Good day and welcome to the Surmodics Fourth Quarter Fiscal 2020 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Tim Arens, Senior Vice President of Finance and Chief Financial Officer. Please go ahead, sir..

Thank you, Corey. Good afternoon and welcome to Surmodics fiscal 2020 fourth quarter earnings call. Before we begin, I would like to remind you that during this call we will make forward-looking statements.

These forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding Surmodics’ future financial and operating results or other statements that are not historical facts.

Please be advised that actual results could differ materially from those stated or implied by our forward-looking statements, resulting from certain risks and uncertainties, including those described in our SEC filings.

Surmodics disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise. We’ll also refer to non-GAAP measures, because we believe they provide useful information for our investors. Today’s news release contains reconciliation tables to GAAP results.

This conference call is being webcast and is accessible through the Investor Relations section of the Surmodics website, where the audio recording of the webcast will also be archived for future reference. A press release disclosing our quarterly results was issued this afternoon and is available on our website at surmodics.com.

I will now turn the call over to Gary Maharaj.

Gary?.

first, to continue building traction with SurVeil, marching towards PMA approval, beginning with our final submission to the FDA; second, to accelerate the advancement of our robust product pipeline through product development, regulatory clearances, clinical evaluation and feedback; third, to optimize cash flow from our In Vitro Diagnostics and Medical Device coatings offerings to support our strategic growth initiatives.

I’ll start with our first initiative. Our goal to obtain FDA approval of SurVeil. We are focusing our efforts on completing our fourth and final PMA module submission to the FDA in Q2 to fulfill the PMA requirements for approval of SurVeil. This module incorporates the primary endpoint clinical report and other product-related technical data.

To that end, we have successfully conducted 12-month follow-up visits with more than 70% of the patients in the pivotal TRANSCEND trial. We have also been engaged in active dialogue with the FDA to address any missing data that we encountered due to the impact of COVID-19 on this process.

We have successfully gained alignment with the FDA on the best course of action to take with this subset of patients and have made the necessary adjustments to the protocols. In addition, we have been in discussions with FDA on the amount of long-term vital status data that will be needed for the PMA.

Vital status information is whether the subject is alive, deceased or unknown.

These data are an emerging requirement for new PMAs of vascular devices that use Paclitaxel, in order to ascertain long-term safety and appear to be a direct result of the ongoing discussion surrounding Paclitaxel-containing vascular devices, which is active drug in the SurVeil drug-coated balloon.

We have been encouraged by our discussions with the FDA on this, and expect to have clarity on additional requirements like Q2. There are substantial financial outcomes from these efforts that are further clarified. As we have previously acknowledged their $45 million of remaining milestones under our commercialization agreement with Abbott.

The first component of this is a $15 million milestone, based on the successful completion of the clinical study report of the TRANSCEND pivotal trial, demonstrating safety and clinical non-inferiority with the control device, while we will not know the answer to these questions until the clinical and statistical analysis of data has been completed, which we expect in Q2.

This milestone will be an important achievement for us on the path to premarket approval by the FDA. The remaining $30 million would be achieved upon approval of SurVeil by the FDA and the PMA. Our goal is to scale FDA approval as early as possible.

However, we are unable to predict the precise timing, because of the need for vital status data as I previously discussed. Switching to our second objective, expanding our product portfolio. Our product innovations aim to improve patient outcomes and quality of life, while reducing healthcare costs.

As a reminder, we have 3 main platforms within our pipeline. The first is vascular drug delivery via drug coated balloon, underscore by SurVeil as we just discussed, as well as Avess our AV Fistula, DCB and Sundance are below-the-knee disease.

The second platform is our thrombectomy platform focused on removing thrombus in multiple vascular beds, including arterial and venous and pulmonary embolism. The third is in the treatment of vascular disease via radial artery access, which has the potential to redefine patient care.

Let’s start with our DCB programs and turn to Sundance, our sirolimus coated balloon for below-the-knee disease. We continue to make progress to patient enrollment in our first inhuman trial SWING, but more than one-third of the patients already enrolled. We are targeting completion of enrollment by the second half of fiscal 2021.

Sundance has the potential to improve the treatment of arterial blockage below-the-knee, which can lead to amputation and death. With respect to the Avess drug coated balloon as we previously announced, we successfully completed data collection in our first-in-human study.

As a recap, these results provided vital safety data on Avess and directional data [on cifactiness] [ph]. Importantly, FREEDOM revascular had some revascularization of 6 months was greater than 90%. These results will be presented as part of the presentation by 1 of our principal investigators, Dr. Andrew Holden at the VIVA meeting later this week.

We are quite pleased that first-in-human trial results and we’ll be discussing more specific plans for Avess in subsequent earnings call. Next, tuning our radial platform.

With FDA clearances obtained for our Sublime Radial guide sheath, and 0.014" radial balloon catheter, our focus continues to be on getting these products into clinical use in Q2 with our field team of clinical specialists.

Our team is also continuing to make progress and filing the 510(k) submission, FDA clearance for 0.018" peripheral balloon catheter to treat more proximal vessels behind and above the knee via radial access in Q2. As a reminder, both of these balloon catheters will help patients who are suffering from peripheral artery disease in the low vasculature.

We have several other products in the pipeline, and we will share as we complete the concept development of these. Moving to our non-drug delivery pipeline and Pounce. As we discussed earlier, we successfully achieved 510(k) clearance for this device.

Our teams continue to work diligently on the validations and manufacturing builds to start evaluations of this system in the clinic to remove clots in the peripheral arteries.

Given the critical nature of this product and the fairness of the validations we require, we expect product for clinical use to be available to what’s the end of the fiscal year. We are also scoping the programs for the next targeted vascular bed for thrombus removal, including deep vein thrombosis and pulmonary embolism.

Finally, tuning to our In Vitro Diagnostics and Medical Device businesses. Our IVD business is expected to continue to outperform the immunoassay market growth of 3%, while generating excellent operating margins. We are pleased to support several customer related efforts for COVID-19 research and serology tests with our chemical components.

While our Medical Device coatings revenue continues to face headwinds this year, due to the expiration of our fourth generation hydrophilic coating patents. We believe that despite uncertainty related to the pandemic, the strength of our coating technologies and diversified customer base position as well to operate through these unpredictable times.

While fiscal 2021 has several facets of external uncertainty, including COVID-19, and worldwide economic and geopolitical stresses, our goals are clear. And we have the talent, the capabilities and the financial resources to successfully execute our fiscal 2021 objectives.

From a strategic point of view, fiscal 2021, ultimately, is about setting the stage for revenue growth from our product investments, development, clinical research, manufacturing, and commercial readiness. I’m excited about this year, and our ongoing commitment to the long-term strategic transformation of Surmodics.

I believe that these are the right moves, and that the success derived from them will position Surmodics for strong long-term growth and shareholder value creation.

I’ll now turn the call over to Tim to provide more details on our fourth quarter fiscal 2020 results, including some perspectives that COVID-19 is having on our company’s results, as well as some thoughts on how we are thinking about certain fiscal 2021 revenue impacts and operating expenses.

Tim?.

Thank you, Gary. During today’s call, I will provide an overview of our fourth quarter operating performance.

While we are not providing fiscal 2021 financial guidance at this time, I will provide comments and how we are thinking about operating expenses and the revenue impacts associated with our fourth generation hydrophilic coating patent expiration and our SurVeil drug coated balloon Distribution and Development Agreement with Abbott Vascular.

Fourth quarter revenue was $22.5 million as compared with $30.8 million in the prior year. Both business segments saw year-over-year declined in the quarter as a several headwinds, including the prior year impact of the achievement of a SurVeil milestone, the expiration of our gen-4 coating patents and COVID-19.

I’ll start with the impacts of COVID-19 to our business during the fourth quarter. First, our fourth quarter Medical Device coating royalties include approximately 2 million associated with a true up from our third quarter royalty revenue, as the actual royalties reported by our customers during the April through June period exceeded our estimate.

As a reminder, U.S. GAAP requires that we recognize quarterly royalty revenue based upon an estimate of our quarter – our customers’ sales during the period. Prior to the pandemic, these estimates have been relatively predictable.

Actual royalty payments received from our customers Q3 sales suggest that the COVID impact in our Q3 royalty revenue was approximately 10% below pre-COVID levels, which was much more favorable than the 30% decline that we had estimated, resulting in a favorable true up to our fourth quarter royalty revenue.

Partially offsetting the royalty revenue true up is an estimated 10% decline below pre-COVID levels or approximately $500,000 in royalty revenue associated with procedure declines due to the pandemic in Q4.

Second, we continue to see an impact to our Medical Device products and R&D revenue, with demand reduced for balloon catheters and coating service offerings based in part on customers that are managing their inventory levels in response to reduce procedure volume.

Third, our In Vitro Diagnostics business saw revenue declined from the prior year period by approximately $600,000. Lower sales of our distributed antigen products accounted for the majority of the decline.

Although, we have also seen declines in our chemical component offerings, as customers are working through inventory levels that have been previously increased to minimize potential supply chain disruptions due to COVID.

Since the COVID-19 pandemic began, we have experienced a modest increase in sales of our chemical components and microarray DNA slides to support COVID-19 related research and testing. Today, we have several customers utilizing our enabling technologies, and the recently commercialized serology tests.

Although, COVID continues to have a net unfavorable impact on our business, we’ve been pleased to see the resilience of both their medical device and In Vitro Diagnostics business during a highly uncertain year.

Moving to financial results for the quarter, revenue for the fourth quarter of fiscal 2020 declined 27% to $22.5 million as compared with $30.8 million in the fourth quarter of 2019.

Let me remind you that last year’s fourth quarter benefited from the achievement of the $10 million, SurVeil TRANSCEND’s study enrollment completion milestone, of which $5.1 million was recognized in the year-ago period.

Looking at our 2 business units, Medical Device revenue declined 31% to $17.2 million and In Vitro Diagnostics revenue declined 10% to $5.4 million in the fourth quarter, as compared with the prior year quarter.

Our fourth quarter royalty and license fee revenue totaled $9.9 million, down $6.9 million or 41% from the prior year period, primarily as a result of revenue recognized in the fourth quarter of fiscal 2019 from the achievement of the SurVeil full enrollment milestone.

Our SurVeil Distribution and Development Agreement with Abbott Vascular generated revenue of $1.6 million in the fourth quarter, a decline of $6 million compared to the year ago period. Royalty revenue declined to $8.3 million in the fourth quarter, as compared with $9.2 million in the prior year quarter.

The expiration of our fourth generation hydrophilic coating patents created and expected headwind of approximately $2 million compared to the prior year quarter. For the full year, the impact of this patent expiration was approximately $5.5 million, which was in line with expectations.

In addition to the fourth generation hydrophilic coating patent expiration, fourth quarter revenue was impacted by lower procedure volumes as a result of COVID. As I discussed earlier, this was more than offset by the favorable impact of the fourth quarter royalty revenue from stronger than estimated third quarter reported royalties by customers.

Product revenue of $10.6 million in the fourth quarter was essentially flat when compared to prior year revenue. And our Medical Device business, product revenue was up 8% to $5.4 million with growth in legacy Ireland Medical Device revenue offsetting a modest decline in reagent sales. In Vitro Diagnostics product revenue declined 9% to $5.2 million.

Continued growth in our microarray DNA slide products was more than offset by decline in antigen product sales due to order timing, as well as overall softness in orders as customers are working off recent inventory builds related to COVID. R&D services revenue of $2.1 million was down $1.2 million as compared with the prior year period.

Our coating services customers have reduced demand in response to the pandemic and the timing of customer R&D projects has also been impacted.

The Medical Device business reported an operating loss of $1.9 million in the fourth quarter compared to operating income of $3.7 million in the year-ago period, which benefited from the previously mentioned revenue recognized on the fiscal 2019 SurVeil fall enrollment milestone. Medical Device operating results were also impacted by COVID-19.

And the gen-4 patent expiration as royalty and R&D revenue declined compared to the prior-year period. Partially offsetting the decline in revenue was a $2.4 million decline in operating costs and expenses, which included the effect of $890,000 onetime charge to R&D in the prior year from acquired in process research and development.

R&D revenue of $5.4 million in the fourth quarter was down $600,000 or 10% compared to the prior-year quarter.

As mentioned previously, we saw continued demand for our microarray DNA slide products, offset by a decline in [antigen] [ph] product sales and softness in orders from certain customers who are managing inventory levels that had been built as a response to the pandemic.

IVD operating margins remain relatively stable at 46% as compared with 47% in the prior year quarter. Product gross margins were down in the quarter at 63% as compared with 66% in the prior year. Product gross margins reflect negative impacts from both product mix, and leverage and volume from the COVID-related decline in Medical Device reagent sales.

R&D expense, including costs of clinical and regulatory activities was 57% of revenue for the fourth quarter, as compared with 47% in the year-ago period. R&D expense was $12.8 million for the fourth quarter, down 12% or $1.7 million as compared with a year ago period.

In the fourth quarter, TRANSCEND clinical study costs declined, partially offset by increased product development investments and costs associated with manufacturing readiness activities for a Sublime Radial access platform.

SG&A expense in the fourth quarter of fiscal 2020 was $7.3 million or 32% of revenue, compared to 23% of revenue in the prior-year period. SG&A expenses were essentially flat with the year-ago period.

Now, turning to income taxes, we recorded income tax expense of $870,000 in the fourth quarter, as compared with income tax expense of $560,000 in the prior-year period. Both periods reflect the impact of taxable income for the full year in the U.S., non-tax benefited amortization and operating losses in Ireland.

On the GAAP basis, diluted loss per share was $0.22 in the fourth quarter, as compared with earnings of $0.26 in the prior-year quarter. On the non-GAAP basis, diluted EPS was a loss of $0.18 in the fourth quarter versus earnings of $0.37 in the prior-year quarter. Moving to the balance sheet, we continue to have strong cash position and no debt.

In the fourth quarter we began with $60.6 million of cash and short-term investments and generated $1.3 million of cash from operating activities. During the quarter we paid $1 million for capital expenditures. As of September 30, 2020, we had cash and short-term investments totaling $61.1 million.

Our current cash and investment balances provide adequate capacity to support our strategic growth initiatives. Turning now to fiscal 2021, as noted in our press release issued this afternoon, due to the continued uncertainty created by the pandemic, we’re not currently providing fiscal 2021 guidance.

However, I will provide some comments related to our royalty and license fee revenue as well as our operating expenses that may be beneficial to understanding our operating performance.

We have the potential to receive a $15 million milestone payment during fiscal 2021 related to the successful achievement of the TRANSCEND written clinical report milestone, under the terms of our SurVeil distribution and development agreement with Abbott Vascular.

The potential revenue associated with this milestone could range between $11.3 million and $11.6 million. Furthermore, full year fiscal 2021 license fee and milestone revenue associated with the SurVeil agreement, including the written clinical report milestone could range between $16 million and $17 million.

During fiscal 2020, we generated $28.6 million in royalty revenue. We estimate that the expiration of our fourth generation hydrophilic coating patents reduced our fiscal 2020 royalty revenue by approximately $5.5 million compared to fiscal 2019.

In addition, we estimate that COVID further reduced our fiscal 2020 royalty revenue by approximately $2 million. During fiscal 2021, we estimate that the expiration of our fourth generation hydrophilic coating patents will further reduce our royalty revenue by approximately $3 million.

We see no further gen-4 patent expiration had went beyond fiscal 2021.

As Gary mentioned, in fiscal 2021, we expect to complete our submission to the FDA for the approval of our SurVeil drug-coated – complete enrollment in our Sundance below-the-knee sirolimus drug-coated balloon first in-human trial, and initiate clinical evaluations for our recently cleared sublime radio access in Ponce Thrombus Retrieval System products.

As a result, we expect fiscal 2021 R&D expense to be similar to our Q3 and Q4 fiscal 2020 levels were approximately $13 million per quarter.

To continue to support our strategy, we expect to grow SG&A in the low-double-digits during fiscal 2021 to increase the talent and capabilities necessary to support product development activities, and accelerate the development and management of our existing product platforms, including receiving physician feedback and performing clinical evaluations.

Operator, this concludes our prepared remarks. We would now like to open the call to questions..

Thank you. [Operator Instructions] And our first question is from Brooks O’Neil with Lake Street Capital Markets..

Good afternoon, guys. I have a few questions. I guess the first one, my sense is BSX recently got approval for paclitaxel coated balloon catheter for peripheral arteries.

Can you give us any feel for how you believe SurVeil might compare with the characteristics of their new product?.

I can’t speculate too much about it. But we do know the technology fairly well, even prior to the acquisition of this technology by Boston Scientific. I think the – from the outside looking in, what’s interesting is that the data was presented a year ago. I think November 5 of the VIVA meeting, their 12 month data from the pivotal study.

And so, almost to the day one a year later they would secure their approval. So we are quite happy to see them get the approval, because the paclitaxel containing device is going through the FDA now. Clearly, there are some additional requirements. So it bodes well for us that they secured it.

Although, it did take – and again, I can’t speculate what it was, but this appears to take close to a year from the time they presented their 12-month data publicly. On the other hand, I would say the data looks in range with the drug-coated balloons impact.

I know there’s a physician or site-sponsored, investigator-sponsored study head to head with Medtronic. So it clearly does look in line with what we’ve seen. I would say, what we look at is not necessarily the Kaplan-Meier 365. We try to look at when all the patients have been assessed for binary patency.

365, really any patient who has not come in for the duplex is counted as patent. And so, you really have to wait for all of them. And I think Boston has reported that data as well. And that’s the data we look at..

Okay.

Given what you just said about the BSX device, would you expect it to take a year to get through FDA for SurVeil?.

It’s hard – we, of course, we would like it as quickly as possible, because it’s a commercialization revenue. That’s a critical thought. But as I said, Brooks, the FDA has informed us that the paclitaxel issue, they’re kind of on the hook now for long-term mortality data, as an agency looking out for public health.

So they are looking for datasets, the PMA, that we’re not aware that was ever a component of securing the approval. It’s really the 1-year safety and efficacy data. Now, they would like to see some longer-term data.

And so, that’s really in our opinion is what sets the critical path to get the approval, depending on the amount and which cohort of time is a 2-year and 3-year data, and if – for more, but the 3-year data, how many patients do you need to get at that to satisfy the agency’s requirements.

Now, recall, 3 years sounds like a scary long time, but we already have patients at the 3-year mark, because the patients enrolled over a period of time. So I believe the first patients in the SurVeil TRANSCEND study are now beginning to hit their 3-year endpoint. So it doesn’t mean we have to wait 3-years.

It just means we have to look at the 3-year data from initial cohort of patients is what we believe. So I know I haven’t answered your questions, because I really can’t predict if it will take less or more than a year except to say we will do everything we can to clearly meet the FDA’s requirements, but to expedite any additional datasets they need..

Great. All that’s helpful, I really appreciate it.

I’m curious if there’s any timeframe that you anticipate anyone sharing data on the success or lack thereof of SurVeil in the Transcend trial? I mean, are we going to see any data from that trial anytime soon?.

Well, a couple things, we – and I know I said, we followed up 70% of patients. What I really mean is that’s the patients within window with all completed dataset. We have followed-up close to 90% of the patients. So just to make that clear, that means the full 12 months clinical follow-up, some of them with the duplex, some of them without.

But what we – the first agreement we had to have with the agency was the how to treat the missing data, and how to statistical analysis of the missing data. And I’m happy to say, we have alignment with the agency on that. In the future, we’ll be getting alignment in the long-term mortality data.

So what we did is, we waited for – I don’t want to use this word, it’s not the right word, but we had the sort of stragglers that come in. And if you lost the database too soon, you missed data of patients who probably at their 14th month and it is important data.

As an example, say, if a patient misses the 12-month window, and they are patent at 14th month that patency still counts. So what our team did is we made sure we got as much of that data that was relevant as possible. And the locking of the database is the next critical point, which I am confident will happen before the end of the calendar year.

What that means is all the case report forms, everything has been all the data, and the database has been checked, the query is completed and the principal investigators have all signed off on all the CRS for each site that are subsequent to that you run the statistical analysis, right, the clinical study report and such, and our colleagues at Abbott will be helping us with that reviewing that and such.

But as far as public release of the data, it’s not prudent to release this data publicly until the FDA hasn’t. That’s how we look at. And so the first public release of that data will be subsequent in our opinion to – will be after the agency has the data in hand.

And so, we are looking at clearly most of these meetings, all of them are virtual for the virtual meetings in the first and second quarter of calendar 2021. With the emphasis of being early as better for all of us, we’d like to get the data out as quickly as possible.

But – sure, that the critical thing is the FDA needs to have the clinical study report for us first..

Right. And then one last one, and I appreciate all this color. If I remember, Transcend, the basic milestone is clinical equivalence with the Abbott product, I think, and I also think I remember that you were trying to get enough patients enrolled so that you might demonstrate superiority.

And can you share any thoughts or questions on that?.

Yeah, the primary efficacy endpoint is clinical non-inferiority to the impact device, if there is sufficient power to conduct and demonstrate clinical superiority that will be done. But that’s the secondary outcome..

Okay, I guess I’ll just ask you one more. And this is a little speculation, but I’m curious.

So if you’re fortunate enough to receive the balance of the milestone payments from Abbott, I think, your said $45 million, probably over the next year or something, how might you think about using that money? You obviously have a lot of cash on the balance sheet now, and you’re managing your spending prudently and all of that? How do you think about that?.

Yeah, Brooks, thank you for the question. I think, Gary and I are thinking about the milestone payments, clearly, we expect that we will see the balance of the $45 million in terms of any significant changes with regard to the organization and capital allocation, really don’t have a whole lot to share with you today.

I think, what you can expect is, the color that it provided in terms of operating expenses is probably the way I want you to think about the near-term future, and perhaps maybe even moving a bit into 2022. But if anything should change, we’ll be the first to let folks know.

But that’s kind of what we’re working toward right now is making sure we’re advancing the 3 platforms.

That being said, I think Gary and I will be talking more, as he mentioned in his prepared remarks with regard to what we might be looking to do, what Avess or Paclitaxel coated – drug-coated balloon used for [stenosed] [ph] AV grafts, depending on what may happen there that clearly would require a pivotal study.

And that wouldn’t be reflected in the operating expense color that I provided for 2021 and beyond.

So until we have a better understanding of what we might do with Avess, there may be a need, we have the need for allocating capital to Avess, because we think there could be a good shareholder return associated with that level of investment, but we still need to do some work there..

Okay, great. Thank you very much for all the color..

You’re welcome..

Thank you. We’ll take our next question from Mike Matson with Needham & Company..

Yeah. Hey, Gary and Tim. This is David Saxon on for Mike. Thanks for taking the question. And I’m hopping between calls. I’m sorry, if I’m repeating anything. But first, during the quarter, you got the Pounce approval.

So just can you talk about how you’re thinking about the market size? And have you had any conversations with any strategics about distribution?.

It’s premature on the strategic conversation yet, especially as we are quite excited about arterial thrombectomy in terms of the market size. I mean, there’s been a lot of discussions about DVT and PE, especially since [NRE] [ph] went public early in the summer.

But the arterial side is as important and it’s really for critical issues when a patient is on the table, you can get a plot out blocking the lower limb. So we’ll talk a little bit more on market size, because it also depends on the future commercialization plan.

So that’s what I will say is the device that we’ll shave off this in future calls – the device is quite unique to what’s out there requires no capital equipment. So the market is defined by a lot of devices that require capital equipment, requires suction, require blood loss.

We see this as operating beyond the market sizes of those, because it’s quite simple to use. It can – we believe remove also organized thrombus not just fresh thrombus and with minimal blood loss, and again, without having a need for capital equipment, and really easy to use an operator’s hands. We think it has a significant impact on the market.

That being said, the result has been we have a lot to do, it’s a complete therapeutic unit. And we want to make sure the validations manufacturing readiness and our own time to evaluate the clinical use of the device before we get too far into any discussions.

If what we believe is true, the clinical use of this device will be incredibly easy and fairly significant impact in competitively in the market. So we’d like to take the time to prove that out before going much further..

David, I’ll just offer a little color. I understand that clot removal in the arterial system, peripheral arterial system, about 100,000 cases in the U.S. performed annually. How it’s been framed up, for me at least is – on the global perspective. It looks like the arterial clot removal space is about a $400 million market opportunity today..

Okay, that’s helpful. And then I mean, it seems like concerns over Paclitaxel devices are just easing. So maybe can you update on it – update us on how you’re thinking about that debate. And at TCT, the VOYAGER trial showed no mortality difference between the drug-coated devices and non-coated devices.

So any thoughts on how meaningful that is from a utilization perspective? Thanks so much..

Yeah, we were happy to see that data. And I am trying to remember now, I guess, it was propensity match, so it is comparable for the current dataset. It really is up at least in the U.S. to the FDA. And then there is an industry collaboration that works quite actively with the U.S. FDA, and with physicians.

And I haven’t – I’ll put it this way, the movement have been positive. But I haven’t been made aware of any significant shift by the FDA yet. Clearly, the data is coming down. But I do believe for practicing physicians, it continues to demonstrate the safety of the entire range of therapy. So we’re quite happy to see that.

And eventually, that will, I believe, help the market creep back to where it should have been. But as this [hazard] [ph] ratio comes down, I believe as [the law limits of the confidence into vote] [ph] becomes less than 1, this is just my personal opinion, you really then have to say the probability of this being a non-issue has gone up dramatically.

So we’ll wait for that. And then we’ll wait to see how the FDA specifically responds..

And, Gary, I might offer a few comments for David and for others as well. I know, with regard to the FDA, and kind of their thinking with regard to the paclitaxel matter, there has been, I think, an interview with the FDA that was published in the September Endovascular Today, where the FDA answer several questions with regard to the current status.

And it might be helpful for folks maybe to take a look at that. I think the other comment I’ll make is, I know prior to the COVID pandemic it looked like we were seeing some improvement in terms of U.S. utilization, based upon the IMS Health data. We’ll still need to take a look at that here for Q3.

I’m not sure that you’ll get a lot out of the Q2 data, because of the pandemic. But it looked like we started to see increased utilization for the use of paclitaxel-coated devices to treat the FFA. So, I would encourage people to take a look at that article in here and the article, what the FDA is directly commenting on the matter..

Okay, that’s helpful.

And just a quick follow-up on the same topic, so if and when the FDA does shift, do you expect them to provide an update on their recommendations or kind of – in what form would their shift take?.

Well, really the shift took place in terms of the labeling of the devices, and when to use them and when to consider not using them. So I don’t actually notice, but I would imagine it would be then a change on easing of the label restrictions on this category of devices.

Right now physicians are being encouraged to use alternative devices like [CEPT] [ph] if they believe a patient is at high risk of restenosis. If that label is eased off, a physician is then allowed to use this on patients according to their clinical judgment. That will be a big thing, because that’s how it was before.

When you talk to clinicians, the high risk of restenosis applies to pretty much the majority of the patients, but it still has that limiting factor for them..

Great, thank you..

Thank you. [Operator Instructions] And at this time, there are no further questions in queue. I would like to turn the call back over to management for closing remarks..

Well, thank you. We want to close by expressing our appreciation to our employees for their incredible dedication and commitment this past fiscal year through unprecedented circumstances. Stay safe, everyone, and be well. Thank you..

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may now disconnect..