw it in the field and I spent a week, week and a half in the field visiting with customers. It doesn't sync in right away with them [indiscernible] their physicians that we essentially just doubled the payment level for -- their hospitals payment level has just doubled for the standard Shockwave as a standalone procedure. And to some extent, that's really a positive. We want to have a steady incremental impact over time, not like a light switch that happens 1 week and then is behind them. 25:28 And so, I think in that area, it's going to take a little bit longer to sort of remind folks regularly, make sure the physicians and administrators are all aware of the fact that Shockwave is -- above the knee is now actually both incredibly positive clinically, but now positive economically as well for the center. In terms of staffing, I think maybe you want to just talk a little bit philosophically about how you thinking about the field.
26:02 Yeah, I think it should be a very positive year for the peripheral business, particularly above the knee with the product launch and reimbursement change as Doug said. And we expect that momentum to build throughout the year. The comps in ‘21 were a little off in place is due to heavier COVID impact in ’20. And then we'll -- as we got -- as we are looking at ’22, at least what we're seeing so far is staffing shortages and that's a global phenomenon and likely though we think those cases will be there when Staffing is there. And so, there might be a little shift back and forth, but I think early in the year here we've seen staffing shortages coupled with Omicron causing some challenges coming into the year, but it looks to be getting better, I think. And I'd say that's true and global perspective with -- from a major country standpoint with Germany maybe being a little behind the curve still in terms of where they're at with COVID sweeping through.
27:09 And what I don't -- I'm not sure about yet at least in my small sample size in the field. One of the centers I was in was lamenting how incredibly sick there peripheral patients were that were coming in, sort of biased more severe which may accrue to our benefit since we treat the more severe stuff, but these are patients who have been kept out of the hospital longer than they should have. So by the time they came in, they went from leg pain to open wounds and much more severe disease. So that may be one of the things we see is a tenancy over the next quarter or so as you're catching up on cases you may get the sicker people who were once again being kept out of the hospital because of COVID restrictions and staffing shortages.
28:00 Okay, got it. That's a very helpful fulsome response. And maybe I'll just pivot to the second question and it's on the pipeline and I think, Doug, you talked about having 6 different catheter designs that you can plug into the generator by 2025 if I heard you right. I know you're being close to the vest year intentionally, but wondering if you're willing to at least say if these are going to kind of be in the same areas where you already playing in, that being coronary and peripheral artery disease? Or if you anticipate you'll be playing in kind of adjacent markets by that time as well. Just any additional color there that you're willing to provide would be great. Thanks so much for taking the questions.
28:47 Yeah. Commercially by 2025, I would expect it will be in the peripheral and coronary segments, longer term TBD.
28:58 And I just add one. Importantly, to be clear, they won't be interchangeable products. For instance, there won't be to products that could [indiscernible] you could use either or in a specific vessel or clinical situations. There will be 6 distinct products, distinct applications, distinct indications.
29:20 Okay, understood. Thanks again.
29:23 Yes.
29:24 Our next question comes from Larry Biegelsen with Wells Fargo.
29:28 Good afternoon and thanks for taking the question. And I'll echo Adam's congratulations, a pretty remarkable year for you guys. So Doug, I wanted to start on international. Is there any revenue in the 2022 guide for Japan? And in China, I thought that was a new update that you slipped in there. Correct me if I'm wrong, that you have approval for peripheral and coronary of the imported product by the end of this year. So can you confirm if that's -- the timings move forward and how you see that opportunity? And I had a follow-up.
30:13 Yes. So working backwards. China good catch we did pull it in a year or 2, because we had -- up until today we have been saying 2023, 2024. So we -- our team in concert with Genesis has done a really good job. It's still a little bit unclear exactly when this year it will be approved like any regulatory body, it's a little bit murky. In China we are -- hard to pin down with precision. PMDA on the other hand, we feel pretty confident that best case end of March were sort of less best case maybe sometime in May, so sometime in the next few months. We have a high degree of confidence that we will be approved. 31:04 But to really get any commercial traction in Japan that would be worth changing our numbers for, you really need reimbursement and we won't have -- we will not have reimbursement until the end of the year. So once approved we will buy MHLW to figure out what the reimbursement level will be and then we'll be able to start fully commercializing essentially in 2023.
31:30 Yes. So Larry, the guidance contemplates small amount of revenue contribution from Japan and China this year. And that's -- as Doug said, uncertainty on timing in China and just blocking and tackling timeline in Japan to get reimbursement in March.
31:48 Got it. Thanks for that. And just one for Dan and then one for Doug. Just Dan on the P&L. How should we think about operating margin in ’22? And Doug, obviously there's a lot of noise this quarter on competition. Maybe just a little bit more color on how you protect your first mover advantage and when you expect competition in Europe and the US? Thanks for taking the questions guys.
32:15 Sure. We're going to continue to invest in the business. As Doug alluded to, we're going to invest heavily in R&D and we're excited about that. With that said, we're still expecting to get some more leverage out of the business as the year moves on, given the revenue ramp. So things are -- the trend is good for this year and into next year I'd say.
32:40 In terms of potential competition in the future as you and I had talked -- we've talked about publicly, we anticipated given the extremely positive response we've had from our customers that we would have competition as soon as 2024. So nothing has really changed from our perspective, other than people have stated publicly that they intend to compete. While we are extremely bullish about our patent portfolio in the electro hydraulic Lithotripsy arena and we'll certainly assert that against anybody who tries to copy what we're doing. We are in -- by no means sort of sitting back and waiting and intending to win through litigation, that's sort of a full strategy and that doesn't do anything to make things better for our customers. So I think what you heard today was a more public commentary on how intensely we've been approaching our product development activities, because we think hiring the best engineers is as important as hiring of our salespeople and in some ways more important because they're the ones who create these great problem solving technologies to feed the sales team. 34:01 And we've -- we have more than doubled the number of projects in our product pipeline over the past 12 months and we're quite bullish, based on the feedback we've been getting from customers who've been sort of helping us think through what we ought to be prioritizing. So we intend to win by innovating and creating better products for our customers and we think it will be helpful that if and when competition shows up we will have multiple things to plug into our generator that will be better than what we're selling today. So whatever products people think they're going to be competing with it will probably be actually different than what they will be competing with when they do try to enter the market.
34:45 Thank you very much, Doug.
34:49 Your next question comes from Bill Plovanic with Canaccord.
34:53 Hey, great. Thanks. Good evening. First of all, congratulations. I don't think I've ever seen a company outperform initial expectations by over $100 million in a year at this size. So that's pretty impressive in my career. My questions are, first, in terms of guidance, how should we think of first quarter ‘22 given the commentary as it relates to the fourth quarter. I mean, I think last year you were up 40% sequentially. I don't think that's realistic, because of the C2 launch. But I’m just wondering if you can help us understand that. 35:34 Second question is M5 as a percent of US sales. And then just a broader question on what -- in terms of the usage today, how much of the uses in severely calcified lesions and what do you think percentage you're starting to see in moderate calcified lesions?
36:00 So, thanks by the way for the kind words. The first quarter is going to be an interesting one. I mean, I was talking to a doc in one of the top TAVR centers, and in January, they would have expected to do like 60 or 70 TAVR and they did 3. That's a more severe downdraft than we've seen in our business, but its representative of how severely some hospital shutdown procedures, because if they shut down TAVR there certainly shutdown -- shutting down like procedures and a lot of the coronaries. So that was loosening up end of January. Even they are most severely shut down, but it's a little earlier for us to say with certainty that there is going to be how much of a catch-up there will be in March, because you also have the staffing constraints that kind of prevent you from an overshoot. So we think all those old cases will get cleaned out, it's just going to be cleaned out over time. 37:09 So you are right to assume that the kind of quarter-on-quarter growth that we saw a year ago when we had the product launch is not achievable, given the fact that we has a product launch in the middle there and we have the COVID downdraft in the first 6-ish weeks of the quarter, as we're anticipating will be. So as you're modeling, I think probably modeling the whole sector you probably want to model the lighter Q1 than you otherwise would have had it not been for Omicron, because I think Omicron effected Q1 more than it effected in Q4, probably. 37:48 In terms of M5's role in our US peripheral business, it's, most of it and we have a nice S4 business, don't want to lose it. M5 is the business by and large. It's a preponderance of our US and even more so, it's the preponderance of our little business of the fact that we're launching M5 plus globally is going to be a meaningful upgrade for all of our peripheral customers and probably for future as yet not converted peripheral customers. 38:19 In terms of the mix of severe and moderate, most -- less than 10% of the docs in the US do intravascular imaging and the only way to really quantify how much calcium there is it to do [indiscernible] or OCT. If you look at an X-ray image, a floor image, they say, look at whether you see calcium on both sides of the vessels, or you see this, it looks like rails. So these white lines outside -- on the sides of the vessel that tells you if you have severe calcium we're not. Kind of objective, yes, you're looking at an image, but it's not like you take a blood test and say, oh, Doug has severe and Isaac as mild. So it's unknowable what percent of our cases are “moderate now” certainly we are treating moderate patients or our customers are treating moderate patients because they probably put an inflated balloon, it doesn't inflate well and they stop and they put it in Shockwave and it works really well. So it's -- I don't know if we'll ever know what percent is severe and what percent is moderate. I think it's almost all of our cases are cases where the doctor has either failed something else or sure they're going to something else with Shockwave and so it's severe enough is the way I would look at it.
39:40 Okay. And then when we think of the BTK, Disrupt BTK II study, when can IVL replace mechanical atherectomy devices and -- but when will also atherectomy still be needed? And if you kind of look at the cases, I know we've seen 5% penetration, I think it's something like that with atherectomy today, especially BTK, but maybe it's higher, but what do you think you could displace there? That's my question. Thank you.
40:12 Bill, thanks for the question. The -- I think like we see, like we've talked about that, ultimately I think we view atherectomy as a complementary technology whether that's below the knee above the knee or in the coronaries. When you get below the knee, I think there is larger lumens, again, where you can get in a balloon and an IVL balloon, these tend to have, I think where you can benefit a lot from having a very traumatic IVL below the knee, that's not going to cause severe dissections and can crack the medial calcium and help the vessel expand ultimately. I think with atherectomy, if you got tighter lesions you get a wire across then you can't get a balloon across then you got to open that up with atherectomy. And I think a lot of times in doing that that might be definitive prep for the vessel and you'll follow with a balloon or maybe someday a DCB. 41:13 So I don't think there is a conversion that we have. I think what we're looking for is, demonstrating through data and with improved products that we are a good solution for a lot of below-the-knee calcified lesions. But not a solution that necessarily does away with atherectomy.
41:36 Thank you.
41:39 [Operator Instructions] Our next question comes from Cecil Furlong with Morgan Stanley.
41:49 Great. Thank you for taking the questions. And I'll echo everyone else's, congrats on another strong execution quarter for the team. I wanted to ask, Doug, just on coronary with NTAP now in place, what are you seeing from an inpatient, outpatient procedure volume mix? And as you look beyond the COVID impacted type of environment, where do you see this going longer term?
42:16 We don't have -- we don't have data on the macro coronary inpatient, outpatient mix outside of Shockwave. And probably won't for another, I don't know, a year, because it usually takes a little while for all to get collected. And in our own cases we kind of don't care, so we don't care the doctor often don't know, am I going to keep the patient overnight, not to keep a patient overnight. It's not really part of our conversation, we may meet with the -- we do meet with the administrative folks at the hospital who do the coding to make sure that they know how to code NTAP and how to code transitional pass-through. 42:56 I think the effect that both transitional pass-through in July and NTAP in November had was that, they -- and predominantly it was when transitional pass through came through, they drastically, dramatically reduced the economic anxiety that cath lab directors and physicians had when using ShockWave. Prior to that, certainly we couldn't get through some VAC committees and pricing and cost was a constant, constant topic, because we did not have an incremental payment on top of the standard PCI payment levels. And while there is still conversation about price and budgets and the like, the fact that we could have add-on payments, we have something to address that economic and anxiety, which we didn't have before July. 43:50 So I don't -- what's quite evident to me and maybe Isaac will have something to correct me on, but I don't think anybody said, oh, well now that you have NTAP, I'm going to do more inpatient procedures. I think they are now able to treat that patient in any way they see fit in the face if they think the best way to treat a patient with Shockwave they don't feel guilty using Shockwave. They don't have to be reluctant to use Shockwave, which they probably would have been particularly over time if we did not get these extra payments, it probably would have been under more pressure from the administration which now they should be under less pressure.
44:27 Yeah. And I think that's right, Doug. I think the -- with where the payments are right now on the transitional pass-through and NTAP there is no kind of overhang either way on what the physician does and what the patient needs for treatment. And I do think, if you think about it from a patient-physician perspective, if you're going in for an elective PCI, let's say, a physician thinks you should be able to go home that day in an outpatient procedure, the best thing for that patient and the physician is that the patient gets out of the hospital and goes home. And what really I think the way we think about it from a IVL standpoint is, it’s a safe procedure, it doesn't create complications during the procedure, and so more likely they are not at that – if that patient was intend to go home, IVL is going to help make sure that patient goes home that day, which is a great thing.
45:25 Okay. Thank you. And if I could ask a few questions just on your international business as well. How you're thinking about UK and France contributions to international sales in 2022? Are you contemplated in your guidance just directionally? And then, looking at 2023 as well, how you view the ramp in Japan, versus China, just any comments on a relative basis? How you view those 2 markets ramping and beginning really in 2023. Thank you.
45:53 Yeah, sure. So I mean the dynamic in the UK and France is a bit different, because in the UK we had a sales agent, there was where we recognize the revenues that were sold at is kind of full ASP. So as we switch to a direct sales team, the benefit in the UK will be volume and that'll be predominantly I think near term volume on coronary as they get more penetration in the existing accounts because there is more focus on the product and there is more focus on teaching physicians, more physicians and longer-term on peripheral as the team will actually focus on using IVL for pre-TAVR, using IVL for iliac and appropriate peripheral situations. In France there is a benefit -- two full benefit, right? There is the ASP uplift you get because we work from a distributor margin to a direct sell and on the focus -- and then you get the same focus benefit we're going to get in the UK, and I think based on how things were going between the UK and France, there's more upside in France on volume as well because it was -- relative to the UK lower penetration of IVL in coronary. And again almost very little penetration of IVL in peripheral. So I think as we look at 2002, we'll get good contribution year on year from UK and France. It will be a volume and an ASP contribution and that won't be done in ‘22. There is a lot of opportunity there and I’m really proud and impressed with the team just coming out of the gate strong, their ability to start driving activity and awareness of IVL beyond where it was.
47:39 And then in terms of ‘23 for Asia, we're -- certainly we have our internal modeling that we have a range of possible outcomes, which are also influenced by when we got approved and what our reinvest percent level looks like in Japan. We see this year very much -- one of the key activities this year is really to set ourselves up for Asia to become one of our growth drivers next year, we're not -- whatever we get this year is great, but we want to make sure what we do this year is more of an eye towards 2023, 2024 significant contribution. And so, we're -- obviously we're not guiding to 2023, but we have -- given that Japan has 250,000 PCIs which is about a quarter of the US market, a very high percentage of imaging, a very, very significant reluctance to do anything that causes adverse events, more than any other country [indiscernible] sold into. It's like the perfect country for Shockwave sort of the fit in terms of the safety, ease of use and identification of calcium. So we're quite optimistic about the role that ShockWave will play in Japan and last I heard, China was a pretty big country with a lot of patients [indiscernible] million PCI. So that should be a nice opportunity for us too.
49:16 Yeah, maybe I'll just throw a little more color on that. One thing about Japan, if you look at the CAD IV dataset, it was the cleanest acute 30 day data set we've seen of any of the CAD trials. I mean they are just excellent PCI operators and it's – they really value safety and predictability in their practices. So that is favorable for IVL generally. I think the other thing that our leadership team in Japan has done and our General Manager particularly has really worked closely with the society, the is cardiovascular society in Japan to help create together with the cardiovascular leadership in Japan, how is the -- what is the appropriate way to roll this product out. So there has been 18 months of commercial preparation on how to roll this product out in Japan. 50:06 And so I think we'll be ready and we'll do that in conjunction with the leadership --cardiovascular leadership in Japan and that should help. And one of the thing about China -- one of the reasons we like the JV aspect in China is, instead of just importing product to a distributor we're importing product to a JV and that helps us drive focus. And as we saw with the unit volume uplift in the UK and France and if we can get focus through a distributor in China through a JV, which really helps us keep focus on the product. I think we'll do a really nice job in China relative to kind of a typical distribution arrangement.
50:51 Great. Thank you for taking the questions.
50:54 Thanks, Cecil.
50:56 And I'm not showing any further questions at this time. So, ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.