Dave Rosa - President and Chief Executive Officer Claudia Drayton - Chief Financial Officer Molly Wade - Vice President Worldwide Patient Recruitment Jim Georgakopoulos - Chief Scientific Officer.

Josh Jennings - Cowen and Company Jason Mills - Canaccord Genuity Steven Lichtman - Oppenheimer Suraj Kalia - Northland Securities Jan Wald - Benchmark Company.

Good day ladies and gentlemen and welcome to Sunshine Heart Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded.

Before we get started, I would like to remark briefly about forward-looking statements. Except for historical information mentioned during the conference call, statements made by the management of Sunshine Heart are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve known and unknown risks and uncertainties that are based on management’s beliefs, assumptions, expectations and information currently available to management.

Those risks include, but are not limited to risks associated with possibility that the company’s clinical studies do not meet their enrollment goals, meet their endpoints or otherwise fail, that the regulatory authorities do not accept the company’s application or approve the marketing of the C-Pulse System, the possibility that the company may be unable to raise the funds necessary for the development and commercialization of its products, that the company may not be able to commercialize its products successfully in the EU, and other risk factors described under the caption "Risk Factors" and elsewhere in the company’s filings with the Securities and Exchange Commission.

By providing this information, the company undertakes no obligation to update or revise any projections or forward-looking statements, whether as a result of new information, new developments or otherwise.

You should review the cautionary statements and discussion of risk factors included in the company’s press release issued today, the company’s latest 10-K subsequent reports as well as our other filings with the Securities and Exchange Commission under the titles Risk Factors or Cautionary Statements related to forward-looking statements.

For additional discussion of risk factors that could cause actual results to differ materially from management’s current expectations and those discussions regarding risk factors as well as the discussion of forward-looking statements in such sections are incorporated by reference in this call and are readily available on our Web site at www.sunshineheart.com.

During this call management will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of this non-GAAP financial measures to the comparable GAAP financial measures are included in the company’s earnings press release and supplemental information.

In addition a replay of the call is provided through the link on the investor relation section of the company’s website. With that said, I would now like to turn the call over to Dave Rosa, Sunshine Heart’s President and Chief Executive Officer. Please go ahead, sir..

Driveline Infections and Management. In May, Dr. William Abraham attended the Heart Rhythm Society meeting and presented clinical experience with the C-Pulse Extra Aortic Counterpulsation system in patients previously treated with Optimal Medical Therapy and CRT. And in June we represented at ASAIO, where Dr.

William Cohn presented Development and Chronic In-vivo testing of fully implantable extra-aortic counterpulsation device. In addition two papers were submitted to the AHA by Dr. Sanjeev Aggarwal and Dr. Eduardo Rame for presentation.

They are, Reduced Heart Failure Readmission Rates, Clinical Experience with the C-Pulse Extra-Aortic Counterpulsation System by Dr. Sanjeev Aggarwal. Arterial and Cardiac Hemodynamics in Advanced Heart Failure Patients Implanted with the C-Pulse Counterpulsation Device, Implications for Myocardial Recovery by Dr. Eduardo Rame.

Now, before turning the call over to our CFO and in light of numerous questions we’ve received, I’d like to briefly comment on St Jude’s potential acquisition of Thoratec for roughly $3.4 billion. In the event the merger consummates, this may impact us historic records [ph]to shareholders at Sunshine Heart with broad observation rights.

And if the transaction comes to provision, St Jude will carry over the rights of Thoratec under the terms of the observation rights agreement. Clearly and regardless of the outcome this M&A scenario speaks to the inherent value of game changing therapies to treat heart failure.

And C-Pulse certainly belongs in this category as it is one of the few assets remaining in this segment. I will now turn the call over to Claudia Drayton who will provide an update on the second quarter financials..

Thanks, Dave. Good morning, everyone. This morning we released our interim unaudited financial results for the second quarter of 2015. I will walk you through a few of the financial highlights. As we reported before, our revenue to date has been generated by sales of the C-Pulse System to hospitals and clinics in conjunction with our US clinical study.

We did not record any revenue during the second quarter of 2015 or 2014. In the second quarter of 2015, there were no enrollments into this study as we worked to resume enrolment after the FDA approval to resume this study in May 2015.

In the second quarter of 2014, the company did not record any revenue because the implants performed did not qualify for reimbursement. For the six months in June 30th 2015, our result includes revenue of 59,000 the same amount for the same period in 2014.

As we have stated before, we have obtained reimbursement for some, but not all of our implant procedures because some private insurance companies and certain governmental institutions have a non-coverage policy for experimental or investigational procedures.

Since all activities are conducted under clinical studies in both the United States and Europe, we record all cost associated with our devices directly to research and development expense as incurred. We expect to continue to do so until such time as we began producing devices for commercial sales in either Europe or the US.

Operating expenses on a GAAP bases in the second quarter of 2015 totaled 6.3 million compared to 6.7 million in the second quarter of 2014. Equity compensation expense included in operating expenses totaled 0.7 million for the second quarter of 2015 and 0.8 million for the comparable period in 2014.

Excluding equity compensation expense, non-GAAP operating expenses totaled 5.6 million and 5.9 million for the three months, end of June 30th 2015 and June 2014 respectively.

The decrease in operating expense here in the second quarter of 2015 is the result of decreased spending in the COUNTER HF clinical study as a result of the clinical study pause that was announced in March 2015.

We received FDA approval to resume enrolment in the study in May 2015, and are currently in the process of reactivating clinical sites and restarting patient enrolment in the study. Operating expenses on a GAAP bases for the six months end of June 30, 2015, were 13.4 million compared to 13.1 million in the same period of 2014.

Equity compensation expense included in operating expenses here in the first half of 2015, totaled 1.6 million compared to 1.5 million during the same period of 2014. Excluding equity compensation expense, non-GAAP operating expenses totaled 11.8 million and 11.6 million for the six months in the June 30th 2015 and 2014 respectively.

The slight increase over the prior year is primarily attributable to increased development expenses associated with our fully-implantable system offset by decreased clinical research expenses related to the pause of our US pivotal study as we mentioned before.

Any fluctuations in equity compensation expense is attributed to the timing and structure of equity awards granted during the period as well as the fluctuations in our stock price. We expect equity compensation expense to continue to fluctuate based upon these factors.

Net loss in the second quarter of 2015 was 6.4 million or $0.35 a share compared to 6.4 million or $0.38 per share in the second quarter of 2014. Excluding equity compensation expense, second quarter 2015 and 2014 net non-GAAP losses totaled 5.7 million or $0.31 per cents per share and 5.6 million or $0.33 per share respectively.

Net loss in the six month end of June 30, 2015 was 13.4 million or $0.75 per share compared to 12.7 million or $0.75 per share in the six month end of June 30, 2014.

Excluding equity compensation expense, net non-GAAP losses for the six months end of June 30, 2015 and 2014 totaled 11.9 million or $0.66 per share in 11.2 million or $0.67 per share respectively.

Cash used in operating activities totaled 12.8 million for the six months end of June 30, 2015 compared to 11.9 million for the same period of 2014 with the increase driven primarily by higher research and development expenses as well as interest expense on outstanding debt.

During the second quarter of 2015, we exercised the right to borrow on additional $2 million under our existing debt facility with Silicon Valley Bank. The second trans became available when the FDA granted us approval to conduct an interim analysis of our COUNTER HF study.

During the second quarter we made limited use of our existing at the market facility and sold approximately $200,000 of stock. During the first six months of 2015, we received net proceeds from financing activities of 15.1 million as follows.

7.1 million from the sale of common shares under our existing ATM facility and 8 million from borrowings under the $10 million debt facility with Silicon Valley Bank. We had $33.4 million in cash, cash equivalents on June 30, 2015 compared to 31.3 million at December 31, 2014.

Going forward for the remainder of 2015, we expect to see modest of the growing revenues in the US as we continue to grow patient enrolment into the trial. As we have previously stated, we have not modeled any revenue from implants in Europe in 2015.

We expect to submit for reimbursement in Germany again, but we have not modeled any reimbursement in 2016 or any future projects until this point.

We expect our quarterly operating expenses in cash burn will be at the same or higher levels to comparable periods last year as we continue to support our studies in the US and Europe and continue to invest in our fully implantable system.

Finally, during the remainder of 2015, we may selectively use our equity ATM facility when and if we need appropriate. I will now return the call back over to Dave..

Thanks Claudia. This concludes our prepared remarks. We can now commence the Q&A portion of the call..

[Operator Instructions] Our first question comes from the line of Josh Jennings with Cowen and Company. Your line is open. Please go ahead..

Hi good morning and nice to see the trial getting back up and running and enrolling. Dave, I just have a question for you first. In terms of the pipeline that you had developed, there was, they had been nicely built out prior to the stoppage of the enrolment pack in February of March I believe.

Can you just talk about where those patients are and are any of them potentially coming back in to and are eligible as potential targets at some of these centers?.

Yeah, short answer is yes some of them are coming back, but I was just recently on the road meeting with some sites that were waiting to be activated and the comments when I asked some questions about some of the patients that they had previously in the pipeline were everything from.

We had patient deaths to patients being implanted with LAVDs to yes patients are still in the midst. May be Molly can add a little bit more light to that, but Josh I’m sure little earlier when we put out the release I think it was July 23rd, so about 7 or 8 business days ago.

We had on the low 40s in the pipeline and then a few days later was in the low 50s and I think as of this morning it’s little over 60. So - and we’ve also - you may have noticed that we have been discussing 25 centers in the past now. We’re referring to 27 as we’re bringing on some new centers as well.

So things at least in terms of reactivation even as of today we may get another couple of sites up and running, but I think we should be in great shape by the end of this month.

Molly, you have any other comments about pipeline?.

Good morning, Josh this is Molly. No, I think Dave’s absolutely correct. We have a very growing - our pipeline is growing very rapidly. We are up to in mid-60s right now and as he pointed out there were a number of patients that were being evaluated prior to the pause and there still are a number of patients that are in the next.

So we fully expect as we get those centers activated here in the next week or so that we’ll be able to take advantage of those patients who’ve been waiting..

Great and just on the OPTIONS HF trial Dave, in Europe, another enrolment in the quarter.

Can you talk about how we should think about the pace of enrolment and what are some of the hurdles and then also when can we get some clinical progress updates on some of the patients that have the C-Pulse implant as we roll through the second half of this year..

Yeah, so we actually had a fair number of patients that represented themselves in the Q2 for the trial and I’ll let Molly may be go into a little bit more specifics about why a number of them dropped out.

But the other challenge that we had was - during the pause was there was reports coming back from our people in Europe that there was a company out there that had gone to our centers in Germany and communicated that the FDA was not going to allow us to resume enrolment.

So obviously those reports were not true, but I think it did cause some of the centers to sit and wait at least until they had received more information that the FDA was going to allow us to continue the trial.

So Molly, do you want to go into the patients that we have that fell out?.

Sure. As Dave mentioned we evaluated six patients for a potential implant in Q2. Four of the patients being filled for various reasons including the classification ascending aorta and one patient decompensated and will be reevaluated for implant in Q3. As Dave mentioned, we did also have some competitors spreading some misinformation.

So now that we have gotten a green light from FDA, we’ve been communicating very rapidly with our centers in Europe and they are now actively screening in. We currently have about five to six patients under the review for Q3..

And the second part of your question was when do we think that we will be able to communicate some data on the OPTIONS HF patients? Jim Georgakopoulos has been also collecting some additional data and I’ll pass this one over to him..

Good morning. It’s a real pleasure for me to join the call today. We just finished, we just completed a study in some of the OPTIONS HF patients. Based on initial data we have seen during programming sessions and then COUNTER HF patients and I can go on for that later if it’s needed.

But we just completed collecting data in five or six patients which entailed non-invasive pressure measurements. We had an [indiscernible] machine available so we were able to obtain flow measurements when the aortic group and from the [indiscernible] which was really our first with this type of device.

And combining those measurements we were able to fully characterize the effect of the device on the arterial system both on the [indiscernible] and the peripheral which I think is a novel observation. We plan on submitting that as a full manuscript in the fall in collaboration with the [indiscernible]..

So when do you think that might be able to be publicly communicated?.

Once we submit the manuscript I would assume probably one of the higher profile journals we should hear back a couple months after that or may be late November, mid-December..

So late second half Josh and we do plan on getting an update on just the data that we’ve been collecting the normal primary endpoints and targeting one of the upcoming sessions for a presentation..

OK my last question just on the fully implantable system, sounds like you are experiencing some nice progress in implants were first demand [ph].

I know it’s still early, but any other potential color around the ultimate regulatory path for the fully implantable system and had to be another full IDE trial or could there potentially be a supplemental PMA route? Thanks a lot..

Yeah. We met with the FDA about six months ago and the short answer is the purpose of the meeting was to get some guidance from them regarding what they were looking for from us in terms of pre-clinical data. So the meeting was very productive.

Obviously our goal is to not have to do a second advocacy study, but those discussions are really premature and rightly so until we are able to go back to the FDA and agree on some pre-clinical protocols as well as obviously gather some of the data that they have requested.

So may be six months from now we’ll have an update on where we are with that, but at this time, it’s still too early to be able to answer definitively what direction that will go..

Understood, thanks a lot..

Thank you..

Thank you. Our next question comes from the line of Thomas Gunderson with Piper Jaffray. Your line is open..

Hi good morning. It is actually [indiscernible] for Tom.

Following up on the previous question on the COUNTER HF and trial on the pipeline of patients in queue, are there many competing trials both drugs or devices that your hospitals for Class III or early Class IV patients that could interfere with enrolment in study?.

Good morning Kai [ph] this is Molly. To your question there are a few studies that are out there, but we really don’t believe that there are any trials out there that offer the characteristics that the C-Pulse system does. Though one I’ve spoken has a lot of physicians.

The bottom line is that they feel like this therapy has a chance to potentially help the progression of heart failure, improve patient’s quality of life and reduce hospitalization.

So although there are a few competing trials that we really feel like we are a therapy that can address patients who have CRTs [ph], we really feel like we fit with any other therapies or drugs that are out there. So we aren’t seeing that much competition for the centers that do have some completing trials.

We actually work with the coordinator to go through their screened fill [ph] logs and see if we can actually take that to our advantage and bring those patients into the C-Pulse studies..

And the other piece of this is many of the trials that - the trials Molly is referring to and ones that we’ve seen have been more in gene therapy space. So recently there were two technologies one [indiscernible], but that recently failed at some point.

So somebody studies these two company’s trials are over now which should open up more patients for us, but it is not necessarily one to one - a comparison between the type of trial, between the type of patients they’re looking for in the type that we are..

OK and do you anticipate your screened enroll changing material with the modified screening criteria and the new Physician Subjects Collection Committee compared to before?.

I hope not. I mean, we’ve only had one meeting, but if there is any indication from that meeting. No, I mean I seriously doubt that we should expect to see that number change with any significance. Our biggest challenge has been used to be getting patients in.

Now we get patients in and as I’ve said in previous quarters we just need to increase the percentage of patients who are willing to enroll in the trial and Molly’s team has been very busy working with sites as well as Dr. Abraham in cases to really work with some of the physicians in their presentation of the therapy to patients.

In the past, we might have a coordinator of one of the physicians speaking to the patient about it and our hit rates were one out of every five patients. So we really want to get one out of every three patients. And recently a few things that have been done is Dr.

Abraham has counseled some of the sites, some of the PIs at some of the centers as well as our encouragement of centers to use really a team approach so that it is not just the coordinator or not just the physician, it’s a group that is actually discussing the trial with the patient hopefully in an effort to be able to improve those hit rates..

Okay, thanks. And then lastly, have you received status four for a German reimbursement you’ll be able to submit again for status one, it sounds like that’s still a plan. Could you talk a bit about the game plan now and how you’ll approach the application this time around? Thank you..

Yeah it’s a good question. I’ve had a reimbursement and myself attended a European reimbursement meeting little over a month ago because things are changing in Europe with respect to reimbursement of devices. And in Germany in particular obviously you are interested to hear what some of the changes may be which really don’t start until 2016.

But there were a few reimbursement experts from Germany that we spoke to and in the end we actually wound up hiring one of those representatives this year. And in short we may employ a different strategy that’s what this person is working on for us right now. So I don’t have an answer as to if we’re going to go the NUB process of not.

It may wind up being that way but there may be another approach whereas we wouldn’t have to apply for an NUB - under the NUB process and potentially use an existing code, but more on that later once we have a more definitive proposal back from this consultant..

Thank you. Our next question comes from the line of Jason Mills with Canaccord. You line is open please go ahead..

Thanks Dave for taking the question. A lot of things have already been asked, but let me dive into a few things in a little bit more detail.

Obviously been a lot in the US trial that’s going on over the last year or so with - I remember on one of these calls we talked about [indiscernible] patients and trying to remove that hurdle and that has been done. You got the interim analysis now as part of the trial. You had the pause. You were able to overcome that.

I’m just wondering about the energy at your sites in their development of the referrals. You mentioned that you’re getting the referrals then you’re trying to improve your screen ratio.

I’m just wondering generally about the energy at your site and what do you think would drive an inflection point where we start to see a real surprising uptick month-to-month surprising base relative to the current generates [ph] in terms of enrolment.

So what would drive that and when do you think that will occur conservatively?.

So on the first part of the question, in terms of given this pause where our sites at [ph].

I personally wasn’t convinced that we should have an investigator meeting in May while we were on pause because I was just thinking that many of these sites given that we’re on pause, I mean their thought process is that the FDA may never allow this company no matter what they are saying to recommence enrolment and Molly convinced me I was wrong and she turned out to be right.

So having 25 centers there while our company’s in a clinical pause, our PI said to me they were actually shocked that the attendance and enthusiasm was as great as it was. And it is one of the reasons why we want to post some of the information from the sessions on the web because I think you’ll come away with the same conclusion.

May be since Molly is out there on a daily basis, may be you can provide a little bit more color on feedback from the sites, but again I think in the end Jason it all comes down to are they - did they all come back to be reactivated? The answer is yes. Do we have patients in the pipeline? The answer is yes.

But Molly, why don’t you provide a little bit more color?.

Good morning, Jason. Yeah, On Dave’s point I can [indiscernible] absolute certainty, we have a group of extremely enthusiastic sites including some of newly invited sites who are doing database searches to tell us how many patients they could have to enroll into the study.

So physicians are desperately looking for an answer to that, very challenging heart failure population and I think C-Pulse could be the answer they are looking for. So the better - summing that up there, there’s a great partnership between Sunshine Heart and their sites.

As I went out I’d been told on numerous occasions that the sites really appreciated the company’s transparency during the pause and that they believed the new protocol revisions will ensure we’re enrolling the intended population and that they are eager to get started..

And in terms of - this quarter obviously we won’t - by the end of the quarter we’ll have all the sites set up. We’ll have a great pipeline of patients. If we’re able to get, if we stay at the current one out of every five, we should be back just about where we were before we stopped or before we had to pause enrolment.

So I think thereafter we should start setting a nice increase in patients where you guys are thinking, this is really starting to take traction which I felt we had right prior to the pause.

So with the inclusion of some additional centers, I think at the end of Q1 we had 23 activated sites by the end of August barring anything unforeseen we’ll have 27. So I think there is - and the newer sites that we’re bringing on.

I know Molly is even more optimistic about their ability to enroll patients and as I may have problem talking to these guys, they all feel that they’ve got a nice population of patients. So you get 100 patients and you are doing one out of every five you wind up with 20.

Do one out of every 3 and obviously things really start to roll and I think we’ll have an increasing pipeline and hopefully with some of the changes that we’ve made I really expect to see those numbers increased as well for enrollments..

Thank you for that. That’s great color, Dave and Molly, thank you. And just as we think about the longer term, you’ve answered some of the questions on the full implantable which I had will track that. That’s exciting. But what I found interesting is well albeit may be less a [indiscernible] investors’ minds was the pre-clinical work that Dr.

Slaughter did at the Jewish Hospital in Louisville.

I’m wondering if you could give us a quick tutorial on what you’re seeing, what he’s seeing with respect to C-Pulse’s treatment of pulmonary hypertension which is a huge market opportunity and I’m just wondering so to how you see that early playing out in terms of studying C-Pulse for that very [indiscernible]..

Yeah, so let me start off and I’ll pass it over to Jim to get into more specifics. In short, the testing is starting this quarter and I believe Jim it’s this month.

Isn’t it?.

Yes, it’s first week of September..

First week in September, so in about a month they will start that. There’s been a fair amount of published information on manipulation of the pulmonary artery and the effect that it may have on pulmonary hypertension.

We filed IP in the space to really protect the concept, but what we finalized was the protocol, the plan for pre-clinical testing with Dr. Slaughter and Jim, can go into little bit more specifics about what we’re going to be evaluating..

Hi good morning, Jason..

Good morning..

We went through over the last couple of months putting a fairly detailed protocol together.

Part of the, I wouldn’t say delay, but doing large animal [ph] studies in pulmonary hypertension because some of these studies are going to be chronic studies and animal ethics committees right now are very hesitant and scrutinize these protocols very carefully as you know these - the pulmonary hypertension models are rather extreme.

But the protocol involves basically three stages. One was just putting our balloon on the pulmonary artery itself which as you may know in pulmonary hypertension. This is where a lot of the load on the right ventricle is. So being able to just kind of pause it offering [ph] and unloading the fact may have benefits there.

The other one is and one that may not be really appreciated is, when you cannot pause it on the pulmonary artery, it’ll also affect pressures and flows downstream of there, which is basically the left atrium and the left ventricle. And part of the problem in pulmonary hypertension patients is that the left ventricle doesn’t get enough blood.

So it is not only unloading, but we’re also pushing blood forward into the left ventricle. And the third aspect is actually looking at what’s happening to coronary profusion of the right ventricle as well, while we’re kind of pausing it and again very similar to what we do on the left side.

But a lot of the issues in pulmonary hypertension patients is the underlying ischemia and the extra load that is placed on the on the right ventricle..

That’s interesting and Dave just following up on that has - could - or has the C-Pulse been used in conjunction with a very - with an LVAD and a very sick left ventricle given what you’re finding it does to the right ventricle, talk about the potential - you’ve talked about the potential obviously for a sustainable device for Class III ambulatory, but as a combo device to treat relatively high incidents of right heart failure in LVAD patients..

Yes, Jim..

Yes that’s obviously - a key indication is doing a combo device. As you know many patients on LVAD developed right heart failure or not even right heart failure, but RV dysfunction to the point that makes the LVAD not as efficient as it could be.

And of course as we are thinking down the road here on the pipeline if we do have a fully implantable system, a heart failure [indiscernible] which a lot of those patients suffer from pulmonary hypertension problems may become an option for us as well..

Fantastic, I’ll get back. Thanks..

Thank you. Our next question comes from the line of Steven Lichtman with Oppenheimer. Your line is open. Please go ahead..

Thank you. Good morning. Dave you mentioned Germany.

When do you anticipate getting some more visibility on the pathway there and any other countries that we could look for perhaps coming online in the foreseeable future?.

Steve, we are expecting in the next two to three weeks to get the recommendation back from the consultant that we’ve hired. So that’s pretty much the timeline there. And right now we’re really focused on Germany.

That’s where really the bulk of all of our cases are being done and that’s really where we’ve got the most support and that’s really where we feel the greatest opportunity is for our technology in Europe. So we’ll start there. We’ll establish there and most of our centers are there and then once we get traction there, we’ll start to expand from there.

But I would assume that in the next few weeks, we’ll have an answer back as to the path we are going to take..

Got it.

Okay, great and then relative to the fully implantable program, obviously the biggest component is TET, but I was wondering if you could provide some color on the other enhancements you are looking to make in terms of the wearable components in the smaller implant and some of the potential benefits to patients of those?.

Yeah, obviously, the biggest benefit that’s going to be the elimination of the driveline, I mean, to be able to provide - to be able to having an assist device that doesn’t require any breach of the scan, I mean, you are able to eliminate the whole issue of exit side infections, which is a big issue from a quality of life standpoint.

And we strongly believe that with a fully implantable system, even patient willingness or patient interest in the therapy - I believe and I’ve heard this in the field which skyrockets. So I think it eliminates the biggest hurdle for us.

As for the wearable’s concept, we are not there in terms of developing those, so, but there’s been a number of discussions about putting the external sensor into an article of clothing versus just having tape it to the skin.

We’re obviously in a position where we’re trying to get this into our first human experiences and I think once we demonstrate that this works the way we think it will work, then I think we can focus more of our efforts on more of the enhancements or preparations, but by just being able to eliminate that external line from a quality of life standpoint, is going to be probably the biggest enhancement that anyone with a circulatory assist device could offer..

Sure. And then just lastly, obviously you mentioned you are targeting first-in-human third quarter of next year.

I apologize if I missed this, but we get any updates on animal results over the next 12 months or so?.

Yes, you will get them this year. We’re starting - what we said was we are going to be starting chronic animal studies with the full system. It’s either going to be late third quarter, early fourth quarter, but there are other 90-day studies. So we will be providing updates as we get additional data from those evaluations..

Got it, great..

But the good news is - the good news is in talking to our partners that are working with us in the development of this, we feel very confident that this is going to happen in the timeframe that we expect it to happen and then it’s going to have a major impact once we are able to get this out into the field..

Great, thanks, Dave..

Sure..

Thank you. Our next question comes from the line of Suraj Kalia from Northland Securities. Your line is open. Please go ahead..

Good morning, everyone. So, Dave and Molly, first question for you all, the mid 60s amount of patients in the funnel, Dave, I heard one five, one in three in terms of enrollment.

I guess, a lot of questions have been asked on the call, so what I’m trying to understand is at this stage of the game, what moves the needle from one and five to one and three to one and two and how does this stack up to other heart failure device enrollment versus my imagination at this stage of the game?.

Yeah, so keep in mind that you are talking - Molly said today there is mid 60s. You are talking 15 centers out of 27 centers that are activated.

So while we had encouraged the number of these centers to screen patients, so that they would obviously have a pipeline already in place, not all of them are willing to do that, I mean they’ve get other studies that they are managing. So those members I expect to go as we get more and more sites on board.

My opinion in discussions with Bill Abraham and Dr. Camacho, it is being able to improve the hit rate for patients willing to participate in the study. And the - in the beginning it was all about filling the funnel and creating awareness and I feel that at least at the site levels, we’ve done that.

Now it’s a question of being able to get these patients to agree to be willing to participate in the study and we don’t present the therapy to the patients. It’s the clinicians and the physicians that do that.

And so as it comes down to the times, we have sites that have - we have one center particular that’s had I think 11 of 13 patients that they’ve enrolled and other sites. Well, another center that was now zero out of 10, zero out of 12, so what’s the difference? It’s the same therapy. It’s the same information that both sites have.

It’s the presentation of the therapy. And that’s really what Dr. Abraham, we’ve identified some of those sites that have struggled to get patients who agree. Dr. Abraham has talked to some of the PIs of the centers. We have seen some improvements. Time will tell us if that’s going to be a - they are going to be consistent.

But, excuse me, but that’s what’s going to move the needle, ensuring that these physicians are presenting it in the manner that is attractive enough for a patient to want to move forward. So that’s the short answer with respect to that.

Anything you want to add, Molly?.

I think the only - the two points I would add to it is for these patients who have been under the care of a heart failure physician or nurse practitioner now for a number of years, there’s a trust that’s built with that provider and we have to realize that with C-Pulse system, this is an [indiscernible] study.

We really worked hard to say after you talk to them about being a participant in the C-Pulse study through stay with them and to answer all of their questions as they go through the consent process versus turning that over to a research coordinator whom the patient has never seen before and we see like making that a team of folks to consent where it is, the provider who is managing the patient’s heart failure along with the clinical coordinator has improved our rate of consents.

The other big thing, I think, that’s helped is we worked with, what we call, a patient ambassador.

So with the patients who had a very good experience in our feasibility trial, the patient was weaned off therapy, but he knows what it’s like to live with the device and often patients have the question like how would it be with the drive line to add questions about the system and we’ve been able to work with the center to have a patient to patient conversation that’s moderated by the PIs of those studies.

So that’s been very efficient as well..

And then, Suraj, how is this compared with other trials? I don’t think you can compare it to gene therapy trials where they are injecting genes into the coronaries, but the only other recent study that was attempted was Thoratec and obviously Thoratec is no longer conducting the revival trial in its current form.

They went through a number of patients that they screened and tried to enroll. I think in the end they said they actually had one patient that was part of the study. So obviously the trial was halted and they started before us. So what we are talking about here is market development. We don’t have a cooler rigid [ph] for an existing market.

We are creating a market in a space that doesn’t really have any good solutions. So that’s the only other study that I can really speak to and I don’t think you can compare it to a diagnostic device like the CardioMEMS device that St Jude has.

So there’s not a lot of comparables in here and the only one was - obviously is no longer conducting that study..

Fair enough. Dave, not sure if I missed any commentary you made, what is the current status of the C-Pulse patients in Europe the four or five patients that will wind off.

Can you give us some color on their hemodynamic, their cardiac output or their functional status and whether they are still on/off, any color would be great?.

Yeah, so, Suraj, on the OPTIONS patients, there is only one that we refer to, we are not allowing - in OPTIONS we’re in the pivotal study, the weaning, but we are not allowing weaning of patients, because obviously that could impact our primary endpoint of re-hospitalization through the worsening heart failure.

And so the one patient that was weaned in the OPTIONS was a gentleman that had had colon cancer, throat cancer, he was undergoing chemo radiation and we requested that the device be turned off because we weren’t sure what if any impact it would have on the balloon or any of the implantables.

And I know that the gentleman was pretty ill with respect to his cancer, but Molly do you know where he is at this point?.

Yeah, he’s still terminal at this point, but he’s actually feeling really well in the patient that actually asked to keep the device on, because he was feeling so good with it and so it was really a decision that his provider had made..

Okay..

Dave, I was asking about the feasibility study, not the OPTIONS that you have, are those patients still off or any color would be great..

Yeah, so none of the - we don’t evaluate Hemodynamics. I think it’s after the first year. It’s just a follow up and in short none of the patients have had to go back on therapy, but as far as any other Hemodynamic information or objective, we do not collect that or we did not collect that after 12 months..

Fair enough. One final question Dave, for you or for Jim and forgive me if this sounds pedantic for this call, so I’d be more than happy to take it offline.

Dave, it seems like you all are building a body of evidence again to either quantify the mechanism of action or eventually tie it into functional outcomes, clinical outcomes, however you want to do it. And I’m very curious about this whole effort for measuring activity of the sympathetic nervous system, what’s going in the peripheral activity.

I guess can you give us some color on what you all are seeing with Intra-Aortic Counterpulsation, how you all are tying it to Extra-Aortic what you guys are doing. What’s the current body of evidence and what leads you all to believe, we need to go down this road, invest more because this will potentially help us get to this point.

Thank you for taking my questions..

Hi, Suraj. Yeah, that was the - it came about from the initial programming of the patient here in COUNTER HF and we took some devices out to record our noninvasive pulse wave forms. What we observed was, we observed the typical unloading effect as [indiscernible] is associated with Counterpulsation.

But then what was really striking to us was that very late during ejection, when we looked at the wave form that load seemed to be reduced as well.

So this was one that the balloon had fully expanded, there was still something going on in the peripheral arterial system that believe if some - due to activation of some type of neural reflex and the obvious target for us obviously was that our high pressure [indiscernible] receptors on the ascending aorta and the aortic arch exactly what we’re putting in the balloon.

So we have studies now, this is what drove the OPTION study in those patients to fully characterize this peripheral effect, but we’re also now partnering with sites, many physicians when they hear this are obviously interested in starting their own studies at the centers where they’re actually going to measure sympathetic nerve traffic through muscle sympathetic nerve activity recordings, which involves putting electrodes and peripheral nerves.

And the unique advantage of the device is we can turn it on and off and do direct comparisons immediately.

There have been - historically there have been a couple of reports with the Intra-Aortic Balloon Pump, where if it’s placed high enough - up in the order, then people have described this at a time that wasn’t bare [ph] receptors, but they called it some type of neural reflex and they tried to block it with data blockers, which they pretty much did for the most part.

So we’re very excited that there might be this other component rather than just a mechanical and hemodynamic effect as you know there’s a lot of effort in developing devices, a lot of money from the NIH now is being put into neuromodulation devices and I think this really provides a chronic basis for any therapy in heart failure.

Many of the medications now basically target some component of the sympathetic nervous system..

And I don’t think it’s been attempted with injury or a [indiscernible] because in that they’re not outside the aorta the ascending aorta anyway..

Correct..

Thank you..

Thank you. [Operator Instructions] Our next question comes from the line of Jan Wald with Benchmark Company. Your line is now open..

Thank you. Good morning everyone and congratulations on the progress. Really most of my questions Dave, it’s not - almost all of my questions have been asked, but maybe going back, just a couple of I hope quick ones.

Going back to the enrollment rate the 1-5 to the 1-3, what are the options that these patients are considering when they’re considering going on - going into your trial or having some other therapeutic option.

What’s driving them to perhaps not go into the trial versus doing something else?.

Yeah. Thanks for the question Jan. I mean in short it’s the - usually the decision that the patient makes is - or choice they have is to do nothing, so wait until they get sick or require an LVAD or to move forward with our device.

And if you go back and you take a poll of cardiac surgeons to a greater extent, maybe to a lesser extent, heart failure cardiologist, the themes that I’ve heard from day one is that patients don’t think they need a LVAD and there was a publication a few years ago out of INTERMACS that said - I don’t know what the numbers are today, but at least a few years ago, report show that 80% of all the patients that received an LVAD were done on an emergent basis.

So that told me was these patients were coming in or electively are choosing to have an LVAD, they were definitely sick. They were at a position where they had to make a decision and they were opting to do that.

And I still hear those same stories today that patients don’t think that they’ve to be sick enough to require a device like that and it’s because the medical community probably hasn’t done a good enough job of explaining the patients that heart failure is progressive and the high mortality rates associated with it.

The comments that you hear are gosh from patients, they all sound just getting tired, I can’t do as much, I’m getting older maybe that’s normal. So it’s the same issue that I believe based on feedback that LVADs have.

So it’s not like you’re opting to pick another therapy or that they think it’s more attractive to wind up getting an LVAD, but what’s the lesson they sustained to do, it’s to do nothing. It’s to continue to take medications because at least you know where you are..

And to Dave’s point - this is Molly. We have experienced that where patients felt like they didn’t want to do anything, they declined the study, but we continued to follow them and as their disease progressed, they’ve actually enrolled into the study.

So those patients that may decline now, we’re going to keep an eye on and potentially bring back for reevaluation and speak to them again about participating..

Thank you, that was very helpful. I may have missed this, but it seems like you’re going to have your centers on the COUNTER HF trials, you’re going to have your centers up by the end of August.

Do you have any sense of what the end point is going to be for enrollment and for when you might be able to submit any kind of update on that?.

I’m sorry.

I wasn’t sure I understood the question, are you talking about - what specifically were you referring to?.

I’m sorry.

The COUNTER - your pivotal trial in the US, do you have a sense now for when you might be able to complete that study and submit to the FDA?.

Yeah, so really the next big data point for us is the interim analysis which we think that we’ll have enough patients for the interim analysis late next year. We previously communicated that by end of 2016 we would expect having enrolled enough patients to do that.

Now, there is - we want to be conservative with this because this trial - getting Class III heart failure patients to enroll has taken us longer than what our original schedules had shown.

That being said, we see a lot of the obstacles are behind us and the piece moving forward is to really get these patients, the pipeline of patients we have to agree to do this. As we add more centers, those numbers could change, it could get better, but I’m really encouraged, I know Molly is, I know her team is based on what we’re seeing.

So - but that’s more or less what we’ve modeled into our plan that indicates your inflexion point..

Okay and one last quick one I hope.

In terms of the fully implantable device, what steps do you have to go through now to get to the first domain [ph] is the design frozen or are you just starting manufacturing kinds of runs, what’s happening? What do you need to?.

Yeah, the design is not frozen. We have the company, we’re not manufacturing the technology, so our vendors are doing that and really next steps are to put it in animals to evaluate over 90 day periods. So I don’t know if today they’re manufacturing those pumps, but I’m assuming that they will be in the near term.

And once we’re able to keep them in patients for that period of time - not patients sorry, animals for that period of time, we’ll have a much better idea of performance and what if any changes that need to be made from a design standpoint.

But at this point we’re pretty not [ph] encouraged with what we’re seeing, from what we’ve done already and expect that we’ll be tweeting things between now and the first demand..

Thank you very much and congratulations again on the progress..

Thanks Jan..

Thank you. I’m showing now further questions. I would now like to turn the call back to Dave Rosa for any further remarks..

I just want to thank everyone for their participation, their questions on the call today and look forward to providing more updates as appropriate..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day..