Q1 2021 Inari Medical Inc Earnings Call
[music].
Okay.
Good day, and thank you for standing by and welcome to the <unk> Medical Inc. Q1, 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. Please be advised that today's conference is the most.
<unk> asked the question during the session you'll need the press star one on the telephone.
If you require any further assistance. Please press star zero and I would now like the hand the conference over to your speaker of today Caroline corner of Investor Relations. Please go ahead.
Thank you operator, welcome to and always first quarter 2021 earnings call. Joining me on today's call are Bill Hoffmann, President and Chief Executive Officer, and Mitchell Chief Financial Officer for the question and answer.
Session will also be joined by true hikes, Chief operating officer and Dr. Kam to Chief Medical Officer.
This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Payments made on this call that do not relate to matters of historical fact should be considered forward looking statements, including statements regarding the markets. So much and already operates trends and expectations for non res product and technology trends and demands for non res products and all of these expected financial performance expenses and finishing on the market and the impact of the COVID-19 on.
Operations and and all of these customer operations.
These statements are any of the promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results performance or achievements to differ materially from any of results performance or achievements expressed or implied by the forward looking statements. Please review and all of these must be from filings with the SEC, particularly the risk factors described and in our U S. One filing under the <unk> quarterly report on form.
Form 10-Q for the first quarter ended March 31 2021.
First of all information and any forward looking statements provided during this call, including projections for future performance and based on management's expectations as of today and already undertakes no obligation to update these statements except as required by applicable law and all of its press release with the first quarter of 2020. One of the result is available on the website www.
Alright, and medical Dot com under the investors section and includes additional details about and all of these financial results and all of this website also had the latest SEC filings, which you want and courage to reveal of recordings of today's call will be available on and all of these website by five P. M. Pacific time today now I would like to turn the call over the bill for his comments on that.
Quarter, 2021 and business highlights.
Thank you Caroline and thank you everyone for joining us today.
Our first quarter was highly productive and successful as many of you might have anticipated based on the revenue range to which we guided during our last earnings call. We treated a record number of patients and reported revenue above our guidance.
We are getting excited to share some additional detail about our progress, including an update on all five of our growth drivers.
And we would like to start first geysers and El tradition.
With the patient story that will remind you of the profound impact our devices have on the lives of our patients.
On March 11th 2020 of.
A woman and her late fifties recently retired and of brand new grandmother.
Was preparing for morning, coffee and getting ready for daily work and her neighborhood and in Florida.
Without any shortness of breath of our illness or any warning of any sort of.
She collapsed suddenly and her bedroom.
When she woke scared and confused.
She called her boyfriend, who immediately called 91 one.
She was diagnosed a short while later at the hospital with the saddle pulmonary embolism and with the large blood clot straddles the left and right main pulmonary arteries.
Our low systemic blood pressure the.
The volume and location of the clot and the fact that she had suddenly collapsed.
All pointed to the high risk nature of our diagnosis and the need to urgently address the p/e and Fortunately the cardiologists on call had recently begun using flow trigger for pulmonary embolism.
And rushed her to the Cath lab for thrombectomy procedure using flow Driever.
Within a few minutes he was able to extract the large volume of clot, which caused the immediate insignificant on table improvement.
And the patient's hemodynamic condition.
Her heart rate pulmonary artery pressure and systemic blood pressure all improved markedly while she was still on the table and she was just charged from the hospital just a few days later.
We consistently see results like this and our flow of tree for cases, and we have recently validated the clinical impact with data from the flash trial.
This patient story has one additional chapter.
We see the personal email from this patient a couple of weeks ago, and it read and part of.
And 13 months post my event and you have to tell you. The day doesn't go by that I don't stop and realize how grateful I am.
I'm totally back and the game, you'll absolutely no limitations to the things I enjoy and the physical ability to do them.
This is nothing short of a miracle.
Massive pulmonary embolism defined not by clot volume.
But by the unstable nature of the patient presentation as with this patient thankfully represents just 5% to 10% of all P diagnosis.
But it's really important because of carry the mortality rate of up to 50%, even when treated aggressively with the current standard of care, which is a large bolus of thrombolytic drugs.
We believe we can do much better.
Last year for example, Dr. Catlin Toma at the University of Pittsburgh Medical Center and several peers.
Reported retrospective data on 34 massive p/e patients treated with flow driever at four different centers.
Remarkably there was just one patient death, which is especially notable again given the 50% mortality rate that I just mentioned.
Last month, we announced the first two patient enrollments into our flame trial for massive p/e.
And as the prospective multicenter two arm trial designed to evaluate the effectiveness and flow of <unk> to prevent death and massive p/e patients compared to other alternative treatment.
It is the largest and most significant trial of this patient population ever designed or even attempted.
Further confirms.
Our commitment to this patient population to the space more broadly.
And to producing evidence to prove that large volume clot removal of flow Trevor makes the important impact on patients' lives and we see consistently and real world experience. We are gathering evidence the answer the biggest and.
And most important questions and the space.
We remain committed to our mission of saving and transforming the lives of our patients.
And ways that are profoundly important to us.
I'd like to turn our attention now to our Q1 financial performance our revenue in Q1 with $57 $4 million.
Up $34 million or 113% from the same quarter last year, and up $8 $8 million or 18%.
From Q4.
During Q1, our physician customers performed approximately 5500 procedures.
Up about 130% from the same quarter last year and up about 20% from Q4.
As in the past the vast majority of revenue and the quarter came from replenishment of inventory after procedures, while the balance came from stocking orders, which include inventory for new customers increases and inventory levels as customers grow and new product introductions.
Moving now to a few comments on the pandemic.
The decline and COVID-19 hospitalizations late in February continuing and continuing today has resulted and the easing of some of the restrictions and challenges we saw in January and throughout 2020.
While recent developments are encouraging.
We continue to believe that some caution in the short and intermediate term is prudent we.
We have noticed for example, some hospitals are full of non COVID-19 patients.
As they return for treatment that was deferred during the pandemic.
And this return to normalcy and they lowered the visibility of ETE and reduced availability of access to our procedures at the same time.
Some hospitals have reported staff shortages, perhaps as a result of COVID-19 burn out on top of the return of much needed staff and physician vacation.
It's difficult to know the net impact of these developments, but we will be monitoring all of it and we will be transparent as always and sharing what we see.
I'd like to turn now to our key growth drivers and the progress we have recently made on each.
First we continue to expand our sales organization to target new hospitals and physicians as a reminder, we estimate the size of our U S target addressable markets.
He has more than 460000 patients annually, representing a $3 8 billion dollar market potential.
Our performance in Q1 strong as it was suggests that we treat and fewer than 5% of all patients who we believe can benefit from treatment with our devices.
We remain very early and our effort to penetrate our core markets and the effort will require a lot more sales professionals.
We continue to believe that when fully built out and our sales organization will rival and size the largest interventional we focused sales organization in the market today.
We began Q1 with 130 territories and we began Q2 with approximately 150 territories.
We have historically stated our intent to add on average of 10 territories per quarter.
However.
Based on our consistent success to date and our scalable approach to commercial expansion. We now believe we can be more aggressive with our hiring plan and we're currently targeting 180 to 200 total territories by the end of 2021, we.
We believe that increased density of our sales organization, and the resulting smaller and smaller territories from.
Wide opportunity to more effectively address our second growth driver.
Which is building awareness and driving deeper adoption at existing hospital customers.
As we have discussed in the past we believe the vast majority of our target PE and DVT patient populations are currently treated with anti coagulation alone.
While changing the paradigm is the complex challenge our approach is simple and straightforward.
First we will continue to educate and train the non interventional positions such as emergency Department physicians.
Pulmonologist Intensivist.
And Hospitalists, we're off and responsible for treatment decisions for these patients.
Central to this effort.
We will be continuing to leverage our online training and education platform called clot worthy of Academy as we've described in the past we will also communicate directly with these physicians at the local level as we do with our interventional physician customers.
Smaller territories of especially useful for this effort.
Second we will work with our hospital customers to establish systematic processes to identify and triage and our target patients through the physicians who are experts in these disease states. Our ultimate goal is to establish and scalable model for the development of <unk> centers of excellence.
And with <unk> patients are identified triaged treated and followed up and a systematic and consistent manner similar to the way patients with other thrombotic diseases like MRI and stroke are addressed.
We are excited about our recently announced partnership with aid dock.
We believe their purpose built <unk> software solution can be helpful and developing the scalable and repeatable <unk> center of excellence model.
We are committing heavily to these and other ideas and programs.
And we've seen important progress we will have more to share about these ideas and future calls.
Our third growth driver.
It's the continued to build upon our base of clinical evidence we shared earlier in the call the initiation and first enrollments into our flame high risk trial.
We are planning to enroll up to 250 patients in this trial.
Because of the inclusion criteria are very strict.
Designed to identify and treat exclusively the.
The very sickest of PD patient enrollment is likely to take some time and we're not yet on a position to estimate of completion date.
We have some important news on the flash registry as well and flash as many of you know is our 500 patient registry study of the impact of the flow treatment on a battery of hemodynamic variables both immediately.
And over time, and our real world patient population.
As we reported previously has yielded pristine and best in class safety data and not just meaningful improvements and hemodynamics, but on table normalization of the vital signs and many patients.
We have enrolled 500 patients into flash and are pleased to announce we have recently expanded the study to 1000 patients, allowing us to add several additional sites here in the U S and.
In addition to several European sites as well.
We have also added the non treatment or anti coagulation and only arm. So.
So that we can understand more clearly the immediate and longer term differences between flow tree from treated patients and anti coagulation only patients.
Finally, we have introduced the monitoring component Utilising a smartwatch to.
So the follow up of a subpopulation of patients.
The watch will allow us to measure over the longer term several important variables that will help us understand how these patients do over time, such as heart rate blood oxygen levels, and the frequency and intensity of physical activity. It will also allow us to conduct exercise tests, such as the six minute walk test more often and more simply than true.
Additional approaches to clinical surveillance.
We are not just producing excellent data about the impact of our devices on our patients. Our studies are asking increasingly interesting and useful questions that we believe will.
We will move the understanding of the entire disease state forward.
We believe that these studies the questions, we are asking and the more sophisticated and valuable metrics. We are collecting will set the bar.
By which all devices and therapies and the VT space will be measured.
Finally, we believe the data we are generating and the insights we are gaining will be critical inputs into the design of future definitive clinical studies.
Our fourth growth driver is to continue to expand our product portfolio.
During our last earnings call, we announced the limited market release of our T 20 curve, which has been FDA cleared for cloud and transit.
As well as our flow stasis Minas closure system.
Both devices are now and full market release and enjoying brisk adoption. Looking ahead, we remain very excited about the robust lineup of new products and innovation and our pipeline.
Our fifth and final growth driver is expansion into adjacent and international markets. We.
We continue to make progress early and our European launch during our last earnings call. We shared the Wii and completed our first cadre of of cases, and Germany and had just obtained CE mark for flow <unk>.
We are now pleased to share that we have completed multiple cloud schriever inflow true for cases and three additional countries. While enthusiasm remains strong as many physicians in Europe have heard about clot schriever and flow treatment from the American colleagues and counterparts and have seen various presentations and publications of clinical results the operating environment for new product introductions remains challenge.
King.
The most recent pandemic surge and cause new lockdowns.
Limiting travel and hospital access.
But even with these headwinds we are seeing case volume steadily increase and we remain optimistic about our European opportunity as we look forward to and improved COVID-19 environment.
We're excited about several opportunities beyond our core DVT and PE markets. We are actively working on multiple ideas to address significant unmet needs in these adjacent markets and we're looking forward to discussing them.
And in upcoming calls.
As always I'd like to close by reminding you that we have committed to our cause and two of mission to doing our very best impact the lives of our patients and important and highly positive ways.
And already represents our life's work.
We're honored to do this work and we are so thankful for your support.
We believe we are in the earliest phase of our mission and that we can and will grow sustainably for many years to come.
With that I'd like to turn things over to Mitch.
Thank you Bill and good afternoon, everyone and.
<unk> revenues for the first quarter of 2021 were $57 4 million compared to $48 6 million for the prior quarter and up $34 million or 113% from $27 million for the same period of the prior year.
This year on year increase was driven by the continued expansion of our sales force the opening of new accounts and deeper penetration of our products and existing accounts.
Revenue was split between our two products as follows 35% of our revenue was derived from the sale of cloud Schrieber products. During the first quarter of 2021, compared with 37% and the first quarter of 2020.
And 65% was derived from the sales of flow true for during the first quarter of 2021 compared to 63% and the same period of the prior year.
Gross margin was 91, 9% and the first quarter of 2021, compared with 90% and the first quarter of 2020 gross.
Gross margin increased due to a modest 2% increase and revenue per procedure year over year as well as positive operating leverage in our manufacturing facility due to continuous improvement initiatives.
Operating expenses were $45 1 million and the first quarter of 2021, compared with $19 4 million for the same period of the prior year.
R&D expense was $8 $2 million and the first quarter compared with $3 million and the same period of 2020.
The $5 2 million increase and R&D expense was primarily driven by an increase and head count as well as product development and clinical evidence development costs.
SG&A expense was $36 9 million and the first quarter of 2021, compared with $16 4 million for the same period of the prior year the.
And the $25 million increase was primarily due to personnel related expenses as the result of increased head count across our organization and public company compliance costs.
Net income for the first quarter of 2021 was $7 5 million compared with a net income of $4 1 million for the same period of the prior year.
And the basic and fully diluted net income per share for the first quarter were 15 says and 13, respectively and the weighted average basic and diluted share counts were 49, 4% and $55 7 million, respectively, compared with a basic and fully diluted net income per share of <unk> 64.
And <unk>, respectively, and the weighted average basic and diluted share count of $6 4 million and $45 million, respectively for the same period of the prior year.
The number of shares last year is significantly lower because of the conversion of preferred stock and additional common shares issued as a result of the IPO.
I'd like to move on to a few balance sheet updates our.
Our cash of $102 9 million and short term investment balance of $71 2 million at the end of Q1 totaled 174.
And compared to $164 2 million at the end of the fourth quarter of 2020.
We have not yet utilized our $30 million revolving credit facility. Although we ended Q1 with borrowing capacity under the credit line of approximately $22 million.
Our cash flows from operating activities were $8 8 million and Q1 compared to cash used in operating activities of <unk> 7 million in Q1 of 2020.
As I've mentioned in previous quarters, our intent is to grow sustainably and we expect to continue to invest heavily in our growth drivers as described by bill the variability of our investments will lead to quarterly fluctuations and cash flow. Our intent is not to maximize cash flow, but to invest and growth.
I'd like to now turn to guidance, while we continue to experience COVID-19 related challenges and uncertainties. We are comfortable providing forward looking guidance as follows for the full year 2021, we are guiding to $240 million to $250 million in revenue.
With that I would like to thank you for your attention and I'll now turn the time over to the operator for your questions.
Thing.
And as a reminder, asked the question you'll need the press star one on your telephone to withdraw.
The question request the balance sheet. Please standby, while we compile the Q&A roster.
And our first question comes from Cecilia furlong from Morgan Stanley. Your line is now open.
Great and thanks for taking our questions and I guess I just wanted to start off on COVID-19 recovery and really what you've seen just from a mix of new store versus existing accounts coming on line just really how that's evolved over the past quarter versus what you saw previously with COVID-19 and just any line of sight in terms of.
Just new accounts versus.
The existing accounts coming back on line.
I'll get started with that we have drew here as well can provide some additional color and Hello Cecilia.
So the operating environment is true.
<unk> improved since.
Since Q4, and probably even since our last earnings call, which was.
Not so long ago.
And.
So the decline and hospitalizations decline and COVID-19 diagnoses, all have allowed hospitals to ease up on restrictions and challenges value analysis committees are meeting their functional and there they are never efficient or fast, but they're meeting and and thats.
So that's I don't think there's any COVID-19 related headwinds to bringing on new customers. We.
We continue to continue to expand our activities with non interventional stakeholders again, that's pulmonologists and Hospitalists Intensivists and of course ER.
Physicians.
Restrictions for our sales professionals to be in other departments, that's eased up as well. So that's all very favorable and as we said and our prepared remarks.
I think theres some post COVID-19 developments that we just need to keep an eye on theres a lot of patients and the hospital, we've even seen some diversions actually not because of COVID-19, but because of so many patients who of deferred.
On the treatment there is debt.
The debt or in the hospital now and being treated for free.
And for all of the right reasons so.
And we want to keep an eye on that.
But but generally speaking the the environment is clearly a different and more functional environment and it's been and some time.
And so it's really all of this gives you a couple of other quick comments for additional context during the quarter. We added about 140, new accounts, which brings us just up to about 1000 active accounts keep in mind only about 60% of those accounts are using both technologies. So we still got some runway.
<unk> to pull and the second technology and about 40% of those accounts in terms of where the cases came from across that account base similar to previous quarters. The vast majority of cases came from existing accounts.
And about 90% of our cases, and fact came from existing accounts.
And over two thirds of our case growth came from existing accounts and from penetration.
And so although we're adding new accounts, we continue to see the majority of the growth coming from driving deeper penetration at the existing account base.
Great. Thank you for the color and I guess just to try and also to T. V of recent launches. If you could just give an update on corn and transit P 20 curve, just what youre seeing.
And just from adoption trends today, and then just on flow state. This as well if I could ask on that just where are you seeing that used today and how youre thinking right now about expansion beyond and of your core venous cases and thank you.
So let's start with the $2 20 curve. That's that's been really fantastic now and we keep in mind the total number of.
On patients that would qualify that market looks like to us a little difficult to measure of it looks like about 20000 patients and there's not a spectacularly large market, but certainly we are seeing more cases being done now than we did before we had the curve and before we had cloud and transit.
And.
And just anecdotally is incredibly exciting because these are some of the sickest patients we see that.
The cloud and transit as we've communicated in the past is one of the most lethal presentations of Venus.
And as Claude and so it's incredibly exciting and the the on table results and the imaging results are really dramatic so that's gone very very well and we're pleased with the performance of their progress.
Plus basis, we continue to we are exploring.
Opportunities beyond as you suggested facility beyond the our core of DVT and PE business and we like 80, fistula, we like and electrophysiology Theres a number of.
Procedures number of specialties, and Subspecialties and which venous closure.
He is we think the flow spaces will be highly useful for venous closure keep in mind and we're in the early phases. Here. This is not it's the $200 device. So we are trying our best not to keep and not to be distracted from from our core business, but we like the we like what we're seeing.
Great. Thank you.
Thank you.
And our next question comes from Larry <unk> from Wells Fargo. Your line is now open.
Hey, Larry.
One moment.
I apologize one moment, please having trouble with the Q&A.
Okay.
Hello.
We later your line is now open.
Hey, Larry.
Bill can you hear me, we can hear you.
Oh, good I thought it was the I apologize if it was the problem on my and.
Thanks for taking the question.
Glad you can hear me so bill can you talk about.
Your case mix trends it looks like P/e is becoming a bigger part of the mix.
Where do you see that going.
And is there any chance of DVT and it was a little softer in Q1 because of the less COVID-19 patients being treated and and I did have a follow up.
Yes, I think that's a pretty good way to frame it and Larry So so our messaging remains consistent between the two device and we were rock solid I think as we've reported in the past and in terms of the mix between PE and DVT patients treated I think we saw in Q1.
Growth a little bit more robust E&P Eve and we saw in DVT and I think that is.
And probably exclusively a result of of COVID-19 those patients that were most urgent we're the ones that get attention and a.
And the pandemic.
The biggest surge that we saw.
So I think thats, probably whats behind the us.
Slight increase and the mix of <unk> compared to DVT and I will point out debt both.
DVT and PE procedures did grow so we're not seeing of shrinking of DVT will you saw relative increase.
Increase and P/e compared to DVT.
That's helpful. Bill I'd love to hear your updated thoughts about how you're thinking about adjacencies within <unk> and outside of the Venus such as arterial.
And just Mitch lastly.
The cadence the.
The guidance, how should we think about the cadence.
Through the year I assume you know you're.
Youre assuming of sequential increases in sales.
Each quarter, thanks for taking the questions guys.
Mitch you might take the the guidance question happy to Larry we are.
And kind of thinking through how we will.
Make it through Q2, obviously and thinking about the second half of the year, we wanted to be comfortable and.
Sort of confident and Eric and our guidance just as a reminder of the IPO was about a year ago right now and we've not yet had a sort of the COVID-19 free quarter as the company. So we're still trying to understand exactly what that's going to look like and.
And I think as a result of that we.
We're seeing obviously improving business environment and the second half of the year, but we wanted to continue to be very confident and comfortable with the guidance and we think the numbers. We provided that the $2 40 to $2 50 sets us up in the in that territory of that range.
I will just add on Larry that.
The amplify and niches point we.
And went public almost a year ago and it was just the beginning of the pandemic I think maybe we had three quarters of commercialization prior to the pandemic and prior to our IPO and the company was very different back then so we really don't have anything to compare as we don't have of pre COVID-19 normal we don't know what that means so I just want to be thoughtful.
And I think we'd like to stay away from intra quarter trends, we'd like to stay away from sequential trends.
The commentary on that and we feel very good and we always will and when we provide the number we feel very confident and our ability to hit that number.
So moving on to your other question, which was Adjacencies, yes look we feel good about.
The adjacencies beyond DVT and PE I think it's a little bit premature.
We did learn of very good lessons learned.
We stepped in and right out of the REIT on the shooting Q1 by.
By telling you all about flow saver, which you asked about everyone.
We still love flow favor.
It's not FDA cleared yet and I think we.
We want to make sure to not.
The comment too aggressively and to specifically on on new products and or Adjacencies at this point, but we like a number of.
The number of Adjacencies to beyond DVT and PE.
Alright, guys. Thanks for taking the questions. Thank you Sir.
Sorry.
Yes.
Yeah.
Okay.
Did we lose you guys aura.
Or are there technical difficulties.
Yeah.
This is Caroline I think the operator was having trouble with moving the keel.
The next person to ask the question will be Danielle and I think he is opening her line.
And Danielle and lastly from SBB Leerink. Your line is now open.
Hey, good afternoon, everyone can you guys hear me.
We hear you loud and clear Danielle alright, great. Thanks, so much thanks for taking the question.
So my first question is on the flame trial and congrats on getting that started.
And I guess my question there is.
The.
And there's a ton of opportunity within P/e and I guess as we think about you guys have done a lot of work so far but it still seems like just relative to the to the total still only 10% of these patients are getting intervention. For example, there is still a lot of work to be done.
From data coming out of flame should we be thinking about that and sort of and inflection driver like a light switch or how do we think about the impact of the building clinical evidence here I know a little ways off but just curious about how we should be thinking about it and the trajectory between now and that thanks. So much.
Danielle, let Tom dive in on that one and Thats alright, great. Thanks, Bill and thanks for the question Danielle first off the.
I want to point out the massive p/e or high risk <unk>, depending on the terminology remains one of the most mortal cardiovascular events with death rates as highest 20% to 90% depending on what cohort and.
The true to the mission of and Army medical we really want to try to change.
Change the standard of care for patients suffering from this horrific disease and that's the impetus behind the flame study the.
Body of data for massive p/e prior to the flame was quite scans and we think it's a great opportunity to and try and flow Trevor.
Yes.
Standard of care for this highest.
The risk disease state now of course, our clinical efforts won't stop there I think as you pointed out there's still a huge unmet need in terms of.
Patients who are suffering from pulmonary embolism that doesn't happen to be in the massive category and of course, we have multiple studies ongoing as well as plan for the future to address those questions as well.
To answer your question, specifically about inflection points. However, I think what you see is that there is rapid commercial adoption of this technique even in the absence of the clinical data and I don't anticipate that the results of this trial are necessary to continue the growth trajectory of of this company.
Okay. So just think about the just sort of more standard blocking and tackling as you as you go along and the data is just additive to that first day of some sort of bolus post the data.
Yes, I think Thats right, Danielle and I think just generally speaking that's true for our entire plan there are no product or clinical developments or sort of just isn't an inflection point of any sort that we can see.
Everything is contributory this is for better or worse.
Shared and the past, it's an execution play and.
We will hopefully be able to keep our eye on the ball and execute.
Okay, and if I could ask just one follow up question on competition and I mean on in the camp that believes the shares of stock obviously, not a zero sum game here.
Curious about what youre seeing and the competitive landscape, if youre seeing competitors get more aggressive whether it's from a sales and marketing.
Standpoint, or from a pricing perspective, just given the success that you're having would love to get your thoughts there. Thanks, So much drew it and I'll, let you dive in on that one.
And so Danielle I think on the competitive front.
No big changes in Q1 compared to what you've heard us describe previously.
So a lot of the same kind of dynamics, we do see trialing of competitive products out of the market.
We continue to very much like our own chances when we're competing head to head with the other devices we.
We have not seen any changes on the pricing dynamics you have <unk>.
And Mitch described of modest year on year increase.
And Asps.
Our average revenue per procedure is pretty stable if not modestly above.
Year on year and that 92 to $9300.
Range.
I think that underscores the broader economic value proposition that continues to resonate with customers. So we've been able to maintain if not hold those those pricing.
Levels and get modest uplift along the way.
So all of that I think speaks to the the purpose built solutions our ability to differentiate both products out on the market.
And we continue to like our chances from a competitive standpoint.
Thank you.
Thank you and our next question comes from Bill part of the.
Nick from Canaccord. Your line is now open.
Hey, great. Thanks, Good evening and thanks for taking my questions.
The first question is on international you did provide us from color and thank you for that is.
As we think about kind of Europe through the balance of the year in rollout into other countries, and then and Asia Pac with Japan, and China. I was wondering if you could put a finer point on that and just how should we think about one of the rollout and then commercially and then to the financial impact and then and there.
And our modeling and just next year of two three and then I have follow up question. Thank you.
We'll let dodger Jive and on that one as well, yes. So bill I can give you a little more color on Europe and on some of the other international markets.
Europe was really in Q1 kind of a tailwind headwind kind of story.
As you heard Bill described and the commentary.
We have gotten started now with cases with both platforms and multiple markets and we obviously have now of 500 10-K clear CE Mark approval for both products.
We have figured out of way to navigate the training and Procter and challenges. The COVID-19 is presented and we've gotten some really good outcomes from that initial group of cases, the docs are enthusiastic and many of them are aware of the technologies from the American colleagues and from social media.
They are appreciating what they are seeing now and their own cases firsthand. So all of Thats really positive on the headwind side. As you may know it is a very difficult operating environment still in Europe, and the pandemic is still Ah.
Significant impediment.
Access to hospitals, and there's lots of restrictions still multiple countries with broad based lockdown is still in place so pretty tough environment still.
Forgetting to new technologies launched and that we anticipate will continue to be the case here, even as we move through the rest of the summer we're hopeful that as we get into the the fall and get the summer period behind us.
Debt some of that operating environment will improve from a financial standpoint, as you've heard us describe in the past I think the rest of this year and even into 2022 will continue to be a building year, where we will be able to see measurable contribution from Europe, but nothing that approaches anywhere close.
And to a material contribution to the broader commercial franchise and I think thats still a pretty good way to think about Europe and the short to medium term realm.
And relative to some of the other markets.
We are underway from a regulatory standpoint, and both China and Japan.
But those are going to be much longer roads for us to navigate the.
Those regulatory approvals will be measured in years candidly even beyond quarter. So we're excited to get started on that but those are going to be longer term.
Paths for us to navigate before we're able to get started with cases and either of those two large Asia Pacific markets.
That's very helpful. Thank you and then.
Just for Mitch.
How do we think about kind of these new products that are coming in the lower price you don't know the margins on those and then I think you have some new space or manufacturing facility coming on and how does that kind of flow into the the gross margins I mean, 92% is pretty stellar and.
Just wondering if theres some headwinds we should be thinking about as we head into the rest of the year sure. Thank you bill and the new products.
One of them has been added to the price per procedure for the flow Trevor which is kind of of the tool kit approach and we've taken.
Four of our positions to be able to use them and to.
The best.
Employee whatever tools and necessary to help their patients with the with pulmonary embolism.
And to some degree of those products that are being added to the flow Cheever price per procedure is going to have a bit of a drag on the gross margin of that particular product and.
So thats something that will I think have a noticeable but a fairly small effect on the gross margin for the product.
I think the.
This the.
New facility, which we're moving into hopefully here and the probably the Q3 timeframe and be operational kind of in Q3 Q4, much larger production facility and we have currently and it's also in Irvine, California, and which is where we're speaking to you from today and Thats something that could have again some drag on the gross.
And for the business and the second half of the year. Eventually we will move out of our existing facility here at nine Parker and Irvine and be fully.
Kind of up and running and the facility.
Expect because of the larger facility and kind of the larger overhead associated with that we could see some drag on the companys overall gross margin and the second half of this year and potentially into next year, but as the business continues to grow as we've kind of seen over the past year here at nine Parker.
And we think we can amortize those.
Sort of fixed and overhead costs over the.
Production base of the business and kind of get our gross margin to some degree back where it is right now.
I think longer term as you've heard us talk about the business and this partially it relates to the international topic. There were just touching on withdrew we're seeing and Ari as having kind of of low to medium.
80% gross margin type business and some of the products that we're developing will be added to the price per procedure. We're also looking at a variety of products for new disease States and new addressable markets, which will be independently priced and so this is something we'll be able to share with you more as time goes on.
Great. Thank you.
Yeah.
Thank you and ladies and gentlemen, if you have a question that is star one again, if you'd like to ask the question that is star one and our next question comes from Marine and the bulk from <unk>. Your line is now open.
Hi, Bill and that is true Dr. Sue Thanks for taking the questions. This evening.
I'd like to start I guess with the expansion of sales force territories can you tell us a little bit more in terms of where youre, adding territories are these.
Are you splitting territories that are already highly productive how are you thinking about some of that and I'm trying to consider how productive these new territories might be and stock.
I'll get started and if.
If we need we can have drew fill and the.
The detail so.
And so Hello Murray.
So first of all almost all territories at this point.
We're at 100.
50, as we shared on that.
In the prepared statement.
So almost exclusively now these are split territories and we have seen productivity increase just a little bit of our overall sales organization because new sales professionals are starting with just a little bit of a base of business and I suspect that will that will continue and.
Everybody's going to start with some base of business here.
Our goal here is increasingly on the.
Increasing our sales organization. So that we can drive deeper adoption smaller territories allow us to communicate more effectively with non interventional stakeholders communicate with administration and about the development of real programs to more systematically identify PE and DVT patients and.
Triage them to physicians, who have the skill sets to to actually intervene if if appropriate. So yes, I think we will see increasingly are almost exclusively from this point forward.
The territory splits rather than new kind of Greenfield territories.
Alright, Thats really helpful. Maybe I can ask my follow up then on aid dock very interesting to see the.
And your work there with that team and and the focus on kind of of triage and notification.
Products.
Having listened to the webcast of that you invited us to it.
And it strikes me as sort of a it's going to be kind of a learning curve for these hospitals to figure out workflow and kind of finesse the product if you will.
To fit there.
Communication protocols and things like that how do you envision a doc fitting and within Ari and maybe you can tell US why you chose a dock over some of the other.
And.
Competition Thats out there came on.
Tom you want and human dive on that one sure yes happy to so thanks for the question I think our partnership with a Doc fits into a larger plan of really trying to systematize, the identification and triage of patients with venous thromboembolism a goal.
All of that despite all of the attention that this.
Disease has received really is still.
Quite far from reach even in areas that have established per teams and things like that we've actually funded research that suggests that even hospitals with established per teams don't even get activated.
Over 50% of the time, when they should and so a doc is one such tool among many efforts to try to help our hospitals develop.
Systems and processes, so that patients don't get missed and I think when you surface of those patients to the attention of physicians that care and know a lot about pulmonary embolism patients care improves.
We chose a doc specifically because of their advanced work in this pulmonary embolism space I think not just from the artificial intelligence aspect of.
Automating the RV to Lv ratio calculation, but also and their communication ability once the patient has been identified and to be able to activate the appropriate physicians, who can then make a rapid decision about patient triage.
And I think this will be of very fruitful partnership with the patient as being the ones that benefit the most.
That's really interesting thanks for the time.
Thank you Bruce and thank you and I'm showing no further questions. This concludes today's conference call. Thank you for participating you may now disconnect.
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