Mark Klausner - Westwood Partners Jeff Soinski - Chief Executive Officer Dr. John Simpson - Executive Chairman Matt Ferguson - Chief Financial Officer.

Jason Mills - Canaccord Genuity Josh Jennings - Cowen & Company Chris Cooley - Stephens Steve Lichtman - Oppenheimer & Company.

Good afternoon ladies and gentlemen. My name is Sonia and I will be your host operator on this call. After the presentation, we'll conduct the question and answer session. Instructions will be provided at that time. [Operator Instructions] Please note that this call is being recorded today Monday July 12, 2016.

And will be available one year on the Investor Relations section of Avinger's website at investors.avinger.com. I would now like to turn the meeting over to Mark Klausner of Westwood Partners..

Thank you. And thank you for joining us today to participate on today's call. Joining us on the call is Avinger's CEO Jeff Soinski, Founder and Executive Chairman Dr. John Simpson, and Chief Financial Officer, Matt Ferguson. Earlier today, Avinger released preliminary unaudited revenue results for the second quarter ended June 30, 2016.

Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meeting 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 are not statements of historical fact should be deemed to be forward looking statements. All forward looking statements including without limitation are expected results for the second quarter of 2016, our future financial expectations are based on our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to differ materially from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with our business, please see the press release we issued today and our filings with the Securities and Exchange Commission including the form 10-Q we filed on May 9, 2016.

Avinger 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 July 12, 2016.

I'd now like to turn the call over to Jeff Soinski..

Thanks, Mark. Good afternoon and thank you all for joining us. This afternoon, we issued a press release relating our preliminary revenue results for the second quarter.

Although second quarter revenues were $4.7 million fell short of our internal expectation, we remain convinced that our Lumivascular platform and Pantheris image guided atherectomy system will change the way physicians treat PAD.

We remain encouraged by the continued growth of our installed base to a 126 accounts, an increase of 19 accounts during the second quarter which is the largest quarterly increase we've achieved in our history. However utilization of disposables has been lower than we expected.

We believe we've identified three main reasons that initial Pantheris utilization has been slower than anticipated, and we're taking a series of actions to improve our performance.

First, we're still helping physicians understand how Pantheris can best fit into their PAD treatment paradigm, both near term and their current treatment algorithms and longer term as they gain familiarity and use Pantheris in increasingly complex cases.

As physicians gain experience and try Pantheris in a greater variety of lesions including more complex and tortuous lesions both above and below the knee. We remain confident that Pantheris will become the atherectomy device of choice in refining our selling messaging accordingly.

Second, we experienced some issues with device robustness as we mentioned on our last earnings call and in our form 10-Q filed on May 9, 2016. We've made changes to the catheter and now believe the most significant of these issues are behind us, and we've received positive feedback from physicians on the performance of the current devices.

We also continue to anticipate submitting a 510(k) application this fall for a version of Pantheris with enhanced cutting capability. We believe this device will broaden the range of lesions in which physicians may choose to use Pantheris.

We're also continuing development of the lower profile device for expanded treatment of below-the-knee lesion and anticipate filing for FDA clearance on this device in the first half of 2017. Dr. Simpson will elaborate on our planned device enhancements in a few moments.

The third item that we've identified is a slower than anticipated ramp in sales force productivity which is due in part to the relatively short tenure of many of our sales reps as a result of the rapid expansion of our sales force over the last several months, and is related to the slower procedure ramp that we have experienced.

Pantheris is providing a new way for physicians to treat PAD and our sales force is deepening its knowledge of Pantheris applications as proctors in increasing number of cases. I'd also note that this is occurring in an environment that includes several large and well resourced competitors.

It's clear that these competitors have taken note of the differentiated nature of our technology and in certain cases have responded with concerted pricing and counter detailing measures in an effort to slow our progress. Nevertheless, we believe our unique value proposition enables us to compete effectively in the markets where we have a presence.

In short we're still in the early days of the launch and with a growing track record of successful outcomes, we're continuing to learn about the best ways to convert physicians to using our catheters and to increase the types of cases in which they're utilized.

We're confident that those sales force effectiveness and physician utilization will increase as we continue to educate physicians in fine-tune our product offering. Taking all this into account, we’ve made change in our commercial leadership.

JD Simpson has been appointed as Senior Vice President of Sales and Marketing and Joe Rafferty our VP of Sales will be leading the Company. Many of you know JD has been with the Company since the founding as previously runs sales, marketing and business development.

JD has an exceptional knowledge of our products and significant experience on how best to educate physicians on the benefits of our Lumivascular platform.

We’re confident that JD will bring strong leadership to this new position and by brining sales and marketing together under one leader will drive greater cohesion between our field sales and marketing and training efforts.

While we continue to work diligently to add new Lumivascular accounts and increase utilization at existing accounts, we’ve also decided to take a more majored approach to expanding our sales team while we refine our market education and physician training program, and fine-tune our product offering.

We ended the second quarter with 59 people in our sales organization and at this point anticipate ending the year at modestly increased level. I'd now like to have Dr. Simpson share some of his recent case experiences and feedback from physicians reviews Pantheris.

Following back to Simpson's remarks, Matt will review selected financial results for the second quarter and review guidance for 2016. We will then open the call for question.

John?.

Thanks, Jeff. This quarter has been a viable one for us as we have now observed Pantheris usage in a large -- buying large number of operators in a wide range of regions. We’ve also gained important physician feedback which we have used to implement some changes in the products and how our sales forces positioning Pantheris.

As I mentioned on the last call while we had some outstanding early case experience, the clinical results have been really remarkable. We have had some initial issues with device robustness primarily imaging fiber robustness, which was not a usual program breaking new technology certainly providing some challenges for our sales team.

I’m pleased to report that based on improvements we've made to this device, and in particular to the robustness of the optical imaging fiber physicians have received positive feedback on the improved product. And we now feel depend there’s performance levels are within the normal range to a new and relatively complex product in our space.

Beyond the current rate of Pantheris, we’re excited about the line extension we’re advancing through our developed programs including as Jeff mentioned as version with enhance cutting of those diseases as well as a lower profile device.

This capability will allow physicians to more specially use Pantheris below the knee and in part to treat in more complex lesions. So far most physicians have been using Pantheris in the less complex cases as requested certainly by whole the rest of the management team in order to become familiar with the product.

But as they gain more experience with the device, many physicians are using it in more challenging situations including CTOs instead of restenosis in below-the-knee vessels. We expect the availability of the next version of Pantheris will further increase the use in the study.

We know that physicians have many different devices available to them, so as Pantheris become available to more procedures, we think, we’re well positioned for utilization to ramp accordingly.

We’re not yet, we aren’t there yet, since we will need necessary approvals, but we think that the lower profile device will be an important step forward to eventually approach the coronary market. We expect another driver of adoption utilization of the time will be clinical data.

We already have demonstrated excellence safety profile of Pantheris through division study and we’ve recently announced an important collaboration with Highmark Health and Allegheny Health Network to evaluate with the long-term clinical and economic benefits of Lumivascular approach to treating PAD.

We’re also finalizing the details of additional studies to be launched before the end of the year and will look forward to sharing those details in this area when we report our full Q2 results.

With that, I turn the call over to Matt to cover our financial results and guidance, Matt?.

Thanks, John. Based on preliminary unaudited financial results, we expect total revenues approximately $4.7 million for the second quarter ended June 30, 2016, which was an increase of 57% from the second quarter of 2015.

Revenues from disposable devices were $3.7 million, a 118% increase compared to the second quarter of 2015, and a 12% increase from the first quarter of 2016. Revenue related to Lightbox imaging consoles were $1.0 million, a 29% decrease compared to the second quarter of 2015, and a 17% decrease from the first quarter of 2016.

We believe the decline in Lightbox revenue in the second quarter relates to the increased flexibility in the Lightbox acquisition programs we're offering, which resulted in our largest quarterly increase in the installed base of Lumivascular accounts.

Of the 19 accounts we added, four resulted from Lightbox purchases and 15 must be rental replacing programs. We will update on the rest of the P&L when we'll announce full financial results, which we anticipate will beyond or about August 3rd.

Turning to our balance sheet, cash and cash equivalents totaled $22.5 million as of June 30, 2016 compared to $26.9 million as of March 31, 2016. As we’ve announced earlier in the quarter, we drew down $10 million through our existing debt facility. The total debt at quarter end was $40.1 million.

We’re in the process of updating our operating financials in second half for the year, but we expect that our available cash will be sufficient to fund our operations at least through the end of this year.

Nevertheless, we recognized the importance of adding to our cash reserves and we will be working to evaluate alternatives for raising additional capital in the coming month.

Turning now to our financial guidance for 2016, we now expect 2016 revenues to be in the range of $19 million to $23 million, representing year-over-year growth ranging from 78% to 115%. This compares to the previous guidance for revenue in the range of $25 million to $30 million.

We will share our updated guidance for adjusted EBITDA and net loss per share when we report our full result in the second quarter. And at this point, I would like to turn the call back to Jeff..

Thanks, Matt.

While sales of this quarter didn’t hit our internal expectations, we believe we have identified the root causes of the slower ramp that our long term opportunity remains exciting, both our clinical results and physician feedback give us confidence that Pantheris will change, help physicians to treat PAD and we look forward to updating you on our progress.

With that, Dr. Simpson, Matt and I would be happy to take your questions..

Thank you. [Operator Instruction] And our first question comes from Jason Mills from Canaccord Genuity. Your line is now open..

So I wanted to start with the new guidance and the reduction there, I guess the crux of the question is, you've lowered it at the midpoint around 25%, what sort of confidence do you have in that new guidance just based on the accounts that you now have with Lumivascular system in place? And I guess ultimately what do you see as the risk to that guidance given the -- we have now seen that introduction twice in last couple of quarters..

Well, Jason, as you know Pantheris is a totally new approach and clearly Lumivascular is a disruptive technology, and I am sure based on your experience with other companies the difficult -- you understand the difficulty of in forecasting on entirely good product.

And so, we have a lot of confidence in our revised range because we at least now have four months of experience to base our forecasting on. We understand some of the early challenges to utilization. We also understand what our utilization rates are in our existing accounts. How many accounts have ordered, how many accounts are reordered.

And as we look to -- and our ability to continue it to add accounts at a very, at a good cliff, and so, there is just more information now for us to provide our forecast through the end of the year. And the entire team here is focused on execution. We also as Dr.

Simpson talked about have made some improvements to our number one product issue that we had early in the launch. We are really delighted with how well that product is performing, and so we feel we have that behind us as well.

Of course, we will continue to make improvements, we always growing our device and we have a series of additional improvements slighted as well as the line extensions which we have talked a lot about. But we just have more visibility now Jason as company marketing a brand new and revolutionary device..

Okay, so if you follow ups to that Jeff, you mentioned reorder rates, what were they in the quarter coming off let's say the monthly run rate you saw in the last month of the first quarter? And what is the complexion of the accounts that are using Pantheris at this point from a standpoint of volume and peripheral inventions and/or atherectomy procedures specifically, what sort of accounts are you in now? Do need to focus more on higher volume accounts things like that? And I have just a couple more follow ups after that please..

So when you look at our penetration of the installed base about 80% of our total installed base has ordered Pantheris and about of course the first month of sale in March was primarily initial orders to existing Lumivascular customers. We have had reorders from say about three quarters of our in accounts that have ordered Pantheris.

So we certainly are experiencing reorders. Our utilization didn’t build as quickly as we thought it would in the second half of the year as physicians get up the learning ramp as our sales force gets up the learning ramps as well.

But you had a lot of questions there I kind of lost track, but I think just from dimensionalizing we are active in several accounts. Certain accounts are doing quite a bit of utilization, others still finding their way.

When you look at the complexion of our business, we are primarily hospital base in our installed base although we do have some office base labs, that is an area that we are actually refining our selling messaging and approach to broaden our appeal.

We have also seen some very competitive activity especially in the OBL from some of the bigger competitors. John, I just don’t know if you want to add anything as about kinds of cases you are seeing and the kinds of accounts that you have been in the field so much..

Yes Jason, John Simpson. So let's say that we talk a lot about the ramp, it hasn't been quite exactly what we wanted to be and that especially I don't think quite true. Our ramp was exactly what we would have expected, not based on revenue, but we're expecting the safety profile.

So we definitely instructed the docs to be really careful about the early cases and so some of the docs still are waiting through their first case and they're waiting for the perfect case which is the short focal SFA lesion without calcium, and we know that we can treat all kinds of lesions that are much more serious than that or much more difficult to treat.

But I think part of what we did and we've got not necessarily apologetic for I think if we focused enormously on the safety profile. And to allow the docs to be careful and make certain of their first cases worked out really-really well.

And probably, we self inflicted a bit here I would say, I might have been more obsessed with that than maybe anyone else, and I think we had a pretty conservative launch.

And I'm proud of the fact that we've had no complications in the launch and we've has effectively 500 some other patients treated so far, lesions treated so far, no perforation, no occlusions, no embolic ischemic events that we know best.

I just feel like that maybe it's not up to the revenue expectations for the street, but it's up to the safety expectations that we demanded at I would say at the organization, and I feel proud of that and of course we're all disappointed about the revenue.

But I think that's going to -- that will definitely come because we're treating patients now below the knee. We're treating patients with calcified lesions. All of this stuff is accelerating, but it's accelerating at an appropriate pace I would say..

Okay, so building on that John, I guess specific to one of the things that Jeff mentioned competitive response was one of the things that you've mentioned Jeff.

What sort of examples, you mentioned pricing, are you also seeing an impact from those companies like Medtronic for example that have a fairly robust drug eluting balloon franchise, and it seems like clinicians are focused on the use of drug eluting balloons as sort of a headline device used in those cases with atherectomy as a prep device.

Is there anything that you've contemplated or think you need to do with respect to changing your message to dovetail I guess more closely with drug eluting balloons, understanding Dr.

Simpson's preference there as a standalone therapy using Pantheris but given the tenor of the market, what have you seen and what do you think needs to change to adapt to it?.

Let me take that Jeff, and then you can add to that. But I would say that most of our patients get drug eluting balloons after the Pantheris because I think you're exactly right. Nothing that we do preclude using that drug eluting balloon, so it’s not like we have to do anything to augment that it's just what the market is currently doing.

And you and I have had a lengthy discussion about this. You would know that I believe that drug eluting balloons are frequently not needed and frequently the drug eluting balloon causes dissection that now the drug has to go to work, and I just think that not totally a separate issue, I think for us drug eluting balloon or not it's fine.

We don't have any -- there's no real pleasure from our part and we see use, I would say probably reality is probably 70% to 80% of our patients that are treated Pantheris get a DEB afterwards..

Yes, so and I do think Jason, there is a lot of attention and a lot of money being spent to prove the ideal combination of directional atherectomy especially in the significant debulking followed by a drug coated balloon as an ideal treatment. We are the only other directional atherectomy device.

We have an extraordinary safety profile and really we listen to our customers. We also want to empower our physicians to make the decision that on their treatment paradigm that they think will be best for their patient.

So there's not resistance from us, but certainly I do think we can ride that wave of interest of combination of directional atherectomy and drug coated balloon, and as Dr. Simpson said we're seeing it in our current cases..

There is an issue too that if you cut too deeply into the artery wall then you put a drug on it that it tends to, it's more likely to form an aneurism, and we're seeing some of the atherectomy trials followed by drug eluting balloon.

In Europe reporting aneurisms can serve in rate of 5% to 10% and maybe not mammoth aneurisms which clearly notable and probably not something you wanting in your arteries.

So if you are going to use drug eluting balloon, you would be better off using it when you've performed atherectomy without cutting into the deep wall components of the artery, it gives you a best sense of having the appropriate drug affect response without forming an aneurism.

So I think that we have an advantage there over other directional atherectomy catheters..

Okay that's helpful color. I appreciate that. Two more follow ups and I'll get back in queue. Jeff, you've mentioned the device robustness issues Dr.

Simpson specified as the imaging fiber, what kind of an impact did that have on clinicians learning curve and learning how to interpret the OCT image and is that fully behind you now and what sort of changes do you have to the training program to I guess augment or accelerate the learning curve for those physicians in OCT guidance interpretation? And then lastly for Matt on the cash side, you mentioned, you think you have a sufficient capital to run into the end of the year, obviously, you don’t to run straight to the end, so what sort of options that you’re valuating on that front? And I will get back in queue.

Thank for the time..

Okay great, Jason. So as it relates the imaging fiber, we’ve done exactly how to describe, we almost like to put a strain relief with the fiber because in very robust setting, if you pull up too hard and you cut to open it, the fabric could crack and when the fabric crack the images would degrade.

So that was -- it was never ever even once the safety issue that was a huge paying issue, you have to exchange devices and it was kind of annoying. So I don't think, if we don’t have to retrain around that because you lose the image, so can you have to exchange devices, put it in the device.

Then the new strain relief seems to have eliminated that almost entire great the majority out of the fabric of fragile, they are tiny, they have with no risk benefit, but they are fragile and they have to be kind the used. Historically, they have to be used very carefully now with the new devices they can be much less careful with.

I mean they can still maintain their images and that’s really the key element. So the fabric that only hasn’t been say protected but also physicians will be cautious about how we use it. I don’t think that, that has really affected the learning curve so much as it has been a little bit annoying.

I don’t know that this actually affected the ramp sometime as fiber so they always put in a new device and they keep going. But I don’t know, if that answer your question or not..

That’s helpful, thank you Simpson. Matt, on the last question..

Yes of course, so we certainly recognized where we’re from the cash perspective, and you’re absolutely right we would intend to too close to the bottom of well as we go forward.

So we’re certainly going to be diligent in evaluating all the different alternatives that are out there and whether there kind of straightforward in traditional equity investments through the market or any other sort of debt security that we might to look at or any kind of strategic investment that might be available to us.

I don’t think that it would -- I mean that it wouldn’t be appropriate or the timing when be right to speculate on which one of those that will end up with, but we certainly have been active in talking to people over the last several months, and I think now with Q3 behind us we can be more diligent in looking forward on the financing front..

Thank you. And our next question comes from Josh Jennings from Cowen & Company..

Good afternoon, John and thanks.

I just wanted to start with the robustness issues that you've called out, were there any other issues outside of the fiber optic cable crack issue if you will?.

Yes, I would say not a well genuine substance. The balloons are so fragile I would say in occasion we have some balloons leaks, and again that’s in a way of safety concerns.

But I think the pivot I found that most annoying, which I think also the physicians that were using device found annoying, it's even, and all the travel to get to device all setup in the console and everything done. You put the device in.

You get down to the narrowing and then you lose the light and that was awe -- so we have to work really-really dashingly to fix there and over the last and say six weeks, I don't remember seeing a catheter have that -- physician had the experience with the device with the new generation.

So the balloons leaking gets some CO2 that's not really doesn't seem to be as a bigger of an issue. And all these things are getting better, the balloons were making -- the balloons are stronger and the fibers are more protective. So I think everything is heading in the right direction.

Kind of the fascinating and wonderful thing about this is that, this was kind of like our best quarter ever in the history of the Company, which seems a little bit paradoxical that I would say. But the patient outcomes continue to be just as very, very, very, very favorable.

And overall, we are just not seeing any of the complications, embolic complications, perforations, dissections, very low death rate. Everything that has been seen now is exactly what we saw in the VISION trial. There is no deviation and if it is does -- may be better in the VISION trial.

And below-the-knee disease has been treated not the [seven-first] device, but you have to inflate the balloon for the treating tibial vessels that we'd never thought we probably would be treated this phase that we're treating on very successfully.

From a clinical perspective and a safety perspective, I cannot be more proud of the organization revenues and additional issues..

Okay and the robustness issues seem to be relatively in the rearview mirror, is that the right way to think about as it is going forward that these technical issues have been solved?.

I would say that it of course had a result, it's the 100%, but I would say 95% those things are behind us.

We're seeing this almost on the really-really rare in place you know how docs will sometimes -- you will be surprised how aggressively the docs will be forcing, pushing, jerking, twisting, everything and even though this we train against this it still happens.

So I believe though that the robustness challenges that we found when we end the initial loss, I think those are behind this. Those that impacts the actual ramp..

And then as Dr. Simpson said a course continue to make improvements and we always be improving our devices as well as developing the line extensions for additional lesion types and anatomies Josh..

Great and just to feed off of that. You mentioned that you have the enhanced cutting capability to the cost -- harder cost encountered in the fall.

Is any different view now that you still very early in the launch, but just in terms of the lesion set that the current version of Pantheris is applicable to, is there -- is it really limited to the softer lesions, is that had any impact just in terms of the early utilization rates?.

Yes, that's the price that I say it was also reflective because we insisted on that with our earlier doctors short lesions, soft flag, low cost in FFA. And we have started a process to really restate the lesion selection criteria. I don’t really believe there is anything right now that we cannot treat.

I suppose there is some gross heavily cost by the lesions that would be just maybe untreatable but we can treat hard flag, we can treat moderate classification, we treat some really pretty cost by lesion with the current device.

And I think we made a mistake and we blame it all on need and I think I was rather more conservative just worried about safety more than anything else in the early going.

But now we are treating just I would say that was every lesion, I don’t see any real restriction anymore, not in the restrictions that I enforced on lesion selection and the original going apply anymore..

Okay, understood. And my last question just on sales force productivity, if you just comment on the new reps that were added, is there an issue with just experience level and the peripheral space at all? We getting these recent rep adds where they coming from an end.

And then just on Raffety's departure anymore color just in terms of his leaving and his short tenure? Thanks a lot gentlemen..

Yes, so when you look at our sales force Josh about two third of our sales force as you remember we had some pretty aggressive expansion of the sales force in the second half of last year especially in the fourth quarter, about two third of our folks are just about six months or less tenure. So it is the very short tenure sales force.

We have a lot of folks, who have significant peripheral experience, but what we are doing at this brand new approach and brand new technology is new, right it's a new approach and the combination of OCT real time imaging with the therapeutic catheter hasn't been done before.

And so the learning curve maybe a little longer than we had anticipated had coming in to real build not just clinical confidence but clinical confidence. That’s more is attributed by the slower than anticipated procedural ramp rates. You need that live case experience to develop that confidence.

And this lower utilization leads to a longer time to get up to learning curve and ramp, again not to be confident but to be very confident especially if it help proctor physician to try to use Pantheris in more complex lesions. So we may have under anticipated the amount of time, it will take to get somebody fully up to speed and productive.

Having said that our reps who have longer tenure with the company, who have been selling and using or helping their physician use Ocelot for a long period of time have some -- there is some pockets of very strong productivity with reps already producing at a revenue level that we would be very happy with on an ongoing basis down the road.

So it is inconsistent based on the tenure. When you tend to look at the longer tenured reps have as you would expect much higher productivity, they have deeper relations that set the accounts maybe they've developed multiple users at the accounts. And they also are more confident in the clinic. So we do again think that will get there.

We are -- and it's one of the reason frankly to relate your second question that we really thought JD in this role with his long experience with lumivascular, his long experience selling and managing the sales organization with Ocelot.

And his continued involvement with Pantheris would really enable us to move quicker, to improve and accelerate the ramp and our training programs, and that was really the primary reason for the move. And already we are just seeing a new energy and kind of focus brought to the organization..

All right. Thanks for the answers guys..

Thank you, Josh..

Thank you. And our next question comes from Chris Cooley from Stephens. Your line is now open..

Good evening everyone, appreciate you are taking the questions. Certainly understand the challenges and the complexity you posed by launching a new technology like Pantheris and our calls with clinicians today have been generally very favorable.

But I really appreciate if maybe you can give us a little bit more color around maybe some of the key underlying assumptions that you have when you think about driving guidance now from the topline perspective in that 19 million to 23 million range for the full year, as I think Jason pointed out at the outset in the call that is, you know candidly down about a quarter versus where guidance was originally established in about 50% since the time of the IPO so just want to make sure I understand kind of what the key assumptions are underlying that revised guidance and why you're now very confident in that guidance and I've got a quick couple of follow ups..

Sure Chris, this is Matt maybe I can take a crack at that.

You know I think, you know it's a circle back on some of the reasons for the lower utilization that we think we've identified, really having to do in the second quarter with some of the device issues and then also with the learning curve of the sales organization and our customers as a result.

Those are all things that we can address, also just sort of the lesion selection and the types of cases that physicians are using the device. As John talked about you know we've seen really wide range of usage but most of the usage that we've seen has been in the more simple straight forward lesions and we're opening that up.

So you know we've seen some very modest upticks in utilization as we've gone through the quarter and started to implement some of this change in messaging but we really think that there's a real opportunity to increase that, you know all that said going from little over 9 million in the first half of the year you know up to you know somewhere in the you know kind of the 10 to 12 range for the second half of the year or a bit higher than that to be in the middle of our range, would be, you know we feel like we're being relatively conservative.

It's still early days it's really the early innings that to think to use the fair bit, you might use the one point and we're really focused on the long term and making sure that we get the right clinical results but we do feel like we’re seeing progress.

It's slower than we expected but we think that if we can just you know maintain that sustain that as we move to the second half of the year that we'll be able to achieve the numbers that we've put forward here..

Okay, thank you, and then maybe just two quick follow ups from me then I'll get back in queue. When I think back to just kind of directionally how the sales and marketing has evolved here, you know I think we started with JD and we’ve had two additional changes and now we're back.

Can you just talk to me a little bit about how confident you are in the stickiness for the sales force and then if the kind of the changes at the helm have in any way in your view maybe prompted mixed messaging and as a result maybe some limitations on either adoption or utilization at the account level..

You know one of the things that we really recognize is we do have a unique technology we have a unique culture and we need sales and commercial leadership that really jives with where we're going, how we want to approach the market and bring a sense of not only urgency but also long term view of lumivascular right, that really understands that vision, and you know JD has continued to be involved with the commercial process along the way our sales leadership team area directors, regional sales managers have mostly all worked with JD in the past so in a way it is a, well not in a way but it is a welcome move from that group and you know honestly as we think about looking on the outside versus working from within it is a much less risky move to bring in a known commodity who has existing relationships with our sales team and our customers.

So we believe that this will actually enhance sales force stickiness to use your word also JD's been with the company literally since its founding and he we are very confident that he's a known commodity and that we'll be able to lead the organization for the foreseeable future so I think it's really more of a move but kind of putting some of the maybe too fast for the change behind us and having a more kind of strategic and thoughtful approach to growing the organization..

Understood, and then lastly from me and I'll get back in queue and I do greatly appreciate your responses. Maybe a question for you Matt just in your response you had to one of the prior questions you talked about not going to the bottom of the well with cash and confidence in this revised guidance as well.

I guess I'm just trying to get some further assurances that the current cash balances that you have enable you to get to this kind of $19 million to $23 million guidance range in terms of what type of capital you're going to need to run traditional marketing programs continue with creative financing to increase the light bucks, install base and at the same time realize that they lower absolute dollar outlay but continue the clinical development programs moving forward both from a calcium cutter as well as the lower profile device, can you just may be walk us through that little bit?.

Yes I think at least directionally here I can talk to that Chris. We’ve done a lot of work over the last several weeks to work on the next iteration of our internal budget and financial plan and well that still on the mid state we're still in the midst of doing that and we don’t have a final product that we can share with you, even at a high level.

We’ve done enough work to feel confident in our ability to push out certain expenses but maintain robust spending, really in all of the areas that you mentioned.

So in the prepared remarks we mentioned that, that we wanted to set at the growing the size of the sales organization a great deal from where it is right now, 59 to 60 people or so, whereas previously we’re looking at an increase from that by ten or more people from there.

But we do, feel like we got the resources and we plan to maintain it, at least that level through the end of the year.

Similar for our similar clinical studies, we’re looking at the timing and the size of those studies, we got a great collaboration going down with Highmark, which is really extremely cost effective for us, because they’re picking up most of the tab for that but yet we’re going the benefit of the data that's been generated that there is.

And we're looking for ways to be creative while still continuing to invest in the business in all the ways that are going to make it a really valuable enterprise in the future.

So, I’m sorry I can’t provide more specifics, we do expect in early August, we’ll be able to share bottom line guidance that will have a very detailed and robust plan as a foundation for that, but it’s just below material to do that right now..

I think also, I’m might add, that when it comes to the smaller device and the calcium cutter the calcium cutter already exists, we've already evaluated it, it’s looks lot like our current cutter with an edge that is more effective for cutting calcium and so it’s not like, it’s a whole new start learning whole new way to manufacturing a directional atherectomy catheter and the little bit of the offset for the below the knee devices is poly version, it’s even simpler, then our current device.

Well used really that didn't have to have a blink as the vessels get so tight down below the knee and obvious success that we’ve had with seven fresh device, below the knee which has been substantial, those expenses have occurred without using the blow and inflation.

To hold the device in place because this tiny small vessels hold everything in place on their own and so provides for a simplified device design, which would also been, we believe translated in the current base..

And given our filing timings, on those devices Chris you can see how they're, they are pretty mature in there development process for adding..

Understood, greatly appreciate your responses..

Thank you. And our next question comes from Steve Lichtman from Oppenheimer & Company. Your line is now open..

First question the impact on the conservative approach to the launch, just wanted to circle back on, how the impact of that, is it only that it’s lengthen the time in which physician will start using Pantheris you know looking for that perfect case or is it also that, even those that you get up and running, they are being pretty narrow in their usage, due to the conservative messaging?.

I think that’s a good question, I wish that I knew the answer to that question, I think that is little bit mysterious to me, I think some of their physicians, everybody by the way started with the short focal lesion, it was just what almost we required it, now I that I think that might have been excessive as I avoid and just repeating myself.

But some people go to the short focal lesion to the next day along the CTO, and heavy calcium in next day results in mid up to below the knee than other vessel personality I suppose there are physicians, other physicians do their first really implications, what that upgraded, they wait for another really simple case, so they could wait a long time with surprise to me but I think that’s is the part of the introduction of a but this is a as we’ve said for a long time they finally disrupted technology.

So it can be a little bit controversial in the hospitals, but you want to make sure, it’s going to accepts hospitals, so strength that the entire staff or the hospital that they don’t want that to go awry. So you probably are more cautious in terms of patients likes and just by nature, but overall that will change.

I think we need to share, we need to have a better mechanism in our marketing group to share some of these amazing cases more quickly and more get them out sooner to the lower of it and over and over again, we’re seeing outcomes from our patients and we compare those outcomes to the patients with competing technology, and are just more favorable.

And they are safer hence more effective and I just feel like that, this message will, is absolutely is the right message to send. Be careful when you start but once you get started, once you understand the technology, you can move into a wide variety of different lesion subsets.

And with the new calcium or the augmented cutter capability, we can definitely move into the calcified lesions as well. You and I both know that the calcification's a big problem in PAD and we kind of stayed away from that, and we're going to take that on big time..

Thanks Dr. Simpson, and then can you guys give any broad metrics on how a high volume physician looks for you guys or just someone who is being conservative in case selection.

Is that high volume doc who's broadened their usages doing double, triple more in terms of utilization per month and your experience versus those more experience -- those have been more conservative, any sort of directional metrics you can provide for us on that?.

Yes, let me comment on it. This should be all by gut, so we can look at somebody like Tom Davis who does maybe say 10 interventions a week in his lab. And I think four maybe sometimes five, sometimes three maybe on average four of those interventions per week with the -- so he might doing 16 in a month.

You have other docs that maybe do one a month and so it's pretty wide spectrum. We want everybody to do 16 a month instead. So that’s what we are trying to accomplish that’s our goal. We make sure that we get the adoption and the comfort zone up for the docs that use the device because each profile is so high.

As well as the confidence in comfort zone for our sales force and you know that is -- Jeff has already pointed out a lot of them very young, very new, no one in the world has any experience with combine OCT and atherectomy period.

So that’s the challenge you can't really go out and find people who have a lot of experience our space because no one has, that’s at least not perspective..

Yes, and just to be clear we don’t require 16 a month per account to achieve our numbers. We really -- when you look at building utilization and account, we can build that certainly there is going always be the much higher users. But if you are in one to two early in the process per week for the eight a month is really pretty good at this point.

And so it doesn’t take a huge increase across the board, I think as Dr. Simpson points out though it's inconsistent, right.

You can have very heavy users and then you could have kind of dabblers and the key is to get those dabblers or those who are kind of more cautious to be using Pantheris in more cases, really anytime that they would think about using directional atherectomy at a minimum.

They should be thinking about using Pantheris, because we are directional atherectomy with the lights on..

Okay, thanks Jeff.

And then Jeff any changing your goal about 150 accounts by year end?.

Well, we are at a 126 now and we added 19 in the second quarter, 12 in the first quarter, so there is certainly no reason to believe that we would in any way slow down our pace of adoption.

Our pipeline continues to develop, we continue to leverage different options, we actually are rolling out a kind of new program for the OBL, be a little bit more competitive and make the offering a little more attractive. So I feel really confident in the installed base growth….

I am sorry go ahead..

That’s where prices are right now..

Okay great and then lastly, gross margin, can you give us a sense where we are trending here in the near term? And then on OpEx I think in the first quarter call you said we should actually see a trend down a little bit on an absolute basis and giving the commentary on the sales force side, I think you assume that that will probably the case in terms of your plan on an absolute basis?.

Well, like I said Steve, we are really still on the process of closing our quarter from completely in our point of view. There is nothing anomalous that we expect, so I don’t think there will be any surprises when we come out with our full numbers.

But I think it's probably just better for us to wait few weeks to have the real numbers at this stage rather than kind of speculating on where we are half way through the process..

Okay, fair enough. Thanks guys..

Thank you. And this does conclude our question-and-answer session. I would now like to turn on call back over to Jeff Soinski for any further remarks..

Well, thank you very much for joining our call this afternoon. We appreciate your continued interest in our company, and we look forward to getting on the phone with you again in a few weeks when we report our full financial results for the second quarter. Thank you and have a good afternoon..

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day..