Mar 21, 2019
Operator
Greetings. Welcome to the Neovasc Fourth Quarter and Full Year 2018 Earnings Conference Call.
[Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host Jeremy Feffer, Managing Director at LifeSci Advisors.
Mr. Feffer, you may begin.
Jeremy Feffer
Thank you, Amir and welcome to our call today. I would like to remind everyone that today's discussion includes forward-looking statements within the meaning of applicable U.S.
and Canadian securities laws that reflect Neovasc's current views with respect to future events including the Company's plans and expectations relating to its business, financial results, capital structure, litigation and other matters. Words such as expect, outlook, anticipate, exploring, may, might, will, should, estimate, continue, strategy potential, intend, going to, believe, plan, opportunity, trend, growing, look forward and similar words or expressions are meant to identify forward-looking statements.
Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. For more information on risks and uncertainties related to these forward-looking statements, please refer to the cautionary statement regarding forward-looking statements and risk factors sections of Neovasc Annual Report on Form 20-F and the discussion in Neovasc MD&A which are available on SEDAR and EDGAR.
Now I'd like to turn the call over to Fred Colen, President and Chief Executive Officer of Neovasc. Fred?
Fredericus Colen
Thank you, Jeremy. Welcome everyone.
With me this afternoon is Chris Clark, our CFO. I will begin today's call with a quick update and our Chair will introduce a program, then provide more general comments on where we are before turning the call over to Chris for a quick summary of the financials for the fourth quarter and year ended December 31, 2018, as well as an update on our capital structure.
We will then open the call up for your questions. The last 12 months were a very productive period for Neovasc as we managed our ways through several critical corporate events and achieved many significant therapy development milestones for both our Tiara and Reducer platforms.
As a result, we have ended 2019 in a much stronger position to drive forward with our clinical and commercial programs for the Reducer and Tiara. Regarding Tiara, at the forefront of this progress is both the clinical enrollment and outcome for the transapical Tiara which we are reporting on regularly, as well as the progress we have made and are continuing to make internally on the concept development of the transfemoral Tiara which I will discuss in more detail later on this call.
As a result, we are generating positive attention for the Tiara as the leading option for minimally-invasive mitral valve replacement for patients suffering from severe mitral regurgitation. To exemplify this, on March 3, an overview of our most recent Tiara data was presented to the world's leading cardiologist at this year's CRT meeting in Washington DC by Dr.
Danny Dvir of the University of Washington Medical Center which is a participating center in our TIARA-I study. The presentation included a review of the data from the 70 patients that had been treated with the Tiara mitral valve replacement device which included 25 patients in a TIARA-II European clinical study; 23 patients in the TIARA-I early feasibility study; and 22 patients that received Tiara through special access or compassionate use bases.
Since then, we have treated an additional patient in our TIARA-II European CE mark clinical study. Dr.
Dvir presented data on the successful use of our Tiara in patients with previous aortic valve replacement and mitral ring. To-date Tiara has successfully implanted in 16 patients with a previous aortic valve including surgical mechanical, bio-prosthetic and TAVI valve.
A recent article published in Jack Cardiovascular Intervention describing the ineligibility rate for TMMR of 89%, noticed that 14.2% was due to a prior aortic valve. We believe that our unique E shaped device could significantly reduce the number of patients excluded for previous aortic valves as we never have to exclude patients specifically for a previous aortic valve, nor have we had any incidences of LVOT obstruction with the use of Tiara.
Tiara truly is a leading edge, groundbreaking device able to treat more patients with a larger amount of co-existing condition. In addition, Dr.
Dvir discussed a patient that was implanted with a Tiara who recently celebrated her fifth anniversary since undergoing the procedure. In terms of how effective the Tiara was in treating this patient, I think it is worth noting that the severity of her disease heading into the procedure five years ago was very serious as she was adding near class for prior to the Tiara implantation.
This patient had a long history of ischemic cardiomyopathy with multiple heart failure hospitalization and she was referred to the hospital program at St. Paul's Hospital in Vancouver, Canada.
It was for a heart transplant evaluation. During her discussions with the hospital heart team, the choice of either going into the heart transplant list or receiving the Tiara was considered.
She elected to undergo the Tiara procedure and after two months follow-up, the patient demonstrated a marked improvement in symptoms compared to baseline with a NYHA Functional Class II. Fast forward to the five-year anniversary of undergoing the Tiara implantation and this patient continues to report excellent prosthetic valve function, and is currently a NYHA Class I/II with significant improvement in quality of life.
To top it all, not only has she experienced this quality of life improvement but we also believe that she is the longest surviving transcatheter mitral valve replacement therapy recipient in the world. The doctors have treated her belief and many of the physicians that have reviewed this case believed that this patient outcome speaks directly to the potential long-term benefit that the Tiara offers to mitral regurgitation patient.
This is just one of the patient cases that we are referencing in our ongoing efforts to grow awareness around the Tiara through publications and prominent cardiovascular journals, live case demonstrations and presentations of clinical results at leading medical conferences. Through these mediums, we hope - minimally invasive mitral valve… [Technical Difficulty] …in the acceleration and extent of the therapy.
Our current transfemoral trans-septal development program has two critical deliverables. One, reducing the profile of the device and the delivery system to at least 30 French for all Tiara device sizes and two, taking into account all learning from our own clinical experience, aiming at further improvements of the safety profile and most importantly to incorporating some minor but very meaningful changes to certain dimensions of the Tiara device, thereby, dramatically improving the number of patients that can be treated with the device.
These further optimized Tiara devices can at some point in time also be made available in our transapical Tiara program. Let me now go into a lot more detail of our current status and outlook for the transfemoral Tiara device.
In the last three quarters of the year, the Neovasc transfemoral trans-septal team has made significant progress with the development of the Tiara TF/TS concept. The goal of this project is not only to develop the TF version of the Tiara, but also to learn from our overall and broad clinical experience to-date and to look for ways to further improve the Tiara system in its totality.
We have, therefore, performed extensive analysis around the key learning that we and other major TMVR programs have struggled with, in particular, the many patients that are being rejected for the implant as well as some specific potential complications during implantation. We already have a significant competitive advantage over other major TMVR programs related to having no LVOT obstruction issues to date after implantation, while rejecting only a few patients for potential LV obstruction issues during the prescreening process.
Furthermore, we have been able to implant Tiara in a number of patients with a previous aortic prosthetic device due to our unique D-shaped device. Other large TMVR programs may find it to be more challenging which could reduce the treatable MR mitral valve patient population substantially.
Since we do not have these issues with our device, we're able to focus on other issues that can limit the treatable patient population. In particular, this relates to device size optimization opportunities with the current Tiara related to the annulus size, as well as to what I call the ventricular footprint.
Our analysis suggests that relatively minor in the range of 10%, sizing optimization opportunities and typically, these are small-size reduction, as well as the introduction of a third offer device size will lead to a much higher penetration into the treatable MR mitral valve population with the Tiara, while we are currently only seeing about a 20% penetration. We choose to not only rely on our own substantial clinical database but instead, and in the last few months, our team who operated with a major clinic and together analyzed an extensive clinical library of the targeted patient population specific to FMR and mixed mitral valve disease.
Our overall analysis, therefore, not only rely on our own internal library of mitral anatomies but also on a large real-world clinical day-to-day that encompasses a representative protection of the entire human population. This analysis forms the foundation for our approach to the TF/TS Tiara program and with the three a three valve size implant portfolio we should be able to cover a targeted treatment patient population of 70% or more.
This overall review and analysis has also allowed the TF/TS Tiara delivery approach to have a full and detailed understanding of the pre-procedural planning and associated challenges of navigating and visualizing the anatomy from the insertion location to actually aligning and anchoring within the mitral apparatus. Specific design features being targeted to achieve the TSTS implantation of Tiara by way of a TF/TS delivery system with the maximum profile of 30 branch are multiple planes of sterible alignment and a dual stage deployment sequence from a collapse to an expanded state.
In the last few months, we made another remarkable new discovery and that we now believe to be able to develop a new concept of food retrieval ability of the Tiara valve up to the final point of release by the delivery system which would allow for an even more and then completely controllable procedure with the additional option of a complete removal of a fully deployed Tiara valve if clinically required. As long as the delivery system remains attached to the valve and this with our any fundamental Tiara valve design changes.
In other words, we believe that this feature can be added to the system without invalidating or impacting our clinical experience today. Additionally, minor Tiara valve modification are being implemented on the TF/TS Tiara valve, to not only dramatically increase the treatable patient population as described above, but also to reduce the overall profile in its collapsed and fully expanded state for its seamless integration within the mitral apparatus.
To-date, we have evaluated three primary concepts around the TF/TS development approach. Through numerous evaluations within clinically based in vitro test methods, like system trackability, deployment accuracy, hydrodynamic assessment and all small acute animal trials, the team has narrowed down that concept to two concepts that are showing strong potential.
At this point in the development of the TF/TS program, we are officially kicking off the development pathway next week based on the leading concept that allows for a very controlled and predictable implantation procedure, similar to our Tiara transapical program. To round up our portfolio and in parallel with TF/TS development efforts, we are also developing the concept of full feasibility up to the final point of valve release by the delivery system for the transapical Tiara system as a future option.
During 2019, the team will take the leading TF/TS concept and refine and reduce performance risk with input from key opinion leaders within the TMVR space. Along with these activities, we will continue to develop a robust IP portfolio around the technology, ramp up testing and development activity in Minnesota and Richmond to align with ISO 5840 testing standards and continue to develop controlled manufacturing capabilities.
Our target remains to enable a first-in-human clinical experience with the transfemoral trans-septal program just before the end of 2020, next year, as part of a small clinical feasibility study. Moving onto the Reducer, with our commercial stage product that we are looking to develop as the standard of care for angina in Europe.
In the fourth quarter, we reported an 83% increase in revenue compared to the fourth quarter of 2017 and the Reducer revenue for the full year 2018 increased by 55% as compared to revenue for the full year of 2017. We are in the process of implementing a broader commercialization and therapy development approach in Europe and in Germany, in particular.
Our goal is to keep building in our sector to keep accelerating our Reducer sale and to also start going one level deeper and educate and convince the referring physician and general cardiologist. We see the vast majority of these refractory angina patients.
This is an ongoing process and we are continually making progress. For example, we recently were informed that [indiscernible] in Germany renewed the NUB status 1 for the Reducer which is effective for an additional one-year period.
While this is a very positive news on its own, in supporting the growth of the Reducer, we were excited to learn that 159 German hospitals applied for the Reducer NUB 1 status as compared to 107 last year. This is nearly a 50% increase in the number of hospitals that actively applied for this status.
And as a result, each of these hospitals can now negotiate reimbursement coverage for Neovasc Reducer therapy under the German health insurance system. This might be one of the single most significant indicators of the progress we are making in driving market demand for the Reducer.
In order to support this expansion, our plan is to continue to expand our sales force in Germany as well during 2019. We believe demand for the Reducer will continue to grow in Germany where we sell directly and that Germany still represents the largest commercial opportunity for us in 2019.
However, we also see increased demand from other European countries where we sell via distributor and we are actually planning to enter three more European countries during 2019. In one of our most more high profile events coming out of Italy, earlier this month there was a light case performed by Francesco Giannini from the Maria Cecilia hospital in Cotignola, Italy which was broadcasted to an international audience of the leading cardiologist attending the recent CRT Meeting in Washington D.C.
The 30-minute procedure was followed by Q&A with Dr. Giannini and the CRT audience which included comments on the procedure and curiosity about the Reducer mechanism of action.
We are very excited to have these types of opportunities and appreciate having such esteemed cardiologists work with us to educate their peers on the procedure and patient benefit offered by the Reducer. The Reducer was also recently presented at the prestigious and very large U.S.
ACC Conference under Chapter 725, refractory angina, option for patient with no option. We have also elaborated several recent peer-reviewed articles to promote additional consultations with the cardiology community regarding new data on the Reducer.
A couple of months ago there was an article published in the JACC Cardiovascular Intervention on the use of minimal Stress Perfusion Cardiac Magnetic Resonance to access the performance of the Reducer. The article points the objective evidence available by a stress perfusion CMR providing insight into the potential impact of the Reducer on the ischemic burden suggesting physiological rational as to how the Reducer reduces a perfusion defect in this patient.
We believe the use of a reliable, non-operated dependent imaging tool such as stress perfusion CMR will allow for greater insight into the potential impact of the Reducer on the ischemic burden of patients with refractory angina, with coronary artery disease. Our Reducer 1 post-market observational study continues to enroll patients across Europe at 20 active centers.
Enrolment has now reached 195 of 400. Data from this study, the COSIRA study as well as published data from several physician initiated studies continues to reflect this very positive safety profile and improvement in patient's angina therefore improving patient’s quality of life following Reducer implantation.
The second part of our strategy for the Reducer to generate value and growth is to finalize the clinical and regulatory strategy for the U.S. market.
In December, we filed a comprehensive Q-Sub submission to FDA with all available Reducer clinical evidence, requesting a Sprint FDA discussion meeting. This was followed up by meeting with the FDA on January 30, 2019 joined with the best - year best team together with two top U.S.
cardiologists proposed moving forward with a PMA submission using the available Neovasc clinical evidence, including the COSIRA study, which was a prospective, multicenter, randomized, double-blind, sham controlled study assessing the safety and efficacy of the Reducer in 104 patients in the European Union and Canada, the REDUCER-I study, a multi-center, multi-country, three-arm observational post market study with 186 patients enrolled, as well as supportive safety and efficacy data from a number of peer-reviewed journals. The FDA review team has since followed up from this meeting and recommended that, despite Breakthrough Device Designation, we collect additional pre-market blinded data prior to PMA submission.
While we respect their current recommendation, we will continue to have discussions with the FDA and their senior management in attempts to bring this promising refractory angina device therapy, which has been available to patients in Europe since 2015 with demonstrated quality of life improvement and great safety profile, to U.S. patients as soon as possible.
In that same vein, we recently announced the second successful implantation of the Reducer in the United States under compassionate use. We have developed a clear value creation strategy for the company's patients, employees, and investors alike.
This will be achieved through our team's proven ability to deliver on the well-defined clinical future milestone we have established for our two product platforms, the Tiara and the Reducer. Before I turn the call over to Chris to discuss our financial performance and the progress we have made to normalize our capital structure, I would like to spend a minute discussing this plight we have made in clearing our outstanding litigation issues.
We reached agreement with three parties to join in the year to considerably reduce the litigation overhang. In January, the patent infringement action claim brought by Edwards Lifesciences against us as a codefendant in Canada was dismissed with re-justice.
In August, we signed a license and collaboration agreement with University of Pennsylvania. And after the year-end in February 2019, we signed a settlement agreement with Micro Interventional Devices and Endovalve.
On top of all this, today, we received the decision of the German Appeals Court that overturned the lower court's decision that CardiAQ be named as coinventors of one of the European patent applications for Tiara and grant the full patent rights of Tiara to Neovasc. This is a key strategic decision in our favor.
This leaves us with only one currently active litigation issue concerning certain U.S. patents that are on the same patent family as the patent the United States Court determined we coinvented with CardiAQ.
This claim does not seek monetary damages or prevent the company from practicing these patents. We hope to be able to resolve this matter in the near term so that we can finish the first half of the year with no active litigation matter outstanding.
I will now turn the call over to Chris to describe the actions we have taken to remove the capital structure overhang.
Christopher Clark
Thank you, Fred. Good afternoon, everybody.
I'll start by discussing our capital structure and then move on to discuss our financial highlights 2018. 2018 was a difficult year and required us to take a number of steps to counter balance the impact of the 2017 financings.
The terms of the 2017 financings were onerous, but having exhausted the other options, Management and the Board of Directors elected to accept the 2017 financings on very difficult terms in order to pay the $42 million remaining of the $112 million damages we owe to CardiAQ rather than seek bankruptcy protection. On 2018 and in the early part of this year, the holders of the Series E warrants exercised their warrants with additional proceeds of $15 million which allowed us to continue operations without the further diluted financing in 2018.
In 2018, after notices from the NASDAQ that we were in breach of the $1 minimum bid price rule, we were able to extend the grace period in order to effect a 1 to 100 reverse split, stock split to remain listed on NASDAQ. We have received notice in 2019 that we are once again in breach of the $1 minimum bid price so we’ll work again to regain funds in 2019.
In the last month, we’ve been able to effect an exchange of all the 58 million warrants remaining outstanding for approximately 500,000 shares, and in the last quarter, we’ve been able to raise $10 million in gross proceeds from two financings and sharing the deal structure to give the company operating capital on the least diluted terms available for the company. Today we have no warrants outstanding from the 2017 financings and $10.8 million of the original $32.75 million.
That note remains outstanding. $8.8 million of the debt notes are held by holders who have not converted any debt notes to date, so there can’t be who have not converted any debt at its stake, so there can’t be any assurance that it won’t convert their debt in the future.
The other $2 million is held by debt note holders who have converted the large majority of their $24 million debt note into shares. Issuing an outstanding share capital is approximately $62 million - 62 million in common shares, and our fully diluted share of capital, assuming all remaining debt notes are converted using the alternative conversion price, there’s approximately 94.9 million common shares.
We believe that we have made significant progress in our efforts to restructure the capitalization table and we continue to work towards a fixed capital structure that will attract long term fundamental value investors. We will also continue to look for additional opportunities to fund the company through equity, debt or other our alliances, collaborations or partnerships.
I’m going to update you as necessary on these future events. I will now briefly discuss the company's financial performance over the last year.
I’ll remind everyone that our financial results are in U.S. dollars and prepared in compliance with IFRS.
To keep my comments brief, we'll refer you to a full disclosure both in SEDAR and EDGAR for a more fulsome review of our fourth quarter and year and 2018 results starting with Reducer commercialization. We reported a 55% increase in revenue from Reducer sales to $1.75 million for the year ended December 31, 2018 compared to $1.13 million last year.
We made more than 83% increase in Reducer sales for the three months ended December 31, 2018 compared to the same period last year and $286,000 to $523,000. The increase is mostly attributable to the progress we continue to make in penetrating the German market.
As a reminder, we ceased operations for our consulting services and contract manufacturing in 2017. So, total revenue for the year ended December 31, 2018 decreased from $4.5 in 2017 to $1.7 million in 2018, a decrease of 68% year-over-year.
Our margins for the year ended December 31, 2018 reflect and are expected to reflect going forward the margins on the Reducer only, which was 79% or $1.38 million compared to the blended gross margin with full revenue segments of 35% or $1.91 million for 2017. Our departmental expenses for the year ended December 31, 2018 decreased by $200,000 from $34.1 million in 2017 to $33.9 million in 2018.
Contributing to this decrease were a $5.5 million reduction in financing expenses by the 2017 financing costs we charged the income statement in 2017 and a $1.9 million reduction in litigation expenses as the amount of litigation the company is involved in has decreased and a $1.4 million reduction in product development clinical trial costs as the company was restructured in the beginning of the year. These were offset by a $2.4 million charge for collaboration and service expenses as we reached the collaboration and lodged agreements with the University of Pennsylvania and the $2.7 million charge for settlement expenses that we accrued for a settlement agreement with Endovalve reached off the year-end and a $1.1 million increase in share base employee expenses as options were reached during the year and a$1.4 million increase in other expenses principally to 2020 with some legal costs as we dealt with significant issues during the year.
Our operating loss for the year ended December 31, 2018 was $32.5 million compared to $32.1 million in 2017 an increase of $400,000 substantially explained by a reduction in gross margin as we ended our contract manufacturing consulting services revenues at the end of 2017. The loss for the year ended December 31, 2018 was $108 million compared to $22.9 million in 2017, an increase of $85.1 million that could be substantially explained by the derivative accounting treatment of wants and notes in the 2017 financings.
In 2017, there was income of $2.7 million booked. And in 2018 there was a loss of $75.7 million charge to the income statement resulting in a net change or a $83.1 million.
These accounting charges for the 2017 financing are best explained in the financial statements, but they do not impact the cash flow expectations in the coming quarters. A basic compelling to loss per share in 2018 was $7.63 per share compared to a loss of $28.10 for the same period in 2017.
From a cash flow perspective, we started the year with $17.5 million and spent proximately $23.9 million in operations and had a net cash inflow from investing in financing activities of $1.8 million due to balance sheet movements and the sale of a building. To offset this expenditure, we received $13.8 million from the proceeds of the exercise with C warrants and ended the year with $9.2 million in cash balances.
As previously announced in February and March, we closed two underwritten public offerings of common shares at a price of $0.45 per share and net proceeds of approximately $40.5 million and $4.25 million respectively, providing us sufficient funds on our budget burn rate until September 2019. As previously discussed, management continue to look for opportunities to raise additional capital and extend our runway further into the future.
We will continue to update you as we continue to execute our strategy to drive future growth opportunities for the TIARA and Reducer. With that we will be happy to answer your questions.
Operator, please open the call for questions.
Operator
[Operator Instructions] Our first question comes from Danielle Antalffy, SVB Leerink. Please proceed with your question.
Danielle Antalffy
Congrats on the great news regarding the litigation. That was very good to see.
So, I'm sure you guys are relieved as are we. So, one quick question on - wanted to get your views on obviously at TCT last year we have the COAPT data and mitral - very strong data for the MitraClip and mitral repair.
So, can you talk about how you guys are thinking now going forward about the market? Has there been any change in your view as it relates to repair versus replacement?
And how this might inform once Tiara does get to the point of a pivotal trial, how this might inform clinical trial design?
Fredericus Colen
This is Fred. So we appreciate your comments - we are equally excited about the outcome of the Munich Appeals Court today and we believe it's really important strategic outcome as well for us.
It certainly underscores the value of our intellectual property in the space of mitral valve replacement. And I think that's a very important element of value creation here.
So as it relates to your question, so keep in mind, Danielle, that most of our clinical activities are happening in Europe and the COAPT trial certainly was a very good thing for the mitral valve space in general and then certainly from that we benefit in terms of demonstrating there is really a potential benefit investing in the space overall. However, in the European market, the repair procedures that were really elevated by the COAPT trial were already in place.
We were already at [indiscernible] in Europe, competing against a broad utilization of the clipping procedures, not just for degenerative but also for function MR. And as such, I can say that we really haven't seen a lot of change in interest either going down or going up.
It has been pretty steady for us. I would say even on the contrary, if anything we have seen more interest in our product and that's basically demonstrated by the fact that we have been able to increase the amount of clinical sites that are now active, not only in Italy and Germany and the U.K.
but also in some new countries like in Spain and Israel and soon to be in the Netherlands. So, we actually are seeing more interest in this - in our device and not really any negative influence because of the COAPT trial.
And I think that was the first part of your question. I think in terms of value creation, we have basically determined that the best way for Neovasc to create value is to indeed get to a CE Mark for the transapical Tiara device and at the same time, demonstrate in a small clinical feasibility study that we are going to be able to deliver this device in a slightly modified fashion in the transfemoral way as well.
And we believe that, that is the very best value creation strategy for us as a company in the next couple of years. You are certainly right that it is going to be more difficult to get through a pivotal trial in the U.S.
given the fact that the bar has been raised. Although I would say it’s not going to make it impossible because we know that in the repair procedures there is a reduction in MR.
And we see with the implantation of a complete valve replacement that the MR is completely eliminated. And there's a lot of clinical data out there that shows that MR is directly related to mortality rate.
So it will probably drive the size of the clinical trials to a bigger number, but I don't think that it will actually diminish the feasibility and the importance of a mitral valve replacement device.
Danielle Antalffy
I tend to agree. So thank you for that.
And last question from me. Upcoming clinical data points that we could expect to see specifically we have Euro PCR that's usually a meeting that’s generally heavy on mitral.
Anything of note coming there for Tiara and then also actually for Reducer. Thank you so much.
Fredericus Colen
Yes. And we are actually in active discussions at the moment with some of the organizers of the PCR Conference in Paris on both the Tiara and the Reducer side, and we believe that there is going to be a broader overview of both of those products and the presentation.
And outside of that, we will also have our dedicated Reducer symposium that we organized. We organized that last year as well and the room was completely overflown.
So this year, we are actually going to have an even larger room available for our own Reducer symposium. So there are certainly lots of opportunities around PCR to learn more about - or both our product platforms.
Operator
Our next question comes from Jason Mills, Canaccord Genuity. Please proceed with your question.
David Rescott
It's David on for Jason. So I guess first off, could you - for any kind of commentary or any highlights around kind of the positive conversations you had during the CRT presentation?
What are the type of excitements you're seeing there on the platform and as far as the data, sorry, you presented?
Fredericus Colen
Yes, so basically, since the Live Case was transferred into the CRT Conference in Washington DC, it was a great opportunity for the European colleagues to share their experience with the Reducer in Europe. We are certainly getting more and more known in the European countries as it relates to the potential for the treatment of refractory angina with our Reducer device.
That knowledge is we did not hear yet in the United States. There is still is a lot of educational work to be done in the U.S.
As I said, we have now two COAPT used cases further reduced in the United States. The experience and just knowledge about what we do with that, how we work all still need to be expanded in the United States.
There was a - just a lot of basic education at TSE around what this device does, where it gets implanted, how does it work. So what is the mechanism of action and then hearing of the very positive safety profile and an outcome for the patient.
So, it was really a fundamental discussion about the reduced of therapy and a basic understanding of what it can do and we will certainly need to keep doing these kinds of things and we are very grateful to the European physician who many, many times just from their side without even our engagement sign up for these kinds of educational events and that's how Reducer is spreading not just in Europe, but also we're starting now to get more knowledge developed in the United States. Similarly at ACT which we just had a few weeks - couple of weeks ago, there was a session on the Reducer again from some European physicians that educated patients there or the cardiologist there about how do Reducer works and the result that has been achieved.
So there is a need to continue education for physicians in particular in United States.
David Rescott
And then regarding the trans-septal Tiara can you provide some more detail at least around kind of what the steps or milestones you're going to get ahead kind of between that - I think you said next week starting the development pathway of the delivery system, kind of what milestones do you think you’re going to hit the least between now and then getting that delivery system working by the end of 2020? Thanks.
Fredericus Colen
Yes. So, we have spent about three quarters of the year to really look at what we call concept development and looking at the different ways of how to make the most promising system.
That concept development phase is coming to an end and we are now starting the formal development process next week for this system. We will go through the typical development process on that, so you have the formal development steps in developing some valve modifications and in parallel to that, the development of the delivery system with the sale of our catheters.
And then, after that, we will go into a whole host of bench steps followed by animal implant. And so the animal implants should be happening towards the end of this year, early next year, and then after that, we were going to be going into filing all day of the first human clinical feasibility study that should result in a very first implant just before the end of 2020.
There's obviously regulatory review time following that process as well. So that the basic overall schedule is, I would say, pretty realistic, but also aggressive schedule to start with this next week and to get the first implant done by the end of next year.
But we have a strong team working on this - any good cross-functional manner and we are confident moving into the next steps with this device, having spent quite a bit of time on really understanding the challenges and the issues that need to be resolved, which I always say, you first have to understand the problems before you can come up with a solution. And I think we spent an appropriate amount of time on really understanding what the problems are, so that we can come up with the right solution.
Operator
Our next question comes from Jeffrey Cohen, Ladenburg Thalmann. Please proceed with your question.
Destiny Buch
This is actually Destiny Buch on for Jeff. I just wanted to ask about a couple of questions about some international effort.
So, I thought you mentioned that you were expanding your sales force this year. Could you remind us the number of representatives you have now and what your goal is for the end of 2019?
Fredericus Colen
Yes. So, all the sales numbers that we went through in terms of 2018 were essentially accomplished with one sales person in Germany.
And we are expanding that now and towards I would say the fall of 2019, we're going to have three sales people in Germany. So, in the next half to three quarters of the year, we're going to essentially triple all capacity over what we had in 2018.
So, it's still a relatively small sales force but given that we are expanding it over the year, we are going to see quite a bit of growth coming out of Germany in 2019. In parallel, we have distributors in the other key countries.
The next largest country in Europe in terms of implant is Italy and we have a strong distributor [Gouda] in Italy that is doing a great job in keeping implantation of Reducer as well as the educational events going. So, it’s a combination of the direct sales growth in Germany combined with distributors in Europe.
Also on the distributor side, we’re going to three additional countries with new distributors in some new European countries as well in 2019. So this growth in terms of penetrating further into the market but also we have been contacted by some new countries that are very interested in starting sales activities as well.
Destiny Buch
And then within the U.S., I know you mentioned that the FDA had asked you to gather a bit more data to another PMA submission. Can you tell us where you stand on that now and are you able to give us a bit more color on when you expect to submit?
Fredericus Colen
Yes. So you said this correctly and basically what we are now in the process of doing is organizing a next meeting with the FDA to talk again about all the clinical data that we have and understand better why they want to see additional data because we believe we have essentially a lot of the data that they would like to see for an approval.
But then, if they clarified to us with why they want to see additional data, we would also like to understand what kind of size or clinical study they are thinking about. So there's more clarification required as to why they're asking for this.
And then once we understand that, what kind of size we're going to say we’re thinking about. And I think that that will - well, we understand all that a lot better in the next month or two.
We, through the breakthrough designation we do have relatively quick access to FDA officials but it still takes time to get it all scheduled, et cetera.
Operator
We have reached the end of the question-and-answer session. And I would now turn the call back over to Fred Colen for closing remarks.
Fredericus Colen
Well in closing, we wish to thank you all for your participation. And we certainly look forward to updating you again in the future regarding our progress.
So, thank you very much and goodbye.
Operator
This concludes today's teleconference. You may disconnect your lines at this time.
Thank you for your participation.