AngioDynamics, Inc. (ANGO) Earnings Call Transcript & Summary

Hi, everyone. Thanks for joining us today. My name is Lili Lozada. I'm part of the med tech equity research team here at JPMorgan. After the presentation, the breakout will be in the Kent Room. And without further ado, it's my pleasure to introduce CEO of AngioDynamics, Jim Clemmer.

Thank you. Good morning. Thank you for JPMorgan for a great conference and inviting us to join. So let me remind you, this morning, during our presentation, we're going to give you some forward-looking statements. These are plans and ideas we have about our company and our marketplace. But as savvy investors know, we can't make any guarantees to what we're talking about today, so make sure you read carefully and understand what we're talking about. So thanks for joining us. Let's share with you our evolution at AngioDynamics. And we are a company in transformation. And a lot of folks say that, we're going to share with you how we're backing those words with our actions. We're transforming our company in the 3 most important areas that we believe will create value for our investors, and number one is portfolio, number two is innovation and number three is capability and the talent, the people that work at our company. So if you look at the first slide we have in front of you today, this tells a very important story of our transformation. To the far left shows the total addressable markets of the areas that we competed in just 2 years ago. Then you look at how we've decided to change our portfolio using active portfolio management and to enter markets that are total addressably higher, have faster growth rates and we have better opportunities to compete and win in these markets. If you look at where we sit today in 2020, we have made measurable portfolio transformation. And then our 2024 goal, to the far right, shows a couple of things that we'll talk about in a few minutes. So it's a maturation of our portfolio, other things that we'll do to open up those larger markets through R&D, our scientific efforts that we have to move our portfolio into that space. So we know that creating value happens in a few ways. Performance ultimately would create the most value for our shareholders, but we want to make sure we're also in areas and markets that are geared to win. So how we'll do what we do, we're going to focus our company on really doing a few things very, very well. We're most interested right now in making sure we can keep healthy blood flow to and from the heart for patients in need of care. So if there are obstructions or inclusions in veins or arteries, we have unique science and technology to help caregivers clear those veins and arteries and maintain healthy blood flow for patients in need. We'll talk more about that in a minute. And also, we have unique tools to help guide oncologists and caregivers for patients that need tumor care for cancer treatment. We have unique tools. We'll use all 3 of our ways to innovate. On the bottom of the slide shows, we'll use R&D, as most companies do in med tech. We're currently spending over 10% of our revenue on our research and development budget. We'll show you an outcome -- recent outcome with our R&D efforts. We'll use M&A. Again, we'll share with you again our active M&A efforts. Last week, we announced our fifth deal in 18 months all geared to moving our portfolio and driving value through our portfolio. And third, we'll use what we call regulatory and clinical pathway expansion, which is really our way of saying we have unique science and technology here at AngioDynamics. We want to now work with regulatory bodies globally to open up pathway expansion to give better opportunities for our science and technology to be utilized by caregivers globally to treat patients. Let me share with you some examples. So first, back on October 3, we announced the acquisition of Eximo, a laser atherectomy system. And the product was called the B-Laser by the folks in Eximo. Eximo is a Tel Aviv-based engineering firm that did an amazing job in technology. So this morning, we're still pre-market launch, I'll talk about that in a minute, but we're announcing the name of the Eximo laser is now called AURYON, which is if you're a science fiction aficionado, it's the female gender version of Orion, the hunter constellation. I did not know that a few weeks ago. But it's really unique, and it connotates light power, speed and safety. So we thought it kind of connotates what our product will deliver when it's in the hands of the caregivers while they're treating people with our unique device. So we're very excited today to announce our new AURYON platform, and you can visit our website and learn more about the product. But let me share with you a few things about it now. Again, over the last 3 years of our transformation, before we decided to invest heavily in R&D and M&A, we made sure we had the capability to do so. We did the necessary things to ensure we had a strong balance sheet and partners willing to lend if we needed it. We have that today. So we're able to make these deals and acquisitions based upon the strength of our financials and our opportunity to borrow if we choose and need to do so. So we used M&A to target AURYON. It's -- why it's different is important. It's a laser-based atherectomy system. There's currently a laser-based system. Why this is unique is a few different things that are really compelling and important to us. We use a different nanometer wavelength to deliver the pulse energy through our catheters. Why that's important, it enables us to deliver the pulse energy different from the current standard of care. We're able to treat lesions above and below the knee, hard and soft calcification. We also have aspiration capability in 2 of our 4 catheter sizes. What's unique again, and what other people have proven with laser-based atherectomy, is you can do so safely and not worry about vessel wall damage. We offer the same benefits with our product. So we believe that we have a really unique system that enables caregivers to treat different types of lesion and with the same safety and effectiveness that people understand laser delivers. Another advantage of this -- our new system with AURYON versus a competitor is it's much smaller to use, easier to use, doesn't require a lot of the start-up time and enables caregivers. Because most of this care is delivered in 2 places, in the hospital or in the specialty office-based laboratories, and both of those have unique logistical challenges. There's anatomical challenges while you're treating a patient, and we think our system offers the caregivers flexibility and ease of use that doesn't get offered today. So we're really excited by what AURYON offers. The science behind AURYON is compelling. How it was developed by our engineers is amazing. They took a challenge they were told that couldn't be beaten and they did. And when they did so, we generate now really great clinical outcomes and benefits. The published data during the IDE submission is really very compelling. It enabled us to have a really great strong 510(k) with indications of support, really strong fields of use and benefits for our customers when they use the product. What's most important for us to talk about today is we're starting with a platform that has strong clinical benefits today. And what our commitment is -- at AngioDynamics is to continually invest in these platforms. So today, this marketplace has 4 good players in it, 3 mechanical thrombectomy players and a laser player. And we're going to come to this marketplace with this unique device. We want to also show the caregivers and physicians that give the care how serious we are about this marketplace. So this morning, we're also announcing a PATHFINDER Registry that we're opening up today and opening up to show our commitment to collecting data, allowing our physicians and caregivers to not only treat patients, but to understand our indication and our need to collect science and data to give us more avenues, to steer us to more data collection over time So this morning, the PATHFINDER Registry is announced, and we think it's important to show AngioDynamics is very serious about working with caregivers in this space. To treat people who suffer from the multiple lesion types in this space, we're going to treat them safely and effectively, collect the data as we do and allow physicians and caregivers to steer future efforts and our future development towards areas where the data points us. A very important piece today in our system with AURYON. Some of you may know today the atherectomy space. It's a large marketplace. Something that gave us interest in this space was because it is a large and growing market. We think it's also ripe for disruption with this unique innovation. And we also have sister products and adjacencies in these markets today. As many of you know, we compete with a laser-based EVLT system for treating diseased veins. Many of the same OBLs that we'll treat with atherectomy are used to our products and our company and use our products today to treat their patients. We also have a sister business in thrombectomy that's very strong. We're currently a leader in keeping veins clear, healthy blood flow through veins, and we knew we would cross the path one day to enter into this market to work more completely in arteries. And this compelling technology is what led us there. So again, at AngioDynamics, we're excited to show an example of how M&A will now bring innovation to our customers through our hands. I spoke to you a few minutes ago about R&D being an enabler of science and technology and an enabler of growth for us. As I mentioned, we spend, today, over 10% of our revenue on research and development. We're committed to a process that will drive products through our system really designed to buy our physician partners and customers, and the AngioVac 3.0 device is a great example of that. About a month ago, we launched our new AngioVac 3.0, which was designed in concert with our customers and partners who deliver care with our device today. What's unique about AngioVac, we're able to treat severe thrombus, severe vein occlusion with patients who need care because of the unique science that -- the way AngioVac works, we have a vortex funnel tip that allows us to pull deeper, larger thrombus through large-bore occlusions. We also use a perfusion system to perfuse the patient's blood back into their body to reduce the risk of the procedural-based blood loss or the post care recovery rate for those patients. So what makes our device special is a few things, the unique design and development of AngioVac and the fact that we can keep that patient healthier during the process. So sometimes, its blessing is its curse. Because the product is so effective, it's also a bit more complex to use. It requires the facilities to have a perfusion team available to treat the patients. We're really excited by the growth and the adoption of new physicians using our new AngioVac 3.0. We also know that we -- today, we treat really only a fraction of the patients that we'd like to treat with mechanical thrombectomy devices. Each of us in this market has seen the adoption of mechanical thrombectomy as a choice for care being widely accepted by customers globally. If you look at the slide we're presenting this morning in front of you, on the far-left side shows really simple occlusions and less complex cases. We have a great device that helps treat patients there with catheter-directed thrombectomy with our Uni-Fuse catheter system. To the far-right of the slide, you'll see our AngioVac that we're just talking about with the highly complex cases. It's a very expensive product, and it's a very specialized product. And we reported last week on our second quarter earnings, I think, our ninth straight quarter of double-digit growth year-over-year, ninth straight quarter of adoption, procedural growth and revenue growth. So it's being highly, highly adopted by physicians. Yet we're missing a spot in the middle. Because we have a great device in both ends, we want to focus also on using this technology and adapting it or finding new technologies to help treat patients in the mid-acute space. So as we develop AngioVac from what it was a few years ago to what it is today. If you look at the progression of the gen 2 to gen 3 slide, 1 year from today, we'll launch another version through our R&D cycle that will be smaller and longer, allowing physicians again to treat different veins. And it gives us the opportunity to look at other indications. If we choose to look at the device as a PE device, we'll have that opportunity to decide to enter into the clinical work necessary. And as we go further along into the future, we believe that the AngioVac design has opportunities for future development. And we'd love to bring this technology to a device that was not requiring a perfusion system and offers our physician partners and customers opportunities to treat the mid-acute space without the perfusion aspect, when high blood loss is not as important as immediate care. So we see this as a platform technology that will enable us to grow with this market or beyond as more and more of our patient outcomes are treated, the favorable outcomes are reported and our physician partners gain the trust and confidence in our device going forward. So this is a very important platform for us going forward. And it's one example of our research and development efforts taking a great device and adding more capability to it over time. We'll look to share more of these stories with you. So I mentioned our third method of getting innovation to market, and it's called clinical and regulatory pathway expansion. And a great example of that is with our NanoKnife technology. Many of you here may be familiar with our NanoKnife. It's a nonthermal-based ablation system, uses energy -- small pulses of energy without using heat or cold to kill damaged tissue. What's unique about NanoKnife and why it's special for us is we've had this unique device for years. We've had a soft indication schedule. What I mean is we were granted a 510(k) in 2011, and all it talked about was soft tissue ablation as an area that we could treat. And we looked at data that physicians had used globally, really compelling outcome data when over 700 patients were treated and peer-reviewed published studies were being done, showing favorable outcomes in life expectancy. It gave us the confidence to go back and sit down with the FDA, looking at the data we had and work towards a collaborative approach towards an IDE. What made that possible was the way that NanoKnife works. We have thermal ablation systems in our portfolio. We have microwave and RF, and they're able to treat effectively certain types of cancer and certain tumors when heat or cold could be used. In this case, certain organs are very, very susceptible to damage during treatment if you use thermal-based technologies. IRE is very special. It uses nonheat but electrical pulses that break the cell down, providing nano-sized particles into the cell. And it really dies pretty quickly, and the body could flush the damaged cell tissue through the body. And the recovery period is actually very quick. It's a unique way to treat. It allows physicians and caregivers to treat tumors and other organs that you can't treat with conventional methods. Part of the reason why is it spares the critical structures associated with the organs post-treatment. So it spares the structures and allows the vascular system to then reenergize and let the body get healthier faster. So it's very, very unique. An area like pancreatic cancer that today still has very, very low survival rates, is an area that we see an opportunity. And that's why we approached the FDA, looking at opening up a study with our device to make sure we can get an indication to treat patients using our technology. NanoKnife is a platform approach. What it enables us to do today is to look at other organs. So we'll talk to you in a minute about why pancreatic was chosen, why it's important. But we've seen caregivers and we've seen data published when it's used in other organs. Immediately after getting our IDE approved on pancreatic, we received a safety study approval for prostate cancer from the FDA. It's almost the opposite argument. Pancreatic cancer, 57,000 people in America are diagnosed each year with this terrible disease. And it's very, very fatal with most outcomes. Prostate is very different. As you see, many more outcomes are diagnosed during the course of the year. And in many cases, it's less severe or less acute. Prostate doesn't usually cause death. Many times, we die with prostate cancer, not from prostate cancer. But the most common treatment today has 2 side effects that are undesirable for most patients that are treated. And we've seen physicians globally who've used our product to treat patients with prostate and reduces those 2 side effects, and allows them to remain healthy, and removes the cancer from the body. So we're going to look at a multi-organ approach of this unique platform technology. We'll speak to you more completely, about our efforts to expand our IDE in prostate, and we'll talk to you about how we'll address other organs over time with the continued development of this platform and our regulatory and pathway expansion program to open up these channels. So our DIRECT study is the study we're using for our pancreatic cancer trial. And again, as we approach the FDA in a collaborative effort, trying to find a way to really get data and allow patients to get the benefit of this product. Unfortunately, at diagnosis, when most patients are diagnosed at stage 3 with pancreatic cancer, the life expectancy is very short. So in some cases, a randomized controlled trial may be hard to collect data with. So in this case, we worked with the FDA. We're granted breakthrough designation status. We found a collaborative way to work on a two-pronged study that has a randomized controlled trial arm and a real-world registry collection data arm as well. So we're enabling our physician partners and the hospitals that want to be associated different ways to address treatment and the collection of data to prove that we can extend life using NanoKnife. As you see at the bottom, we have 15 sites anticipated. 13 already have received IRB approval to be a part of our study and to be part of our data collection. We believe very deeply in the base of science and technology of how NanoKnife works. And that's why it's extremely important, enables us to be a caregiver option into organs that couldn't be treated with conventional methods. We have really great outcomes. So again, at AngioDynamics, we're committed to portfolio changes along the way, to ensure that our company competes in places where we can and should win. We also know that in med tech, innovation drives value. And we get that innovation in the 3 ways we talked about today: R&D, M&A and clinical and regulatory pathway expansion. The final thing we'll do is make sure we have the capability to grow with that. So our company has attracted people who've done that before. Getting an IDE at our company was a major accomplishment. We brought in new talent, new people who've done this before, built our capability out. So we're stronger and more ready to do this on a repeatable, consistent basis over time. So as we talk about the AngioDynamics story, we have a unique fiscal year. If you're not familiar, we have a June 1 fiscal year start. So last week, we reported our second quarter FY 2020 results. Our second quarter ended November 30. And we reiterated guidance that we shared earlier in the year. So we have a $280 million to $286 million revenue number, which if you guide from a low point to top point is a 5% to 7% revenue growth when you normalize our run-rate ex Asclera we can talk to you about. We had a product that was terminated during the course of last year. So during the first 6 months of the year, we've got about a 4% revenue growth over prior, and we've maintained guidance at a 5% to 7% rate, the $280 million to $286 million rate. We've moved gross margins in a measurable fashion. To get back to just 5 years ago at AngioDynamics, we finished the year with a 48.7% gross margin. We just reported a gross margin over 59% in the quarter that just ended. We really have gotten there through 2 ways through our portfolio changes. We divested a product that wasn't right for us at a very low gross margin, was also in a space where differentiation clinically didn't matter anymore. It was a 50-year-old product that's gotten to a space really commoditized, became a value play and a size play. And we're not the best owner for that product. So we divested that product, used the proceeds from that sale to again invest even only about 1/3 of them into the Eximo acquisition and leaving our balance sheet strong for future opportunities. So again, gross margin expansion's very important. It's done 2 ways, great operational efficiencies by our supply chain team, high-quality manufacturing and world-class supply chain and now our portfolio expansion and product mix into more attractive areas. And then finally, this year, we're making investments currently as we speak into our new AURYON product platform. As we told our investors on October 3, when we announced our acquisition, for the remainder of this fiscal year to the end of May, expect a lot of investment spend from us with very, very little revenue. We're not trying to rush this product to market. We bought a product that was basically already approved at the FDA indications approved. It was ready for market, but it was a start-up company with no commercial experience. So we're taking really a 6-month window. We're about halfway through that now to do 3 major steps that we talked about on October 3. The first is ensuring a strong and robust supply chain. So immediately from day 1, we worked on ensuring we could build the capital -- laser -- at the rate -- the robust rate we need with the quality standards that meet our levels. We also have to make sure we can ensure their disposable components. The catheter. There are 4 sizes of catheters that work with our product. The 2 largest have aspiration capability. It's very, very important to us. So now they're part of our supply chain. Our people have built that supply chain out, and we're seeing the first products come through our supply chain. Second, we need to build the physician and the sales training program to make sure our product can be used widely, accepted widely and used properly when we go to market full. We're mostly through that. And finally, a dedicated selling and marketing channel to take this product to market in the proper way and to support our physicians and clinician customers who utilize it. So we're adding a new dedicated field sales team. We're not splitting a bag or moving it somewhere. We found that we want to make sure that we can give our customers a service they deliver, that they expect. And we also have so many unique capabilities with this product. We want to make sure we can support it properly and communicate those capabilities along the way. So again, as we guided our EPS this year to a $0.10 to $0.15 range, based mostly on the investment we're making today that we'll see revenue growth in the future from. So as you see on the left of the screen, we're up to $0.14 this year after the first 2 quarters. The bulk of our investment now in AURYON is occurring in the quarter in currently in our fourth quarter, which ends May 31. This is where we sit. So we hope, as you look at AngioDynamics, you'll see a company that is truly in transformation. Our actions at least match or excel from our words. We've identified areas to create value in our company. And we've talked about value creation. Just so we're all on the same page, it starts with our customer. If we're not valuable to them, we're going to -- not going to be valuable to anybody. So our customers get value when you deliver a med tech device that has unique clinical outcomes and is different from other opportunities to use. We're very, very aware of that, and we're going to do that at a constant pace. So we're able to create value through our portfolio expansion, through our commitment, through ongoing constant innovation development and through people and capability that we keep adding on and growing. I thank you for your time. Thanks for joining us this morning. I'll talk to you soon.

Hi, everyone. Thanks, again, for joining us today. Again, my name is Lili Lozada. I'm part of the med tech equity research team here. It's my pleasure to have Jim Clemmer and Stephen Trowbridge of AngioDynamics here with us today. I will kick things off with a few questions, but if anyone wants to jump right in at any moment, feel free. So as you mentioned, you just released your second quarter results just last week. Revenue came in at about $70 million, in line with expectations for about $71 million. Can you walk us through the key puts and takes for the quarter? What surprised you? And what were the main drivers of the results that you saw?

So there's a couple of things. So revenue and gross margin and profit were actually all in where we expect it. So our revenue side, we're maybe softer in one or two areas and higher in some. I'll point those out to you. With our -- in our oncology business, our NanoKnife, we sold record amounts of capital in the first 6 months of this year, which is a great bullish sign going forward. And a lot of that, we think, is driven by our commitment to the direct registry to measure outcomes for the pancreatic cancer patients who suffer from that disease and hopefully are treated by our device. That's really important for our future. So we saw record capital in the first 6 months. And again, these are customers either who are buying our new NanoKnife 3.0. We're upgrading their old system to our NanoKnife 3.0. Even an upgrade is a 6-figure investment, and a new product is a significant 6-figure investment. So very bullish on the amount of hardware that we've sold to potential new sites joining either registry-based or pure caregiver-based. But we're slower in adoption of the disposables and associated with that product. So that's an area that we want to pick up. We think part of that maybe we weren't sure yet how the registry would work, how fast it can go, but we need to do a better job aligning our disposable and our capital sales. That was an area of softness. And our VA business, our Vascular Access business, slightly slower start to the year, but we have a -- in November 1, we have a brand-new contract, our Premier contract. In the U.S., Premier is one of the 2 large GPOs, and they have compliance tiers to many of their contracts. We were just awarded the port contract for implantable ports that Bard, C.R. Bard or BD Bard now has had for years on the 2 compliance-based tiers, Ascend and surpass. So we just replaced Bard with the port of choice. So we're moving a lot of those customers over during the course of this year. So a little softer start there. We'll end up with faster growth second half. And from the -- the really strong side, our AngioVac 3.0 was launched mid-quarter. We've had a lot of tailwind on this product already by more physician adoption and caregiver adoption. We track every procedure that's done and every product that's sold. And the 3.0 is really serving a lot of needs well, really strong growth again. We think that will drive growth again in the second half.

Great. And your guidance for $280 million to $286 million in sales for fiscal '20 kind of points to a bit of an acceleration in the back half of the year. What's going to be driving that uptick? And how confident are you in hitting that range?

Sure. Yes, I'll give you -- and Steve can jump in, too. So the thing I've touched about , our Vascular Access business, not only with the Premier business kick in, we have a couple of new products coming out, derivative or adjunct product launches with our PICCs, ports in that area. So we'll have some new sales on VA. Second half will be stronger. We'll expect in our peripheral vascular or our VIT business, we'll expect a continued AngioVac momentum to continue. And there may be a few dollars now that we have the new AURYON product in there. We're starting a soft launch, as I just discussed in our presentation. Second half, we're not going to market in a hard way yet. We'll do that soon after. But we do have users now that we're supporting with use of the product. And finally, our oncology business, their capital sales were really strong in the first half. But of disposable sales on NanoKnife and even what we expect for our microwave sales, we're a little behind what we expect. We know where and why we have plans to change that second half. So we need to see a growth rate. We had about a 4% ex Asclera growth rate in the first half of the year. In the guidance we've given is 5% to 7%. So you're right we need to accelerate second half. We know exactly where and why.

Yes. The one thing I would add to that is the capital pipeline that we talked about being very strong in the first half. We expect to see that strength continue into the second half. We launched a new version of the NanoKnife capital platform that has been facilitating sales. And so we expect to see continued strength in capital, along with the turnaround that Jim talked about in disposables.

Are there any questions from the group?

So we kind of focused on AngioVac kind of maybe going after that middle part of the market. So I guess, what are some of the hurdles for you in that middle part of that market? And are you making any changes and maybe whether it's pricing and reimbursement or stuff like that [indiscernible]

Yes. So good question. Well, it's a very important market for us. So again, you saw on the slide, we've got the low and the high-end covered, but a lot of the treatment occurs in that middle space. And we're also seeing mechanical thrombectomy being a treatment option of choice more and more. So one of the hurdles of AngioVac, as great as it is, as I mentioned in the program, the perfusion capability is also a limiting factor, and maybe for some of those cases aren't as acute. There are some other good devices in the market today with Boston's products. You've got Penumbras and [ REs ]. There's some good devices. There's no one size fits all. And we also know many of our customers, these cardiologists, they love gadgets. They love science. So willing to try new things. And we've seen AngioVac be well received. And even many of our doctors have said, "Hey, guys, can you make this off-circuit some day. Can you do it differently?" So we're going to look at doing that. We know the larger addressable market fits in that mid-acute space that we're now missing by being in the high and low ends. So as I mentioned during the presentation, with our internal R&D efforts, the AngioVac 3.0 was just launched. Next year we'll launch the 4.0, really creative name. But it enables us to get our product again into different vein structures, allows clinicians to use it to treat other types of thrombectomy. And then from there continued development, and we'll launch our off-circuit device. From there also, we're active in watching the market. There are other good science and people inventing good products. So given the capability that we have on our balance sheet, we'll look if a device came available that would fill that gap and fit our portfolio. Through M&A, we'd also look at that.

As Jim mentioned during the presentation, what makes AngioVac great, some of its benefits are also the drawbacks. It's a very complicated procedure. You have to have perfusionists in the OR to put the thing on circuit. We understand that AngioVac is not the solution in that middle market that you were talking about, that middle section. It really does play in the high acuity, and it's going to stay there. But if you remember the slide that Jim had, right now, the growth that we're seeing in AngioVac that we expect to continue through the back half is really playing in a very small sliver, even in that high-acuity section. We're getting a lot of right heart cases, tumbering right atrial masses. We're all seeing lead vegetation. So with the clinical pathway expansion that Jim had mentioned, we can expand where AngioVac plays in that high-acuity system and increase the addressable market there as we look to address the middle market through R&D, potentially some portfolio expansion as well.

As a final comment I'll make to our investors. One of the first -- when I got to Angio 3 years ago, the first or second day we worked on was R&D. First day, as we remember, we didn't have a robust R&D process here to the level should be at. And people work with other device companies knew to build what we did. So this -- we're proud of this device coming out ahead of schedule. What we also did do, because we've added capability, our supply chain team is world-class now. And we also can pull from our global supply chain. So this is an expensive device. We just -- the ASP just went up with a new device. So it's a $14,000 device, which is 2 or 3x what the other devices on the market cost. And also, even our cost of production went down. So you see a gross margin expansion during this product. So we really did a lot of things while our team did a great job. Number one, it starts with listening to our customers and designing a device that they wanted. We gave them that. We're seeing that now in the rapid adoption. But along the way also, because the product is so unique, there was room for ASP expansion. And our supply chain team did a great job designing enhancements into the product to make it robust, repeatable and efficient. So I'm saying that because we're not stopping, and that's how we're running AngioDynamics now. You'll see more of that as we move on.

Anyone else?

Can you talk about the tip locator.

Sure, great.

The tip location you just signed upon a product. Is that -- are you expecting that to help stabilize? We can actually go back on offense.

So this is good. Yes, go ahead.

Okay. Just give me a reset on is that the materials, like the fact that you're not coding, you're the -- you got to remind me on what the technology is that, has that continued to resonate accounts that had bought in? Or is that now like everyone's got something close enough, but it just doesn't matter?

So it's a good series of questions. So I'll take a swing at it, and Steve Trowbridge, who is our interim CFO, he's also our General Counsel, and he'll add some color in a minute. And he's been in the company 12 years and knows a lot about it. Let me add quickly. So we acquired last week, we announced the tip locator. And we also have further development. So we'll turn the tip location device that we bought last week. Also, we'll add navigation capability. Our development team will finish that development cycle. 18 to 24 months is what we're targeting. So it will be tip location and navigation capable in 18 to 24 months. That's important because, today, that's a gap in AngioDynamics has had. You've got Teleflex who has 2 devices and Bard has a really good one as well. That helped -- it really helped Bard to their credit. The migration, where this was a physician-driven product a dozen years ago, where most IR's replacing it. And now with the tip location capability, it's gone to the bed side, nursing. It's also part of the story, too, where we talk about our transformation, where we can win every client. When that occurs, it's also more of a store room product, right? It's a general use product. I don't know if we're the best company long term. It could be in areas like this that are more medical supplies based and is less physician touch. That's my look on it. It's also one thing I'll remind the group. So to answer your question, we need to stabilize first, give our customers an option of choice to place those tip, the PICCs in wherever they want. So stabilize our business, number one. Soft, it allows us to go on offense, number two. We're going on offense against a really big competitor.

Mass?

Exactly. So we're being very reasonable in our expectations, but we don't want the bleed to occur that has occurred. Briefly to the last 5 or 6 years, if you look back in our VA business, it's lost about 5% of revenue for about 5 or 6 straight years until last year. We grew only 1.8% where it grew last year. It's going to grow this year. So we've already stopped to believe we're going to slightly grow it. I remind everybody before our general counsel chimes in, 2 years ago, we filed a lawsuit against Bard for improper trade practice in the PICC space. We believe that they're improperly selling their PICCs by tying their PICC and their tip locator device, not giving the customers the option. So reminding folks of that. So we've had significant work on that. I'm not aware, but Steve is, who'll chime in, in a minute. But we're very, very serious about giving our customers the choice they deserve, and the product should be sold and marketed in the proper way. So we believe very deeply we're right. It doesn't always mean you win in the court of law, but we're fighting for what's right here. So we believe we're being held back by the much larger competitor. Really we're a people of choice because you mentioned the coating, right, our product, the BioFlo. And our product is special. BioFlo is very, very special. And why we can back that up with just more of the words, we launched a midline product about 4 years ago. A midline is very similar to a PICC, but it is not as long. It doesn't require a location device. Our midline market share in the U.S. is about 3x what it is of PICCs. We're very aware of that. So again, these are customers that aren't held now by the lack of choice and Bard forced them to buy 2 things. They can choose and they're choosing 3x to 1. So we're very aware of what our market share could be if the customers had the freedom to choose as they do with midlines. I'll say that and leave room for Steve to jump in.

Yes. The BioFlo is a differentiator for us. There are not other competitive technologies out there. So remember, BioFlo's not a coating. It's a material that's integral to the catheter. And Teleflex has a coating. Bard's done a great job making implantation of the PICCs subservient to using the tip location technology. As Jim mentioned, they took it out of the IR suite, brought it to the bed side. And it really leveraged their market share in that business to also tie the tip location. So our approach in buying the tip location to that we had disclosed on our Q2 call as well as the lawsuit that Jim mentioned, so take a comprehensive approach at this market to just get an even playing field, because we do see customers when they've used our BioFlo, they've gotten great results. It has been sticky. It's something that's a differentiator, but we haven't been able to get the full impact of that unique technology because of the market dynamics. And that's why we're taking this comprehensive approach. And as Jim mentioned, we do think the tip location will eventually facilitate some ability to go on offense. It's important for us to get the navigation piece. The market has moved to require both tip location and navigation. We know how to do that. We did it with a previous product. So we can get there. 18 to 24 months, we think we'll add the navigation. And we'll also have what we expect to be a resolution with the losses that Jim mentioned. We think we're right. We've looked at this. We're very strong in our opinion. As a lawyer, though, I'll put my hat -- my lawyer hat on now and I'm not going to predict where the lawsuit's going to go. So the court has said that the case will be trial ready in September, and that they are not expecting to move it out, and we'll not accept any additional delays at that point. So by the end of this year, we expect that to be moving forward.

And sorry, last question then. Whatever decline you have seen in your [indiscernible] to assets, et cetera, set of products, is there -- what's the price versus volume? Is price going down in these products?

So dialysis, midline's actually growing. So we grew dialysis last year. We'll grow it this year as well as midline. So price volume is always a factor. It's not really much in this case. We're growing -- the reason we grew dialysis last year and this year is volume. Yes, price is pretty stable.

What about on the PICC side, same?

PICC side's pretty -- yes, I think the price volume we've of fought. We've stabilized pricing. I think GPO's going to get pricing there. So I don't think -- there's always a little bit of price...

But you're not having to say like I'm going to give you 5% off just to hold my line.

BioFlo is a differentiator itself. And if we lose it, it's not for price. We're losing it for other -- we know exactly why we lose it, so that's not where we're at.

Yes. Price is definitely more of a conversation in this business than it is in some of our other businesses. But as Jim mentioned, we're able to hold price primarily because of the differentiated BioFlo technology.

On the topic of M&A, how has the integration of Eximo been proceeding relative to your expectations? And what's the initial feedback you've heard there?

Yes. It's great. So we bought this Israeli-based startup company, amazing engineers, brilliant people, and we're happy to have them now part of our team. They're going to be part of our future development and innovation center for us. So those folks are really important for our future innovation. But we're a little cautious about the integration of the 2 companies because we have really, really high aspirations and expectations for this device. So back to the October 3 announcement, we were measured in our approach, and we hopefully shared with our shareholders, a measured, cautious approach to do the 3 things, right, that are most necessary to facilitate a proper launch. And first is the supply chain robustness and quality that we demand. So that's being done as we speak. We have the first products that are made within our hands, our supply chain now here. They're putting it into the field soon. Second, our physicians and sales training program to make sure that we can train properly how to use this device, to get the outcomes that patients deserve when they're treated with this device. And third, really the biggest hurdle and the most important long term because the science is so compelling will be our dedicated selling and marketing channel. That will take a little bit. We're ramping that up slowly. We guided our investors with this. We built and modeled a ramp-up over the next 8 quarters, continually adding selling and marketing capability. We also talked about why we chose a dedicated sales force because we're going to make sure we can communicate to our customers how unique this device is. We're also hiring people who have done this before. So we're hiring people who have sold atherectomy products in their markets and know their physicians already. So we think that's very, very important. That's why we're doing it. So today, about halfway through the 90-day window, we already have sales reps hired, being trained, ready to service the market. We'll continue that process. That will be really a 2-year process as we buildout that.

So building out the sales force is the most important thing that we're looking at now as we look to launch this through a measured approach. In the meantime, we've been having additional conversations with KOLs and other users of the product. We were very excited when we bought this product and closed and made the announcement in October. We're more excited about what the technology can do now than we were when we bought it just through some of those conversations.

As we look at atherectomy, there's been a lot of investment in the more clinical data out there with all different types. I mean, I don't know how much you guys have on your side, but how much more do you think you're going to need to start making the average atherectomy doctor [indiscernible]

Yes. It's a great question. We'll both answer it. But, again, so why it's -- so PATHFINDER was announced this morning. That's really important to us to facilitate that data collection. We agree with you, these doctors want to see data. And we also have data that's been collected. The IDE was supported with really, really strong data. So it's very important to us to answer your question. And Steve can give you more detail around the data collection.

Yes. Look, I think we think that the data that we have coming from the IDE that they did that supported the indication is compelling, and that is clearly sufficient for us to have those conversations. We expect that clinicians will start to use our product and trial it as we go into our full market launch. But we also understand this market. There's a lot of different technologies. There's different options that clinicians have. We're going to need to continue to build out that data set as we want to drive the market share that we've talked about reaching.

Did you have the [indiscernible]

We do, yes.

[indiscernible]

Not an Eximo laser, no. It's a 355-nanometer laser that will treat the lesions.

As we think maybe 5 to 10 years down the road, what would you consider any penetration beyond your product in that space? Is it kind of the successful?

Sure. Again, so when we entered the market, we all know what -- about the size is. It's a growing market, too. And we've guided -- initial guidance all we've shared is we believe we'll have 8% to 10% of our share at end of year 3. So that was our initial assumptions. How we modeled our business, what we communicated through our shareholders, we'll update those guidance numbers soon, but we' still want to get through this prelaunch process and get ourselves ready for market, and we'll give deeper guidance at that point.

And you talked about pricing and all that [indiscernible] price for [indiscernible]

Yes, it's good point. We haven't talked a lot about pricing. We fully understand where -- you got different products today. You've got the Spectronics laser today. You've also got 3 mechanicals. So their price vary differently. They have their features and benefits. You all have also got different price points of where the product's used. So we're facing a historic really of pricing schedule. We understand the historic prices. We're aware of them, built it into our models. We also know there's some benefits we believe. 2 of our 4 catheter sizes have aspiration capability. And some of the physicians who use that have talked to us, people who've generated some of the data, and as a point, "Your product is so unique that I found that I can safely treat and not have to use filters." And reduce the cost of the care delivery in their process because of the unique capability of our product. So we're still working with those physicians understanding that. So we're fully aware of that. So you look at just acquisition price of a catheter or total price of the procedure. I'm looking at it both ways. But to your point, take from us today, we understand the pricing of the market, and we're prepared to work within the current pricing models. If anything, we think we may offer additional features, so we're not going to be a discount to current prices.

And is it over the wire?

Yes, yes.

Yes.

So the sales development, you talked a little bit about that in the presentation. Could you give us a sense of how quickly you'll build out the [ TE ] soft launch now and then just kind of we're thinking about spending [indiscernible]

Well, if you look at -- today, we haven't guided an exact spending to us. But if we've done $0.14 of EPS in the first 6 months, and then we just guided we get a $0.10 to $0.15, we're not trying to be cute. We're not raising it. We're spending a lot of money right now this quarter. So we're bringing in reps. At a quarter ago, we had 0 dedicated reps. Today, I think we have 6 or something.

Yes.

We'll end the quarter with more. So again, we have a -- our fiscal quarter will end at the end of February and our final quarter ends the end of May. So we expect by the end of May, the end of this fiscal year to have a dozen or so sales reps in that bag dedicated, again, with marketing people. We're also building on a clinician field, clinician force to support our users and in-house, selling, market and clinician capability as well. So we're spending right now in making those investments, bringing talented people in. And I also want you to know, remember what I said, we're not just hiring salespeople. We're hiring people that have sold these products in these spaces to these physicians. And they are not always cheap, but these people are specialized. They're skilled and they're good. So we're making sure we bring in the best of the best to represent this product. So we'll give more guidance over time. We'll share with you when we look backwards in this quarter. We can always break out if we can share with you if you're interested here's how much we spent, but we're fully prepared to invest properly in those 3 areas I talked about, supply chain, training programs and our people.

If you look at kind of the doctor training side, how does this device compare relative to the other laser devices out there in terms of when doctors are using laser on [indiscernible]

We just don't know. We've been told by the physicians -- and almost every physician's tried everything, right? These guys try everything. And for -- Spectronics has been out there for a while. So we've had many physicians who use it and have them in their office, and they've also used ours. We weren't able -- we haven't been able to fully support commercial launch or full use capability up until this point. We're still at that precipice now of getting there. We expect over time that probably someone will choose 1 of the 2 lasers. I doubt -- maybe some of the large spaces may have us and [ Spectronics ]. We don't think so. We think at some point, they'll say, "Hey, we were comfortable with Philips. We're going to keep [ Spectronics ] here." Or they'll say, "Boy, the AURYON brings so many more things. We're going to go to your platform." That's what our expectations are. In most cases, they'll pick 1 of the 2 lasers. We'll see how that works. We think it will also always have 1 or 2 of the mechanicals there as the tools are necessary. So we think we will be one of the treatment options. We hope to get a high level of the treatment based upon the fact, again, we can treat what no one else can do. We can do above and below the net, hard and soft calcification with aspiration capability. It's really, really amazing what we can do. But we're not going to expect physicians to move all of their treatment volume over yet. We're going to slowly get their comfort and adoption levels. And over time, the product and our support, we think, will separate us from the market. We'll let that stand on its own.

Physician training is certainly going to be a big part of our rollout, and we're going to be focusing on creating the use protocol. The good thing is it's not a generation apart from the existing lasers. So someone who has a baseline of having used some of the competitive lasers, they're going to be up the learning curve very fast. And it will give us an opportunity to spend a lot of time on some of the unique features of this product, which we think will drive utilization that Jim talked about.

Are you selling the generator?

We'll follow the market. The market today is there are some sold with a non-use agreement, and there are some places that the customers commit to a certain use volume.

And is there plug into the wall or [indiscernible]

Yes. No, that's a great question. So you know the difference. No, I mean, I think the other product, give them credit for innovating what they did. But they have a lot of unique challenges, which are our customer base challenge. We don't face those. Plug it into a normal plug. it does not weigh 800 pounds. It weighs 100. You can move it anywhere. Because as anatomic are concerned, sometimes in procedures, we've sat through a lot of procedures to learn in our diligence. We've got a lot of field diligence. So lasers need to be moved. They need to be mobile. They don't -- people don't want to start-up times or gases or calibration times. We learned -- and really, I'll say, we -- our team did -- the folks that actually have developed this, engineers did an amazing job. They knew the stuff, and they designed it -- this into the product.

i suppose they've not launched that new version that you plug in the wall and just supposed to be lighter and all that nonsense.

I would just say that not that we're aware of because we've heard and we expect it probably will, which is fine. We're anticipating that, but we're not aware of a national launch.

Great. With that, I think we're almost out of time. So I think this is a good place to wrap it up. Thanks so much for joining us.

Thank you.

Thank you.