Good afternoon and welcome to TransMedics First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay process.

I would like to turn the call over to Brian Johnston from Gilmartin Group for a few introductory comments..

Thanks operator. Earlier today, TransMedics released financial results for the quarter ended March 31st, 2022. A copy of the press release is available on the company's website.

Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.

All forward-looking statements, including, without limitation, are examination of operating trends, the potential commercial opportunity for our products, and our future financial expectations, which include expectations for growth in our organization, regulatory approvals, and reimbursement, and guidance and/or expectations for revenue, gross margins, and operating expenses in 2022 are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ 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 refer to the Risk Factors section of our annual report on Form 10-K filed with the Securities and Exchange Commission on March 1st, 2022.

TransMedics 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 that is accurate only as of the live broadcast today, May 3rd, 2022.

And with that, I'll turn the call over to Waleed Hassanein, President and Chief Executive Officer..

Thank you so much Brian. Good afternoon everyone and welcome to TransMedics first quarter 2022 earnings call. Joining me today is Stephen Gordon, our Chief Financial Officer. As we discussed on our previous call, we believe that 2022 will be a transformative year for TransMedics commercial adoption.

Our Q1 results further validate our conviction in our strong growth potential, leveraging our three transplant technology platforms, i.e. OCS Lung, Heart and Liver, as well as leveraging our unique National OCS Program or NOP to meaningfully expand our commercial footprint throughout the year.

We started the year with strong momentum and the results speak for themselves. We achieved net revenue of $15.9 million, representing 125% growth year-over-year and 64% growth over Q4 2021. U.S. revenue for Q1 was $13.6 million, representing 136% growth year-over-year and approximately 85% of total Q1 revenue.

International sales were $2.3, million representing 79% growth over the same period 2021. Importantly, we are very encouraged by few positive commercial trends that expand our confidence in our commercial trajectory. Let me share these trends with you.

First, while our revenue growth was very strong, the bulk of Q1 revenue was driven predominantly by approximately five to seven centers in each Oregon market. This is important for two reasons. First, it demonstrates the potential of rapid and deep penetration of key high volume transplant programs with the OCS technology.

This has always been our focus to go deep first then grow wider. Two, it shows that we are only scratching the surface of the commercial opportunity across our three Oregon markets, leaving significant opportunity to drive future growth by potential new transplant programs getting added to the OCS technology.

The second trend was -- as we expected, given the relative volumes of liver transplantation procedures in the U.S., U.S. liver revenue represented the largest share of our sales in Q1. As a reminder, the total U.S. liver transplant volume is nearly double the heart and lung volumes combined.

The third trend was that the fact that the vast majority of Q1 revenue, truly represented real-time case utilization and not stocking order. Let me explain why. This trend is due to the high contribution of NOP to the overall revenue mix in the United States.

We're excited by this trend and we are monitoring it closely due to its impact on making our business more linear and predictable. With the NOP, now revenue growth represents growth in case volume and deeper penetration into existing and new transplant programs.

The last trend and perhaps the most important is our National OCS Program or NOP, has already played a critical role in our commercial efforts, driving a significant portion of our U.S. revenue during this quarter. In Q1 approximately 70%, 7-0, of the overall U.S. revenue came from NOP cases, rather than direct acquisition.

On the per organ basis, liver was 98% NOP, lung was 78% NOP, and heart was 30% NOP. As we move forward, we expect to see the percentage of revenue from NOP to continue to grow across all three organ platforms.

Importantly, this early momentum with NOP enabled us to repeatedly demonstrate our ability to facilitate more transparent volume at the central level, with reduced operational friction of resources and logistics, while significantly shortening the typical sales cycle for OCS technology. Let me explain.

Historically, via the direct acquisition model, it used to take us 90 to 120 days to go from initial clinical buy-in to the issuance of the first purchase order of any transplant center wanting to adopt the OCS.

From there, it would take somewhere between 30 and 60 additional days, waiting for installation and scheduling of training of their first team to be trained on how to operate OCS. And then once they're back, it used to take somewhere between 15 and 30 days until we see the first true revenue generating case of this transplant program.

With NOP, it's the complete opposite. We saw many centers in Q1 going live within few days -- literally few days from initial buy-in by the clinician -- the clinical and administrative leadership until they did the first case. In fact, the quickest was literally six hours.

From there, once the center experienced the simplicity of the NOP model, they kept coming back for more cases. Based on above, we see NOP as the most significant growth catalyst for not only our commercial growth as it drives efficiency in case volume and center penetration, but also the overall U.S. transplant volumes starting in 2022.

In addition to NOP, we also expect to benefit from two additional catalysts this year. First, is the recent FDA approval of our DCD heart indication that came in ahead of schedule. This approval will allow us to expand into new centers that were not a part of the original DCD trial. This will ultimately grow our OCS Heart centers in the U.S.

and drive case and revenue growth for the OCS platform. Second, the expansion of the number of active OCS center for each organ market. Our goal is to end 2022 with 10 to 12 centers per organ; lung, heart and liver that are routinely using the OCS for their transplants as we've seen in the NOP centers in Q1.

Now, let's shift to provide you an update on our progress against our operational goals for 2022, goals related to the actual operation. First, our goal was to buttress the NOP surgical and clinical staff, while expanding the NOP launching points or regions.

In Q1, we added two new surgeons bringing our total headcount to 10 full time surgeon supported by 12 contract surgeons in the NOP program. We expect to add additional surgeons throughout 2022.

We also increased our clinical support staff from 36 in the beginning of the year to 50 at the end of Q1 across the U.S., all of whom are being cross-trained for all three OCS platforms.

Finally, we expanded our NOP launch points or regions from 11 at the end of 2021 to 12 by the end of Q1 and as of today, we're at 14 active launch points in the United States, giving us broad geographical coverage of the U.S. territory. Second, operational goal was to expand our manufacturing infrastructure and capacity.

We are on track to expand our production capacity to accommodate anticipated mid and long-term demand volume by year end of 2022. This will further derisk our supply chain process. The last operational goal was to invest in raw material inventory to meet the growing clinical demand.

We've invested in bolstering our raw material inventory to help us meet the clinical demand in Q1. We plan to continue to make targeted strategic investments in raw material to minimize any negative impact of supply chain challenges on our business and our commercial execution throughout the year.

We're very proud of our commercial performance in Q1 2022 and we are focused on maintaining this level of execution throughout the year, despite the potential impacts from macro headwinds. Let's discuss these potential headwinds. First, the lung transplant volume remains somewhat vulnerable to further COVID waves as they were in early Q1.

Although we've seen minimal or no impact from Omicron on heart and liver transplant volumes. The second potential headwind is we remain exposed to ongoing global supply chain challenges. While we have largely mitigated the impact to our revenue to-date, our early rapid clinical adoption has meaningfully increased the rate of inventory usage.

Despite our investments, this is an area that we cannot always control and may negatively impact us in 2022. Nonetheless, given the growing demand for the OCS technology, our strong Q1 results, and other key catalysts that have just reviewed, we are increasingly confident in our near, mid, and long-term outlook.

However, we need to remain prudent in our expectations given the global potential headwinds mentioned above. As such we are raising our annual revenue guidance for the full year 2022 to 59 -- to arrange between $59 million and $65 million. This represents a solid 95% to 115% growth over 2021.

This compares to our previous guidance, over a range between $49 million and $55 million.

Before turning the call over to Stephen, I would like to provide summary highlights from last week's annual meeting of the International Society of Heart and Lung Transplantation or ISHLT, that took place here in Boston, where the long-term results of OCS Heart and Lung trials were presented. Specifically, the results of the U.S.

randomized OCS DCD Heart trial was presented by our lead investigator. The data showed that the use of OCS Heart technology resulted in high rates of 89% successful utilization of DCD donor hearts for transplantation.

And importantly, with excellent post-transplant clinical results, the trial reported one and two-year survival results of 93% in the DCD or OCS, both at one year and two years, compared to 86% and 83%, respectively, in the DCD control arm of standard criteria heart transplanted using cold storage.

These seminal results are going to be instrumental in significantly expanding the utilization of DCD heart -- donor hearts for transplantation in the U.S., thus providing access to more patients with heart failure to receive the lifesaving heart transplant procedure.

On the Lung front, the five year OCS Lung expand trial results were also presented by the lead investigator. The results showed that the use of OCS Lung in extended criteria DBD and DCD donor lungs resulted in a five-year survival of 68% compared to the US national average or the U.S.

five year's lung transplant outcome of 59% from routine lung transplantation based on the UNOS/OPTN national data. This is clinically powerful to show that we can expand the lung transplant volume in the U.S.

from extended criteria lungs and have good post-transplant clinical outcomes that compares favorably to routine lung transplant outcomes in the U.S. With that, I will now turn the call over to Stephen..

Thank you, Waleed. I will now provide some additional detail on the Q1 results and other financial information for the quarter. For the first quarter of 2022, our net revenue was $15.9 million. This was an increase of 125% from the first quarter of 2021, a sequential increase of 64% from last quarter. In the U.S.

net revenue was $13.6 million, a 136% growth over the first quarter of 2021. The organ breakdown is as follows; in the U.S., net revenue was $7.9 million in OCS in Liver; $3.7 million in OCS Heart; and $2 million of OCS Lung. And revenue outside the U.S.

was $2.3 million, that's up 79% from Q1 of 2021 and included $2 million of OCS Heart and $0.3 million of OCS Lung. Key driver of Q1 revenue performance was the acceleration of OCS Liver and OCS Heart utilization after the recent FDA PMA approvals in 2021.

We began the commercial launch of these products in Q4 of 2021, but really saw the impact especially of OCS Liver sales in the first quarter of 2022. In addition, the positive impact of our National OCS Program was apparent in these results with 98% of our liver sales involved in national program cases.

Gross margin for the first quarter of 2022 was 76%, that's up from 68% in the first quarter of 2021 and improved from 72% reported in Q4 2021. The higher gross margin is a result of the higher revenue and fully commercial revenue in the United States.

Total operating expenses were $21.5 million in Q1 2022, a 90% increase over Q1 of 2021 operating expenses. The significant increase in expenses was primarily driven by the growth in our commercialization effort in the U.S. and our NOP in particular.

This represents our continued investment in our regional resources and infrastructure to allow us access more national program transplant cases across all organs and all regions. We also saw significant growth in R&D expense as we made important progress on our next generation OCS program.

However, while national program spending will continue to grow, this R&D investment in q1 2022 included some non-recurring project costs and I expect next quarter's R&D spend to be more in line with what we saw in Q4 of 2021.

Our operating loss was $9.4 million in the first quarter of 2022 compared to $6.5 million in the first quarter of 2021 and our net loss for the first quarter of 2022 was $10.6 million compared to $7.9 million in the first quarter of 2021.

Finally, cash, cash equivalents, and marketable securities were $72 million as of March 31st, 2022, which equates to a reduction of $20.5 million from the balance at the end of Q4 2021. This cash burn rate was higher than typical and was reflective of the timing of several large impact items in the quarter.

The most significant area in backing our cash was our investment related to inventory and capacity, ensuring that we are prepared for significant growth in 2022. We also saw the non-recurring investments in next-gen platform that I mentioned earlier, the growth in the national program, as well as other working capital related uses of cash.

Looking forward, I do expect our cash burn to be at a more typical run rate of approximately $10 million to $11 million per quarter.

Our weighted average common shares outstanding for the quarter were 27.95 million shares and as a result of our strong commercial start and as Waleed mentioned, we are raising our annual revenue guidance to $59 million to $65 million for the fiscal year 2022, this represents 95% to 115% growth over 2021.

Now, I would take -- I would like to turn the call back to Waleed lead for closing comments..

Thank you, Stephen. In summary, we're proud of our Q1 commercial performance. However, we don't plan to stop here or be satisfied with that. We are now focused on driving continued growth through throughout 2022 and beyond.

The National OCS Program, NOP, has shown its potential to drive significant growth for transplants through driving clinical efficiency and adoption by transplant centers in the U.S. The addition of the FDA DCD Heart approval uniquely positions TransMedics as the trusted partner to any U.S.

heart transplant program interested in growing their volumes from DCD Heart transplants. We look forward to maintaining our momentum as we continue to leverage all three OCS platforms to deliver more and better organs for transplantation to those patients in need. With that, I will now turn the call to the operator for Q&A.

Operator?.

Certainly. [Operator Instructions] The first question is from the line of Bill Plovanic with Canaccord. Please proceed..

Yes, great. Thanks. Good evening. A couple of questions for me here. I think the first is really around guidance. And maybe I'll step back and -- in the quarter, extremely strong quarter. Can you looking at the quarter, $15.9 million annualizing, that gets us to $64 million, which is the -- towards the higher end of that guidance.

I'm just trying to understand like, was there stalking in the quarter? Is there a certainty place system, especially as a lot of this is NOP? I'm just trying to get my head around, kind of, the guidance for flat sequential quarters based on the guidance?.

Is that the -- is that it Bill or there's another question?.

That's my first question. That's my first one..

Okay, great. So, thank you for the question. It's an important question. So, I want to clarify one thing. We -- our guidance reflect exactly what we discussed on the call, which is we have to be prudent. We only have two full commercial quarters under our belt. We're just getting started.

There are macro headwinds that could -- if any of them get activated, could dramatically impact our ability to execute. The NOP in it of itself, we're ramping up resources, we're adding new people, and we need to be prudent. We need to not to get too far -- lean forward off our skips, we need to stay the lane.

And we think this is a significant growth and we would rather be prudent and be cautious in our, building our commercial credibility and we will reassess as we see Q2 and Q3 results. So, that's really what's driving that Bill, it has nothing to do with stocking orders.

In fact, it this is why I specifically commented on -- where the Q1 revenue came from. This is primarily NOP guys, there's no stocking order here. And with NOP, every case is revenue, every revenue is a case and then there's another case that would generate another revenue..

Okay, thanks. And then my second quarter [ph] is just -- I think, obviously, liver far exceeded expectations. So, I was wondering if you could just give us a little idea on the dynamics of why liver would have such a quick uptake with NOP? And as I look at the U.S.

Heart, it was flattish sequentially, which was a bit surprising, and maybe why we didn't see it there. And I know, we just got the DCD data, which was extremely positive, but just any color could help us out there. Thanks.

And maybe on the end of that is, is you're not sustainability or repeatability with the NOP and maybe that why there's some conservatism -- people used it and then held off or is there something you're seeing that we should be aware of things? Thanks..

Sure. Thank you, Bill. So, very important question. So, Liver, we expected livers to lead the way. We've been saying that throughout our public interactions throughout end of last quarter and this quarter. Why? For two important reasons.

As I said, liver volumes -- liver transplant volumes are nearly double the heart and lung transplant volumes combined in the United States. So, that sheer number is very important and that's one reason.

The second reason is because that high volume, transplant -- liver transplant programs in this country are very used to having somebody else procure the liver for them and shipping it through them. They're also focusing on how can they do more liver procedures with the limited staff they have, here comes the NOP to solve both problems.

We can provide them confidence that we can ship livers to them, supported by our clinical staff that babysits these liver for them until they're ready to do the procedure with their staff being at home base rested, and in many cases, schedule -- scheduling the liver transplant procedure in the morning.

So, that's why liver transplantation, we expected it to lead the way and we expect it to continue to do that because of these two reasons. That being said, we expect to see the Heart and Lung to pick up pick up the pace throughout 2022. There's -- the NOP is barring any quality issue.

NOP is one of the most repeatable, sustainable model for driving revenue in TransMedics' history. But we need to meet -- again, Bill, there's no hidden messages. This is us being prudent, being conservative to make sure that we earn our stripes after -- as we see the results come in Q2 and Q3, we will reevaluate guidance from there.

But at this point, we felt that this is -- this guidance represents significant growth and we want to go continue to put points on the board, but there's no hidden messages or negative messages that we are concerned about. NOP is a solid generator of repeatable cases and expanding.

We haven't talked about one of the major value for the OCS -- for the NOP, as you've heard me say at the ISHLT is minimization of the learning curves. And you've seen and heard many centers are very, very excited about this. So, we expect to see NOP to continue to deliver significant contribution to our revenue throughout 2022.

The guidance is merely as being conservative..

Thanks for taking my questions..

Thank you, Mr. Plovanic. The next question is from a line of Cecilia Furlong with Morgan Stanley. Please proceed..

Great. Thank you for taking the questions and congrats on a great quarter.

I wanted to start again, just really on your outlook for 2022, but breaking it down into pieces and just how you're thinking about NOP's contributions, really restarting, reaccelerating lung volumes on the on the heels of COVID as well as, as you think about just exiting the year, NOP -- and then you're focused on some of the higher volume centers, how you think about just the breakdown from a key spaces contribution, exiting the year versus what we saw in the first quarter..

Thank you, Cecilia. So, as far as the first part is how do we think about the cadence kind of exiting the year? I think when we start the year with 70% blended mix, if you remember on the last call, we were hoping to end the year with 30% NOP contribution. So, what we expect to see is we at least maintain 70% or even higher NOP cases exiting the year.

As I've stated to the second part of your question about the contribution of NOP to recover in the lung commercialization effort, and expanding the heart, this is exactly why we did the NOP, Cecilia, and we are confident that the NOP will play a key role that once the COVID issue, kind of, settles down, the NOP will be there to pick up the lung and accelerate the lung contribution to our overall growth going forward and we expect to see that for the heart.

I think the community we're waiting for the DCD approval, the presence of the -- our presence at the ISHLT. There was a palpable -- broad palpable buzz around the OCS Heart and Lung and NOP when people would stop me in the floor of the conference and talk to me about NOP with literally NOP acronym. It was very exciting.

So, we are focused on making sure that we end the year with a very large contribution of our revenue, the vast majority of our revenue to be NOP. We expect to NOP to help the lung recover and help expand the heart volume, as well as help continue to drive liver adoption across more centers. And that’s the beauty of NOP.

We have to make sure we continue to beef up the staffing and the surgical expertise, but that's something that we are committed to doing anyway..

Great.

And if I could follow-up specifically on heart and just kind of the physicians, cardiothoracic surgeons maybe being a little less kind of willing to adopt versus liver transplant, but just as you think about the volume going through NOP going forward, as well as the next really between DCD, DBD, I'd love your just longer term outlook, if you think about both of those drivers going forward? And thank you..

Thank you. I think the -- we are -- we're very familiar with the mindset of the cardiothoracic users of OCS. And we believe that we will be best position to turn that into successful adoption and utilization of our OCS platform in both DBD and DCD and predominantly through the NOP. Let me repeat again, a point I made to Bill's earlier question.

One of the key elements of NOP that we played, we exploited heavily at the ISHLT is you have now every Tom, Dick and Harry heart transplant program wanting to do DCD heart transplants, or extending to DBD heart transplant using OCS.

The learning curves that would have been associated with that expansion would have been huge, and it could have actually negatively impacted the rate of adoption of OCS.

Now having the NOP will buffer against that, and what we're witnessing to Cecilia is the transplant surgeons themselves are welcoming this NOP to minimize the learning curve because they know that their outcomes are important. And they're looking for us to best manage these organs for them on OCS accounts.

So we are confident that heart will be utilized both for DBD and DCD and we expect the mix to be 60/40 or 50/50. And at least that's throughout 2022..

Great. Thank you for taking the questions..

Thank you Ms. Furlong. The next question is from the line of Josh Jennings with Cowen. Please proceed..

Hi, good evening. Thanks for taking the question. It's great to see such a strong start to the year I wanted to ask what did -- Stephen just you talked about the buzz Mark as ISHLT posted DCD data.

And I thought, I think expressed before the low hanging fruit on the livers DCD data release would be just increased interest in centers that hadn't participated in either heart any of our trials.

Can you built on that just on the buzz for one? Two, how this data could catalyze more non-trial centers to adopt OCS and maybe even adopted the NOP channel.

And then lastly, do you think that the DCD and non-trial centers will accelerate NOP adoption in for DCD Heart and DBD Heart?.

Thank you, Josh. So, let me let me clarify one point. The buzz that was generated at the ISHLT was on heart was actually multi-factorial. The buzz was across heart and lung.

And for the heart specifically, it wasn't just about the DCD data or the DCD approval, but also the long term results of the EXPAND DBD extended criteria hearts, which a lot of people came to this meeting, anxiously waiting to see the results because that was the first of its kind trial if you remember Josh.

So the buzz is multi-factorial, all three elements DCD, NOP and the DBD heart pieces of the story contribute to that buzz. Now, do we expect many non-trial centers to jump and try to do this at heart? Absolutely. Absolutely.

I think the primary driver for any heart transplant program today in this country is to do DCD and expand their volume because they know that CMS is going to be coming looking at their transplant volumes very soon. So we expect that to happen.

Now, the NOP will become the catalyst for the facilitator, because with the NOP it streamline the process, it's also protects them from the learning curves. It also protects them from the resource constraints that each transplant program is operating under. And it makes gives them a much better leverage on controlling their schedule.

A lot of side conversation at the ISHLT were between some of our users and some of the new centers talking to each other about now that they can schedule the heart or lung transplant procedure to be an early morning procedure rather than the middle of the night. And this conference is afforded to them by the OCS.

And, you can see that -- you can see the excitement and momentum. It's, it's early days. This is why we have to be prudent. And we have to continue to watch this dynamic.

But we believe wholeheartedly that the NOP will be the largest catalyst to increasing the number of transplant centers that are using the OCS, increasing the volume of successful transplant at this institution, and secondarily, increasing the overall transplant volume in the United States..

Excellent. Thank you for highlighting this wasn't just easy, you had my apologies for the leading question. And just piggybacking off that answer, we'll even just thinking about this data and how it could impact. And I am focusing on the heart here not but I understand one on data, but it's very strong as well and powerful.

But just focusing on heart, and just because you've had the strongest OUS, utilization of OCS in the heart indication.

But what does this data do for the OUS revenue growth? I mean, do you think that this have you gotten feedback from international heart transplant surgeons already? And how do you see that facility?.

Absolutely, absolutely. We hosted our annual user's dinner at the ISHLT, which was the highest number of guests we've ever had nearly 180 guests, many of whom were international users. So they see the momentum, they see the data. And we expect that momentum to pick up.

However, international revenue is always going to be plagued with the lack of reimbursement until we secure national reimbursement at each of these geographies.

That being said, I have to also highlight one positive outcome that came out one from one of the least geographies that we expected representatives of the UK transplant community, NHS representative came to us and wanting invited us to go and negotiate or discuss seriously with NHS, the possibility of replicating the NOP in the UK transplant community.

So again, this is some secondary positive momentum from highlighting the NOP or exposing the NOP publicly. And we expect to continue to see that, we've already seen countries like the Netherlands trying to implement the NOP with DCD hearts and successfully so throughout 2021.

So we're excited about where we are Josh, we're excited about where this is going. Our goal is just to continue to be have a steady hand and keep focusing on the fundamentals and making sure that we were continuing to drive positive change and positive momentum focusing on maintaining the highest quality results. I hope that makes sense..

Yes. That was very helpful. Thanks for the answers..

Thank you, Mr. Jennings. The next question is from the line of Allen Gong with JPMorgan. Please proceed..

Hey, guys, congratulations on a really great start to the year. I just had a few quick ones. Just looking at the performance you had in a quarter and looking at your original guidance right. Apart from, omicron maybe being a little bit less of a headwind than you might have contemplated.

Initially, what you said already wasn't really a challenge to heart and liver.

What really ended up being so much better than expected was it just much faster adoption of the NOP? Was there anything else that really drove this kind of outsize performance relative to your own expectations?.

That's it Allen. It's very rapid adoption of NOP and combined with the sheer volume of liver cases. Really these are the two combination that led to the quarter being what it is.

In fact, to a smaller extent, Omicron in Q1 -- early Q1 In January, may have even negatively impact the lung worse if the NOP wasn't there, because it helped recover it through February and March. So, really, it's the combination of NOP and the sheer number of liver transplant cases that as I said, it's nearly doubled the heart and lung combined.

Stephen, do you see differently?.

Yes, Waleed and thanks Allen and I would just agree. It's really the acceleration of the liver in particular, especially at some pretty large liver centers, they're able to do a lot of cases in a very short amount of time.

So, once that they experienced NOP and realize that it was going to work for them, they continue to use it throughout the quarter and that was a little bit above expectations, I would say for Q1..

Actually, Allen, if you allow me to kind of add one important point to what Stephen just said, that give you one example anecdote from the quarter.

The largest liver transplant center in the United States, it belongs to one major health system that is headquartered in Rochester, Minnesota, has never used OCS in a trial, or any of our trials for liver or heart or lungs. They became one of the highest users of OCS Liver NOP they became they -- in Q1.

They are now scheduling their liver transplant procedures. They're staggering liver transplant procedures, many nights we have two livers on OCS -- on two different OCS is coming from two different parts of the country through NOP and they're staggering them so they can do them first thing in the morning and the likes.

So, this is kind of a positive impact. We want to build on these anecdotes and increase them and expand them.

Another anecdote is one of the key centers in some of the competing technology trials, they became -- again, they never touched OCS, they became one of the major users of the technology, OCS Liver technology in NOP in Q1, and we expect them to grow with us throughout 2022..

Got it and then just one quick one. Following up on a question that was asked earlier on Lung, right? Is Omicron -- like, you know -- I think Omicron has clearly been a very big challenge to lung. And it's why you know, even though it was the first order and you've really had the one that's been on the NOP the longest, it's continue to struggle.

But it's hard to say when the pandemic will officially end, so what should we be looking out for to really showcase that like trends are really turning around, maybe guidelines are starting to change that really do enable you to get lung up and started and ramping to the same extent as liver and heart? Thank you very much..

Thanks Allen. That's a very important question. So, Allen, I don't believe you had the time to attend ISHLT, but we announced a major national initiative at ISHLT calling out -- doubling the heart and lung transplant volumes in the U.S. over the next few years.

We had early positive response from leading lung transplant programs, large academic lung transplant programs in this country and we are organizing that movement and we expect that by the end of 2022 -- Q4 2022, we will see tangible growth in the lung volume on OCS predominantly through the NOP. So, we are tracking the lung.

We are not giving up on the lung. The opposite is true. We think that the lung future is bright, the NOP will help the lung recover faster. And we will be there hopefully by the end of this year, pointing out to some tangible evidence of how the lung is recovering nicely in the U.S.

Operator, should we move to the next question?.

Thank you, Mr. Gong. The next question is from the line of Mike Ott with Oppenheimer. Please proceed..

Good afternoon Waleed and Stephen. I'm on for Suraj tonight. Congrats on strong start to the year and thanks for taking our questions. First one on the DCD Heart data last week, was the greater proportion of moderate and severe primary graft dysfunction in OCS group versus control.

I think you know, 20% versus about 9.1 Just that OCS had sicker patients and you have achieved the better survival we saw?.

Thank you, Michael. The numbers were about 17% versus not about 10%. Actually, it's 15% versus 10%. PGD in DCD Heart transplant has always been reported to be higher than DBD Heart transplant. Remember, these are not normal hearts. These are hearts that cease to function.

They stop beating, clinically dead hearts subjected to warm ischemic injury in the body of the donor until they were procured, chilled, and instrumented and OCS. That being said, that whatever early hit that they took, were recovered by OCS and resulted in excellent post-transplant outcomes.

And the PGD that we saw in DCD Heart transplant didn't translate into survival outcome. And that's not just in our randomized control trial, the data that was published from single center and multicenter cohorts from the U.K. and Australia, showed exactly the same numbers. In fact, the early data from Australia had a PGD rate of 40% and 45%.

Yet the long-term survival outcome mirrored what we've experienced here in the U.S. randomized trials. So, -- and I think this this point -- this specific point was discussed, Michael, at -- when the data was presented and there seems to be a clear consensus -- clinical consensus that PGD in DCD means something different.

And it's not the PGD that we experienced with DBD Heart transplants, that has correlation to short and long-term survival. And we will continue to look into this particular question throughout our post-market performance and it's exciting. It's exciting times, and the field is being transformed, thanks to TransMedics' technology and NOP programs.

And we plan to continue to collect post-market evidence and data to address all these important questions going forward. And hopefully, that will translate into clinical guidance updates and practice updates and the likes..

Okay. Thanks for that helpful and detailed explanation Waleed.

And then any rough estimates as to how many incremental DCD Hearts could ultimately be transplanted here in the U.S., one, 2000, any estimates you could share at this stage?.

I mean I can -- I mean, it's -- that is a very difficult question to answer for the following reasons. And that point was also kind of discussed on the side discussions after the data was presented. There's a significant under reporting of DCD donors in this country because they were used only for kidney and a little bit of liver.

So, -- and -- so it's very difficult to estimate. But based on the 2021 data, there was 3,000 DCD donors that donated a single organ in 2021 in the United States. That cohort -- the DCD donor cohort saw their highest rate of increase year-over-year and approximately 30% ending the year of all the donor rate -- deceased donors in the United States.

Even if you cut that in half, Mike, and you apply that 89% utilization rate, you can meaningfully expand the heart transplant volume in the United States from the DCD donors.

But we expect that we're not going to stop there that there will be more and more opportunities for DCD numbers to grow given that now we can utilize their organs across heart, lung, liver, and obviously, the historical kidney.

So, DCD contribution is going to be huge, DBD contribution is going to be even bigger because when you look at DBD, we know for a fact that we have 8,000 or 8,500 hearts that are that go unutilized every year. And with the OCS, we've demonstrated that we can transplant 85% of those hearts that were placed in OCS.

So, that the combination of both is what gives us a very high degree of confidence that we can double the rate of heart and lung transplantation in the U.S. just using DBD organs. Every year, the DCD will be icing on the cake..

Great. Thank you so much, Waleed for answering our questions..

Thank you, Mr. Ott. There are no additional questions waiting at this time. So, I will now turn the call over to Waleed for closing remarks..

Thank you, operator. Thank you all very much for taking the time to be on our call and we're looking forward to speaking again after Q2 results. Thank you. Have a great evening..

That concludes today's call. Thank you for your participation. You may now disconnect your line..