Q4 2021 CVRx Inc Earnings Call

February 15, 2022

Ladies and gentlemen, thank you for standing by and welcome to the CVR, Inc. Q4, 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 to ask a question. During this session you will need to press Star then one on your telephone.

If you require any further assistance. Please press Star then zero I would now like to turn the conference over to your speaker for today.

Valley you may begin.

Good afternoon, and thank you for joining us today for CVR <unk> fourth quarter and full year 2021 earnings conference call.

Joining me on today's call are the company's President and Chief Executive Officer, Nadeem, Youre, right and its chief Financial Officer Gerry <unk>.

The remarks today will contain forward looking statements, including statements about financial guidance.

The statements are based on plans and expectations as of today, which may change over time.

In addition to actual results could differ materially due to number of risks and uncertainties.

Including those identified in the earnings release issued prior to this call and in the company's SEC filings, including the upcoming Form 10-K that will be filed with the SEC.

I would now like to turn the call over to CVR, <unk>, as President and Chief Executive Officer, Nadeem Youre right.

Thank you Mike and thank you everyone for joining us this afternoon.

I'll begin by providing an overview of our fourth quarter and full year performance, followed by an operational update and our CFO . Jon <unk> will then review our financial results and I will conclude with our thoughts for 2022 before turning to Q&A.

We are very proud of everything that our team accomplished in 2000 for anyone taking into consideration the material headwinds caused by COVID-19 in the U S and in Germany.

In 2021, we more than doubled our worldwide revenue delivering full year growth of 115% driven primarily by our U S heart failure business grew more than 750%.

We also made progress towards our strategic initiatives, including the first patients implanted with the help of our new ultrasound guided implant toolkits.

In the fourth quarter total revenue was $3 $7 million, which fell short of our expectations, primarily due to COVID-19 related headwinds.

Europe .

Despite this impact we saw an increase of approximately 75% over the fourth quarter of 2020.

This significant year over year growth in the quarter highlights the resilience seen in our U S heart failure of our business.

Turning now to an operational update.

First I wanted to give you a quick update on hiring.

Added over 50, new employees in 2021, bringing the total at year end to over 100 employee worldwide.

Being able to more than double the size of the organization by bringing in top talent.

Tough hiring environment is a testament to the excitement in the industry for better stim and the opportunity that lies ahead.

Of the new hires two or four senior management, including our Chief marketing officer, and our European VP of sales and marketing.

As part of that hiring.

We continued the expansion of our commercial infrastructure.

As planned we added three U S territories in the fourth quarter, bringing the total to 14 by the end of the year.

Recall, we began the year with six sales territories.

And we are very pleased with our ability to train these reps and launch them into the field throughout the year. Despite the disruption from COVID-19.

We also made progress with two early commercial initiatives during the year.

First we launched a direct to consumer marketing pilots program and.

And second we created an internal prior authorization team.

Both initiatives have seen early success in our initial experience has allowed us to optimize these programs.

Given the traction we have seen thus far we expect to expand both initiatives in 2022.

For the adoption of better Stim, which I will discuss in greater detail later in the call.

Another area of focus for us during the year was product portfolio innovation.

As we mentioned last quarter, we recently submitted three PMA supplement to the FDA.

The first was for better steam MRI conditional labeling.

The second was for our new implantable pulse generator.

And the third was for our new programmers.

We are pleased to announce that we received approval for our new implantable pulse generator in December 2021.

This new IPG is smaller in size than prior generation and has 20% longer battery life on average we are expecting approval of the new program in the first half of 2022, and then plan to launch the new platform commercially.

We are encouraged by the accomplishments joining 2021.

As a result of the successful launch of <unk> for heart failure in the United States and the expansion of our commercial organization, we more than doubled our revenue.

Despite the COVID-19 overhang that has continued into 2022, we are confident in our ability to grow the business and continue the adoption of <unk> to bring relief to patients suffering with cardiovascular illness.

Now I would like to turn the call over to <unk> for a financial review.

Thanks, Nadeem total revenue generated in the fourth quarter was $3 $7 million, which is an increase of $1 6 million or 75% when compared to the same period last year.

Revenue generated in the U S was $2 $9 million in the current quarter, which is an increase of 244% over the same period last year heart failure revenue in the U S totaled $2 $7 million in the current quarter on a total of 95 revenue units as compared to $607000 in the fourth quarter of last.

Year on 'twenty, one revenue units. The increase was primarily driven by continued growth in the U S heart failure business as a result of the expansion into new sales territories, new accounts and increased physician and patient awareness of barrels Tim at.

At the end of the current quarter, we had a total of 46 active implanting centers compared to 38 on September 32021, and 11 on December 31, 2020 at the end of the current quarter. We had a total of 14 sales territories in the U S compared to $11 on September 32021, and six.

On December 31 2020.

Revenue generated in Europe was $800000 in the current quarter, which is a decrease of 36% when compared to the same period last year.

Total revenue units in Europe decreased from 55 in Q4 2020 to 39 in the current quarter. The decrease is due to the COVID-19 related headwinds in Germany. In December 2021, the number of sales territories in Europe remained consistent at six during the current quarter gross profit was $2 7 million.

For the current quarter, which is an increase of $1 million over the same period last year gross margin decreased to 73% for the current quarter compared to 78% for the same period last year gross margin in the current quarter was lower due to a larger percentage of our revenue units coming from full systems versus battery replacements for.

Existing patients new patients receive a full system that includes in IPG and the stimulation lead and have a lower gross margin than our standalone IPG used for our battery replacement. This was partially offset by an increase in our average selling price.

Research and development expenses were $1 $8 million for the current quarter, which is an increase of $1 $3 million when compared to the same period last year.

This change was primarily driven by an increase in clinical study expenses due to a $1 million nonrecurring reduction and a clinical accrual in the fourth quarter of 2020.

Additionally, this increase was driven by a $200000 increase in compensation expenses as a result of increased head count and a $100000 increase in noncash stock based compensation expense SG&A expenses were $9 $7 million for the current quarter, which is an increase of $6 four.

When compared to the same period last year. This was driven by an increase of $3 million in compensation expenses. As a result of increased head count of $1 $2 million increase in marketing and advertising expenses, primarily related to the commercialization of <unk> in the U S. A.

$600000 increase in noncash stock based compensation expense of $700000 increase related to D&O insurance costs incurred as a result of becoming a public company and a $500000 increase in travel expenses.

Other expense net was $1 $4 million for the current quarter compared to $632000 for Q4 2020. The expense in the fourth quarter of 2021 was primarily driven by a $1 $3 million loss on debt extinguishment in connection with the repayment of our outstanding debt under the horizon loan.

And the expense in the fourth quarter of 2020 was primarily driven by the increase in the fair value of the convertible preferred stock warrant liability net.

Net loss was $10 6 million or <unk> 52 per share for the current quarter as compared to a net loss of $3 $4 million or $10 <unk> per share for the same period last year net loss per share was based on approximately 20.367 million weighted average shares outstanding for the current quarter.

And approximately 360400 weighted average shares outstanding for the fourth quarter of 2020.

Turning to our balance sheet update.

At the end of the current quarter cash and cash equivalents were $142 1 million net cash used in operating and investing activities was $7 $6 million for the current quarter compared to $4 2 million for the same period last year. The primary driver for this change was an increase in compensation as a result of.

Increased head count across the organization now turning to guidance for the full year of 2022, we continue to expect total revenue between 20 and $23 million gross margin between 74, and 76% and operating expenses between 55 and $61 million.

For the first quarter of 2022, we continue to expect to report total revenue between three six and $4 million I would now like to turn the call back over to Nadeem.

Thanks Janet.

Before opening the line for questions I would like to discuss our key areas of focus for 2022, as we seek to drive increased adoption and utilization of Patterson.

First.

The continued expansion of our commercial infrastructure, especially our direct sales force in the United States remains a top priority.

We expect to continue hiring top talent throughout the year.

We're targeting a total of approximately 26 U S territories by year end or an average, adding three new territories per quarter.

Outside of the U S. We have added additional talent to our direct sales organization in Germany to help expand our sales efforts in Europe , and we continue to expect to add incremental headcount in 2022 to support our commercial strategy in that region.

In 2022, we will continue to invest in marketing efforts focused on both physician and patient education.

Includes the continuation of the direct to consumer pilot program initiated in 2021.

The pilots is primarily a series of digital marketing campaigns designed to educate potential patients and help them manage through their journey to therapy.

To support this effort we are investing in the launch of our new patient focused branding campaign, which will be rolled out during the first quarter of this year.

Currently the programs are only running in a select number of markets, but we plan to prudently expand to additional geographies in the U S and experiment with layering in additional marketing channels.

The year, we look forward to updating you on the progress on these initiatives on future earnings calls.

As mentioned earlier, we also created an internal prior authorization team.

In 2021, we build a small in house team working directly with physician offices to help patients seek prior authorization for our procedure.

We believe this to be a critical function to help facilitate implementations and the creation of <unk>.

In house team allows us to support patients more effectively through their journey.

While it is still early days, we have seen encouraging trends and we will expand the service and team as needed throughout the year.

Our second area of focus is the continued innovation of our product portfolio. We recently received FDA approval for the new IPG and anticipate two additional approvals in the first half of 2022, one being for better stems MRI conditional labeling and the other being for our new pro.

Grammar.

Our third focus area is the expansion of the clinical body of evidence the collection of primary endpoint events in our post market study of beat HFF remains on track this.

This study is that randomized controlled study designed to demonstrate the mortality and morbidity benefit of <unk> and the <unk> patient population.

We continue to expect to collect all of the data required for the final analysis by the end of 2022 interim blinded data in 2023.

In addition, we expect to continue to make progress with batch wire, which is our ultrasound guided implant toolkit in 2022, we will continue adding more sites to the clinical trial as well as enrolling more patients.

As a reminder, we expect an FDA approval for backfire in 2024.

We are very excited about the position that Fiat in today.

Despite the overhang of COVID-19, we are highly confident in our ability to grow our business during the year. The opportunity ahead of US remains large and we have built a solid foundation to accelerate the adoption of Patterson, bringing relief to as many patients as possible that are suffering with carryover.

<unk> illnesses.

And that was a good time to open the line for questions.

Thank you.

Ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone.

All your question press the pound key.

Again, Thats star one to ask a question. Please standby, while we compile the Q&A roster.

Our first question comes from the line of Robbie Marcus with Jpmorgan. Your line is open.

Oh, great. Thanks for taking my questions.

Dean maybe we could start.

Yeah.

How do you try and how do you think about the barriers here tip arrow stem, what's what's the pushback you get when you go to hospitals is it all COVID-19 related and difficulty getting in and educating and establishing these centers is there some pushback to the procedure.

Just wanted to get your thoughts on.

How are you thinking about the commercial rollout.

Yes sure first good evening, Rob you and again, thank you for inviting you got extra present at the Jpmorgan conference that was a great experience for US we look forward.

Hopefully it can be invited in future year that hopefully to be face to face.

The obstacles if you want to call. It this way or the objections that we may face in.

Any new account are very similar to any new therapy.

First and foremost administration has always wary about the reimbursement and they would like to see.

A couple of cases reimbursed and paid for and once they see that they feel more comfortable so what happened.

Happen, what we often see happening.

Centers, signing up first for a pilot phase <unk> units, and then expanding into commercial use making its more of a routine basis.

The second is training of physicians training of nurses on how to identify the appropriate patients who are eligible to receive chemotherapy and then how to do the best which in our case is very simple the unintended extremely simple and after the implant is the follow up in the management of the patients.

What we are seeing though right now is <unk>.

Possibly a unique situation where do we have.

<unk>.

The COVID-19 pandemic hitting sporadically from time to time in a geography to geography.

Bind or may be causing.

Hospital.

Staffing shortage.

And.

In our experience what we are seeing this is possibly impacting us proportionately more than established product lines.

The reason for that is.

The.

NTT given the choice and if they have limited time to select few fewer procedures. They can do given the choice.

They will revert back to the area of comfort zone of comfort with established procedures.

That's why new procedures end up paying a little bit.

A little bit of a price here being pushed away.

And Thats, what Youre seeing and why do I noticed in headline notice we sign up more accounts than we've activated.

In Q4.

And when you dig down deep about what is going on that's exactly what is going on our staff.

Facing a shortage of one or two.

Ward.

Having a tight schedule.

Reverts back to existing therapies that they know that predictable they know exactly what they expect rather than embarking on a new program. So I don't know Ravi heat if I answered all of your question in here on what you were trying to get to.

Yes, no that definitely does and then maybe just a quick follow up much smaller part of the story.

Somewhat of a hit to 2022 versus prior expectations was <unk>.

Maybe just update us on.

A month ago, you gave us your plan too.

Stabilize and improve <unk>, but maybe just give us a progress report on.

How it's going so far.

Yeah no. Thanks for asking this question. So what is common between Europe , particularly Germany, and the United States is the excitement of physicians and nurses when they see the result of better stay on their patients. So that's the common ground, where starting from this basis, we know they're excited they're seeing the results they've been seeing the results of our therapy.

And they want to continue doing it we know the product is paid for in Germany.

So the only thing that hurt us in Q4, but even started before that.

Let's call. It now in Q4, it was exacerbated when Germany shuts down they had their delta variant and Theyre, all micron value adds back to back.

If you recall in <unk>.

Mid November late November Germany shutdown due to the Delta then they switch directly from Delta to omicron without a break in between the two no.

That's the environment, that's what going on with our setup in the markets but.

When I think about how I have managed.

The situation in Europe , and the strategy.

Even before the IPO I decided for 2020 , one not to invest in Europe . That's rather spend every dollar that we're planning to spend in the United States rightfully. So you know this is we're starting to invest in the U S. We got FDA approval to get reimbursement and we are building solid foundations.

We assume jud deny that without increased investments in Germany, we can stabilize and keep it flat.

A slightly growing five 6% year over year.

In fact, it doesn't grow if you flatten out because you will be sending the wrong signals.

To your customers about your future support and future investments in that country.

So we reversed that and we started in Q3, we allowed us to start looking for talent and hiring them in Q4 that said.

It could be a little bit too late here the talent that we added in Q3 and Q, particularly in Q4 would not be effective at our estimate on possibly the end of this year. So that's why when we looked at when we look at dollar.

Cost for 2022, we are taking 2021 and assuming it's flat. Despite the fact that we added a couple of head counts.

To Europe .

Great. Thanks, a lot.

Thank you Rob.

Thank you.

Our next question comes from the line of Matthew O'brien with Piper Sandler Your line is open.

Thanks for taking my questions.

Eric just a clarification you said three $6 million to $4 million for Q1 revenues is that right.

Yes, that's correct Matt.

Okay. So that that's.

Obviously down sequentially versus Q4, I get the whole seasonality side of it.

Things, but just Q4 beat our number in the U S.

Youre still seeing some COVID-19 impacts can you just talk about the level of impact.

Hey, Dave you started talking about it a little bit, but just the level of impact you're still seeing on the volume side of things and then the.

Indeed that prior off group to really kick in before you can get some of those new centers that you've added to really.

To really ramp from here and then I do have a follow up for Jared as well.

So Matt maybe I'll jump in just on the numbers real quick when we put out the guidance of three six to four O. What we were really pushing towards was.

Knowing what was going to happen from a microphone right. We were a week into January we are starting to see cases, Mike all throughout the U S and also continuing to cause problems for elective procedures over in Germany, and so when we looked at what we would be able to accomplish in the first quarter, we were going in with the assumption that Janney.

He was going to be a pretty tough month, then we'd be able to recover from a fast peak fast fall from micron.

In the months of February and March and really the way that it's played out.

As expected for Q1 guidance, so that we saw a pretty significant slowdown in the number of procedures being performed in the month of January and then as we get into the first and now the second week of February and we're starting to see some recovery on those procedure numbers.

Okay, and then maybe maybe for.

Nadeem, just just again, maybe under the surface, what youre seeing from a new <unk>.

New center existing center utilization perspective.

Yes, it's an excellent question Matthew So first let me add to what John was saying about the cohorts yet we expected for.

Yeah.

The Q4 that all Micron would hit US in January and then things will start settling down similar to what we've seen with a delta wave back in this summer.

And we're starting to see increased utilization now the question is.

It is our expectation for February and March to recover for the full quarter in line with.

Our ability to get to the.

Yeah.

<unk> estimates that the guidance that you provide for US we wanted we bill against that is absolutely. Yes. So from that perspective, it's good news in here. The fact that we are seeing an improvement in the Covid situation late in January early February .

In regard to customers and what we're seeing at the site level.

We added in Q4 eight sites, we sign up contracts with more than eight.

The beautiful thing, though that was happening Matt is we have seen an increased <unk>.

Utilization.

And the sites that have been with us more than 12 months.

So number one there is no fatigue it is not a novelty where they jump on a bandwagon and then they switch no.

Okay.

The more they use it the more they see the long term benefit of their patients the more they want to use it the more they verified that the payment is coming without any hiccup the more they want to use it.

Sure.

If you recall the <unk> west.

Our forecasting for the long term that we will get to an average of one patient per center per month in the long run right. Now we have a handful of centers that we've opened up more than a year ago that had exceeded.

These numbers, so we're very satisfied with Westwood.

Got it.

I appreciate that.

And then the follow ups for Jared on the on the.

Cost side of things.

First of all just for clarification your Opex when you're talking about Opex you can just talk on SG&A plus R&D is that right.

Gardner.

Okay. So just given that that number for the year again is a bit higher than I think some people were expecting that we were modeling. So I don't know how much of that is the prior off group. It doesn't seem like the DTC is a huge chunk of that but can you talk about those two things in and the returns you expect to get on those two things and then.

Just how what else is really contributing to a higher opex number here in 'twenty two and then when it may kind of stabilize a little bit from these elevated levels.

Yes, so I'll go through the couple of different components here. So first on research and development line. So we are expecting to see an increased spend in that line in 2022 compared to 2021 as we look at the different programs that <unk> mentioned number one that that wire program, we're going to continue to enroll more patients in that program.

And treat more patients this year than what we did last year. So we will see a step up in investment in in.

That program the second use related to the morbidity mortality data collection. So there is effort and spend that will go into the data collection, but then also in the monitoring of all the sites before we'll be able to submit that data to FDA. So a lot of that spend will be taking place here in 'twenty two as well. So we will see a step up in research and development this year compare.

2021.

For the sales and marketing side of the house, we continue to add.

Andy mentioned for that account manager positions. So that we can get them trained up over that six month period and open up a territory for each of those account managers, but we're also making investments in market development reps to help lessen the burden on those physician groups, so that they need to spend less time educating the referral cardiologists.

About the therapy, so that our team can go out there and take on some of that burden for the team.

And then we will continue to make the investments that <unk> mentioned in prior op in DTC and other marketing campaigns to make sure that we get out in front of patients that they know what this therapy can do to help lead their heart failure symptoms.

Great. Thank you so much.

Yes, Thanks, Matt.

Thank you.

Our next question comes from the line of Margaret.

<unk> with William Blair. Your line is open.

Hi, everyone. This is actually Brandon on for Margaret Thanks for taking the question Nadeem you were talking a little bit about how COVID-19 and then a little bit of the staffing shortages.

Have caused some procedures to be pushing I think that would be interpretation of of you mentioning that you had signed on more accounts than you were reporting us implanting centers.

Is there kind of curious if you can give a little bit of an intra quarter update on the delayed cases specifically.

Are those accounts that you've signed on starting to ramp back up as the omicron has subsided.

Or does it potentially going to take a little longer or theres. Some other things are prioritizing. So just trying to get a sense of the pipeline of patients you already had or accounts you already had what can the rebound look like in terms of time.

Yes, great.

Great question Brandon So.

We tried to explain the dynamics, but.

When you look at.

The impact the <unk>.

<unk> of our business coming from accounts opened more than 12 months.

That percent of our business is going to increase.

We started 2021 with.

11 accounts opened and we ended up with 46.

This year, we're starting with 46.

And we'll be adding about 36 over the year, but you think that the 36 will be adding in 2022 over the <unk> 46 of last year is almost 40% to 50% but.

More than 80%.

Revenue units in 2022, when it come from accounts that have already implemented in 2021.

You see how that dynamic place so our growth is.

Hinging yet of course on opening up new accounts, but more so is on increasing the utilization on existing accounts.

And.

And you'll see that ratio is changing over the years, because we started from a very small base and thats why we get to this year, where I'm heading into 2022, we expect 80 or 82% of revenue to come from.

The hospitals are the sites that did.

The first implant last year.

So I don't know if that helps you.

And so the question that you're asking me Brandon if not pleased to be articulated.

No that's helpful. Thanks.

We're getting to the point of kind of what I was asking I was just trying to understand the cadence of when those accounts activate given like you said, they're important to growth going forward, but that's that's helpful color to think about.

Growth in the next three or four quarters.

Just another question focusing a little bit on.

The other comment that you made there and growing your utilization within your existing accounts can you talk about what's working in the accounts that are doing really well you mentioned a handful of them are already doing one implant per month.

Kind of reaching those long term goals you had what's working in those accounts and as we move through 'twenty. Two how do you implement that same playbook into the rest of the user base.

Yes, when we look back it's a great question actually when we look back about what works well in accounts that they've been working with US 12 months or more.

The common denominator, which is great that means wait and time will heal it but.

Thats, one element, but you can adjust that and think that everything will be the same so our patient and physician education campaign continues and one thing that I mentioned last month, when we had.

During the JP Morgan called when Robbie asked me the question about what Youre doing to alleviate the concerns about the staffing shortage staffing and so forth.

We look at hospitals, we verify that they've got staff everything's working but if we see them struggling we try to step in and see what are the tasks that we can take on for example, and patient education.

Instead of having the physician or nurse practitioner.

<unk> 15 to 30 minutes to educate the patient about the mechanism of action of ferrous Tim on what to expect.

Before during and after the procedure. We do this we can do that with our team and those are some of the elements that help us make the business more predictable for our customers for those sites.

Now if we go back and look at the sites about whats the whats the common trait of the sites over performing versus those underperforming.

I cannot stand here and tell you well the economic sites are doing better than the private sites or the <unk>.

Doing better than hospitals is not it's a site that has been working with us more than 12 months is doing better at a site that just started in the last six months.

Got it thank you very much.

Thank you Ben.

Thank you. Our next question comes from the line of Bill <unk> with Canaccord. Your line is open.

Great. Thanks, Good evening, thanks for taking my questions.

Yes.

<unk> started commercialization you've learned a couple of things in from listening to the call.

Maybe some incremental investments.

<unk> team the market development group team some of the DTC I was wondering how much of that is incremental from what you thought 12 or 24 months ago, and then as you look at what's incremental how much of that do you think is going to be scalable, where it's more of an upfront cost than something you have to kind of add 1%.

One over time.

Great question.

So prior to US we knew from the beginning that we needed a program, we particularly and learn by observing other similar companies will have an active implantable device selling it into markets, where they did not have full coverage decisions.

And it's a temporary thing prior to us alright.

Last for few years, but then after a while when we have enough volume to work with payer by payer to get them to do the coverage decision analysis on us and it will be positive and then they get analyst coverage, then yes didn't need for the prior half theme will shifts.

DTC.

Is a different beast, we did not expect.

That would be investing in DTC impact early in the process.

And it's a combination of two things number one observing what worked and what did not work with other companies like I mentioned and the second is this need to educate patients to alleviate the workload on hospitals.

So because of those two reasons our investment in DTC right now is larger than what we expected to be doing at this stage now if it was not providing.

Good.

Our return on investment than by return on investment I'm, not meaning yet the revenue itself, but rather than leading indicators that would lead us to forecast with revenues in the future we would not be investing these amounts now with this godot, yes.

And again, how do I know I'm looking at other companies similar to us and their investment in this field the need to educate patients.

At the same time that you are educating physicians and that doesn't seem to be a substitute to DTC to educate patients directly now the market development team.

I started building to educate the referring physician.

But this one we talked about it earlier, we decided to do it this something last year with a couple of pilots and those couple of pilots turned out to be pretty positive. So we're encouraged by this result, and we are duplicating the small than elsewhere in the country, so that seems to be.

Operator, Monday hit our way of operating as a business take a couple of geographies try something new and new products. It could be something that has been utilized for rapid biotech companies market development or therapy development of apps have been utilized by Medtronic and Boston scientific and other established companies for many many years, but for US it was new.

Run it in a couple of geographies verify that is suitable to our therapy and the dynamics in about an hour surrounding our therapy and then if it works if the numbers feel good, particularly when you look at the leading indicators.

Then we started investing more in expanding lease.

I don't know John if you can.

Comment on.

Bill's question about the numbers themselves.

Yes.

Go in details on numbers of what's changed from what we thought a year ago.

Is a pretty different business from where we were at that point in time in December 2020 is still on.

Art of Covid.

Pre IPO you lost money on the balance sheet and trying to decide where we're going to make investments as a company right, but when I look at where we are at the end of 2021 and the investments we're making in 'twenty. Two I think it is an add for the Mds <unk> at this point in time in the business and again part of this is driven by.

The need to alleviate workload on the new customers that they can get programs up and running get these physicians educated on what this device can do for you.

Their patients.

DTC again, it's working with centers.

Are open for business can treat patients with our device and starting to educate patients in and around there.

Those activated centers, so that they know that this therapy is available to them and thats.

A bit of a step up from where we were a year ago because of the success, we've seen along the way.

The R&D side of the house. Some of this is shifting spend money that we thought we'd be spending a little bit earlier in 2021 seeing that shift into 2022 and part of that is just driven by COVID-19 and not being able to get some of the work done that we wanted to get done.

In the last 12 months.

Okay, and then if I could have a follow up I mean, I think the one kind of theme. We're hearing at least I'm hearing is that the time is your friend in your early accounts are becoming a productive.

I mean, that's that's good news right and it sounds like it's repeatable and Youre able to drive it.

Is there.

Is it like after 12 months historically, when you really see that benefit is it more of a six month type of thing I.

12 months is the number you have given us but is there anything.

Else that we could see.

Where it is today and then these.

These investments how should we think about this like this will pull this into instead of 12 months six months or how do we think about that and Thats. All I have thank you.

Yes.

Very good question, what when we plotted all of the revenue units.

Starting from <unk> being the time or the day of the first implant of our new accounts right and your lineup all of the accounts like this and then you add them up and you try to analyze that month by month, what is happening right you would see a first blip. The first two months 123 revenue units.

Sometimes the silence for three four months.

And then they stopped doing one every other month for another six months and then they started going closer to a one month and I am talking get averages alright.

That initial blip as that trial periods, they try to III patients many of our customers.

Got hurt many years ago when.

When they embarked in a new therapy, such as carriage events, where they had probably getting any burst or with watchman, where the reimbursements was less than that costs. Initially if you recall so before they embark and do hours month month after month administration, but I can add on the physicians to say.

Net do few patients you can observe the clinical outcome on those patients we can observe the payment on those procedures and if both are positive then you can continue and that's what we're seeing at the macro level and the good news here all of our accounts are continuing.

As far as I know right now we're looking at all.

All of the accounts.

All of the 46 accounts have done and continue working with our setup, which is great news right now with DTC accelerate this possibly after month six meaning when they get to month six now they go to their organic patient flow.

And initially of course, they start with a sicker patients right. Because then you said at the end then they start expanding a little bit closer to the center of the distribution and the disease progression.

With DTC helped with a physician.

Except the patients with the middle of the distribution in terms of the disease severity.

Patient is knocking on the endorsing doctor treated with this device I think the answer is yes, our experience in previous trials, whether it was a hypertension.

Okay to go in and heart failure more recently have shown that physicians have more.

Okay.

Courage, maybe that'll word but.

More appetite of trying a new procedure, particularly before it gets an FDA approval on patient if the patient has already knocking on the door say duck. Please give me this therapy.

So yes, it could help from month six and beyond we're not there yet and our data to be able to confirm that it's all speculation at this stage for now I would say Ben.

Hello, our guidance in terms of what we're saying which were forecasting we have lot of data that we're looking at our early indicators versus trailing indicators are starting to line up so our ability to forecast the future pending any other major crisis like another COVID-19 wave or something our ability to forecast business when it going a business as usual it seems to be pretty solid right now so.

And we were very happy with it.

Our data.

Great. Thank you for taking my questions.

Thank you.

I'm showing no further questions in the queue I would now like to turn the call back over to <unk> for closing remarks.

Yes, thank you operator and.

Thanks again, everyone for joining us for our fourth quarter earnings call I know, it's late in the day, particularly for those on the East Coast. We appreciate your ongoing support.

And we look forward to updating you on our progress on our next updates Goodnight.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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Good afternoon, and thank you for joining us today for CVR <unk> fourth quarter and full year 2021 earnings conference call.

Joining me on today's call are the company's President and Chief Executive Officer, Nadeem, you right and its chief Financial Officer Gerry <unk>.

Our remarks today will contain forward looking statements, including statements about financial guidance the.

Statements are based on plans and expectations as of today, which may change over time.

In addition to actual results could differ materially due to a number of risks and uncertainties.

Including those identified in the earnings release issued prior to this call and in the company's SEC filings, including the upcoming Form 10-K that will be filed with the SEC.

I would now like to turn the call over to CVR, <unk>, as President and Chief Executive Officer, Nadeem Youre right.

Thank you Mike and thank you everyone for joining us this afternoon.

We are very proud of everything that our team accomplished in trade for anyone taking into consideration the material headwinds caused by COVID-19 in the U S and in Germany.

In 2021, we more than doubled our worldwide revenue delivering full year growth of 115% driven primarily by our U S heart failure business that grew more than 750%.

We also made progress towards our strategic initiatives, including the first patients implanted with the help of our new ultrasound guided implant toolkits.

In the fourth quarter total revenue was $3 $7 million, which fell short of our expectations, primarily due to COVID-19 related headwinds in Europe .

Despite this impact we saw an increase of approximately 75% over the fourth quarter of 2020.

The significant year over year growth in the quarter highlights the resilience seen in our U S heart failure business.

Turning now to an operational update.

First I wanted to give you a quick update on hiring.

Added over 50, new employees in 2021, bringing the total at year end to over 100 employee worldwide.

Being able to more than double the size of the organization by bringing in top talent in a tough hiring environment is a testament to the excitement in the industry four <unk> and the opportunity that lies ahead.

Of the new hires two or four senior management, including our Chief marketing officer, and our European VP of sales and marketing.

As part of that hiring.

We continued the expansion of our commercial infrastructure.

As planned we added three U S territories in the fourth quarter, bringing the total to 14 by the end of the year.

Recall, we began the year with six sales territories.

And we are very pleased with our ability to train these reps and launch them into the field throughout the year. Despite the disruption from COVID-19.

We also made progress with two early commercial initiatives during the year.

First we launched a direct to consumer marketing pilot program and second we created an internal prior authorization team.

Both initiatives have seen early success in our initial experience has allowed us to optimize these programs.

Given the traction we have seen thus far we expect to expand both initiatives in 2022 to support the adoption of better stem, which I will discuss in greater detail later in the call.

Another area of focus for us during the year was product portfolio innovation.

As we mentioned last quarter, we recently submitted three PMA supplement to the FDA.

The first was for better steam MRI conditional labeling.

The second was for our new implantable pulse generator.

And the third was for our new programmers.

We are pleased to announce that we received approval for our new implantable pulse generator in December 2021.

This new IPG is smaller in size than prior generation and is 20% longer battery life on average we are expecting approval of the new programs in the first half of 2022, and then plan to launch the new platform commercially.

We are encouraged by the accomplishments during 2021.

As a result of the successful launch of <unk> for heart failure in the United States and the expansion of our commercial organization, we more than doubled our revenue.

Now I would like to turn the call over to <unk> for a financial review.

Thanks, Nadeem total revenue generated in the fourth quarter was $3 $7 million, which is an increase of $1 6 million or <unk>, 75% when compared to the same period last year.

On December 31 2020.

Revenue generated in Europe was $800000 in the current quarter, which is a decrease of 36% when compared to the same period last year.

Research and development expenses were $1 $8 million for the current quarter, which is an increase of $1 $3 million when compared to the same period last year. This change was primarily driven by an increase in clinical study expenses due to a $1 million nonrecurring reduction in our clinical accrual in the fourth quarter of 2020.

$4 million when compared to the same period last year. This was driven by an increase of $3 million in compensation expenses. As a result of increased head count of $1 $2 million increase in marketing and advertising expenses, primarily related to the commercialization of Barrow stem in the U S a $600000.

Increase in noncash stock based compensation expense.

$700000 increase related to D&O insurance costs incurred as a result of becoming a public company and a $500000 increase in travel expenses.

The expense in the fourth quarter of 2020 was primarily driven by the increase in the fair value of the convertible preferred stock warrant liability.

Net loss was $10 6 million or <unk> 52 per share for the current quarter as compared to a net loss of $3 $4 million or $10 <unk> per share for the same period last year net loss per share was based on approximately $20 million 367000 weighted average shares outstanding for the current quarter.

And approximately 360400 weighted average shares outstanding for the fourth quarter of 2020.

Turning to our balance sheet update.

At the end of the current quarter cash and cash equivalents were $142 $1 million net.

Net cash used in operating and investing activities was $7 $6 million for the current quarter compared to $4 2 million for the same period last year. The primary driver for this change was an increase in compensation as a result of increased head count across the organization now turning to guidance for the full year.

2022, we continue to expect total revenue between 20 and $23 million gross margin between 74, and 76% and operating expenses between 55 and $61 million for the first quarter of 2022, we continue to expect to report total revenue between three.

Six and $4 million I would now like to turn the call back over to Nadeem.

Thanks Jared.

Before opening the line for questions I would like to discuss our key areas of focus for 2022, as we seek to drive increased adoption and utilization of Patterson.

First.

The continued expansion of our commercial infrastructure, especially.

Our direct sales force in the United States.

Remains a top priority.

We expect to continue hiring top talent throughout the year and our.

We're targeting a total of approximately 26 U S territories by year end or an average, adding three new territories per quarter.

In 2022, we will continue to invest in marketing efforts focused on both physician and patient education. This includes the continuation of the direct to consumer pilot program initiated in 2021 the.

The pilot is primarily a series of digital marketing campaigns designed to educate potential patients and help them manage through their journey to therapy.

To support this effort we are investing in the launch of our new patient focused branding campaign.

Which will be rolled out during the first quarter of this year.

Currently the programs are only running in a select number of markets.

But we plan to prudently expand to additional geographies in the U S and experiment with layering in additional marketing channels throughout the year. We look forward to updating you on the progress on these initiatives on future earnings calls.

As mentioned earlier, we also created an internal prior authorization team.

In 2021, we build a small in house team working directly with physician offices to help patients seek prior authorization for our procedure.

We believe this to be a critical function to help facilitate implementations and the creation of an in house team allows us to support patients.

Actively through their journey.

While it is still early days, we have seen encouraging trends.

And we will expand the service and team as needed throughout the year.

Our second area of focus is the continued innovation of our product portfolio. We recently received FDA approval for the new IPG and anticipate two additional approvals in the first half of 2022, one being for better stim as MRI conditional labeling and the other being for our new.

Programmers.

Our third focus area is the expansion of the clinical body of evidence the collection of primary endpoint events in our post market study of beat HFF remains on track.

The studies at <unk> controlled study designed to demonstrate the mortality and morbidity benefit of <unk> and the <unk> patient population.

We continue to expect to collect all of the data required for the final analysis by the end of 2022 interim blinded data in 2023.

As a reminder, we expect an FDA approval for backfire in 2024.

We are very excited about the position that we are in today.

Despite the overhang of COVID-19, we are highly confident in our ability to grow our business during the year.

Opportunity ahead of US remains large and we have built a solid foundation to accelerate the adoption of Patterson, bringing relief to as many patients as possible that are suffering with cardiovascular illnesses.

And that was a good time to open the line for questions.

Thank you.

Ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone.

All your questions.

Again, Thats star one to ask a question. Please standby, while we compile the Q&A roster.

Our first question comes from the line of Robbie Marcus with Jpmorgan. Your line is open.

Oh, great. Thanks for taking my questions.

Dean maybe we could start.

Yeah.

Would just love to get your thoughts on.

Are you thinking about the commercial rollout.

Yeah sure first good evening, Rob you and again, thank you for inviting you got extra present at the Jpmorgan conference that was a great experience for US we look forward hopefully to be invited in future year that hopefully to be face to face.

The obstacles if you want to call out this way or the objections that we may face in.

Any new accounts are very similar to any new therapy.

First and foremost administration has always wary about the reimbursement and they would like to see.

Couple of cases, reimbursed and paid for and once they see that they feel more comfortable so what happened.

Happen, what we often see happening.

Centers, signing up first for a pilot phase SKU units, and then expanding into commercial use making its more of a routine basis.

The second is training of physicians training of nurses on how to identify the appropriate patients who are ineligible to receiving our therapy.

And then how to do the impact which in our case is very simple the unintended is extremely simple and after the implant is the follow up in the management of the patients.

What we are seeing though right now.

Uh huh.

Possibly a unique situation, where we have the confluence.

The COVID-19 pandemic hitting sporadically from time to time in a geography to geography.

Combined or may be causing hospital staffing shortage.

And.

In our experience what we are seeing this is possibly impacting us proportionately more than established product lines.

The reason for that is.

The.

Any cheap given the choice and if they have limited time to select few fewer procedures. They can do given the choice.

They will revert back to that area of comfort zone of comfort with established procedures.

That's why you will procedures end up paying a little bit.

Little bit of a price yet being pushed away.

And that's what we're seeing and why do I noticed in headline notice we sign up more accounts than we've activated.

In Q4.

And when you dig down deeper about what is going on that's exactly what is going on our staff.

Facing a shortage of one or two.

Having a tight schedule.

Revert back to existing therapies that they know that predictable they know exactly what they expect rather than embarking on a new program.

So I don't know Ravi heat if I answered all of your question here on what you were trying to get to.

Yes, no that definitely does and then maybe just a quick follow up much smaller part of the story.

Somewhat of a hit to 2022 versus prior expectations was <unk>.

Maybe just update us on.

A month ago, you gave us your plan too.

Stabilize and improve Europe , maybe just give us a progress report of how it's going so far.

Yeah no. Thanks for asking this question so what is common between Europe .

Particularly Germany and the United States.

Is the excitement of physicians and nurses when they see the results of <unk> on their patients. So that's the common ground, where starting from this basis. We know that excited they are seeing the results had been seeing the results of our therapy and they want to continue to like it.

The product is paid for in Germany.

So the only thing that hurt us in Q4, but even started before that.

Let's call that now in Q4, it was exacerbated when Germany shuts down the head than Delta variant and Theyre, all micron value adds back to back.

If you recall in.

Mid November late November , Germany shutdown due to Delta and then they switched directly from Delta.

Micron without the break in between the two no.

That's the environment, that's what's going on with our setup in the markets but.

When I think about how I have managed.

The situation in Europe , and the strategy.

We assume jud ni that without <unk>.

Increased investments in Germany, we can stabilize and keep it flat.

Slightly growing five 6% year over year.

In fact, it doesn't grow if you flatten out because you will be sending the wrong signals.

To your customers about your future support the near future investments in that country.

So we reversed that started in Q3, we allowed us to start looking for talent and hiring them in Q4 that said.

Added a couple of head counts.

To Europe .

Great. Thanks, a lot.

Thank you Rob.

Thank you.

Our next question comes from the line of Matthew O'brien with Piper Sandler Your line is open.

Thanks for taking my questions.

Eric just a clarification you said three $6 million to $4 million for Q1 revenues is that right.

Yes, that's correct Matt.

Okay. So that that's obviously down sequentially versus Q4, I get the whole seasonality side of things, but just Q4 beat our number in the U S.

Youre still seeing some COVID-19 impacts can you just talk about the level of impact.

We started talking about it a little bit, but just the level of impact you're still seeing on the volume side of things and then the.

You need that prior off group to really kick in before you can get some of those new centers that you've added to really.

To really ramp from here and then I do have a follow up for Jared as well.

Yeah.

So.

Maybe I'll jump in just on the numbers real quick when we put out the guidance of three six to four O. What we were really pushing towards was knowing what was going to happen from a microphone right. We were a week into January we are starting to see cases, Mike all throughout the U S and also continuing to cause problems for elective.

Procedures over in Germany, and so when we looked at what we would be able to accomplish in the first quarter. We were going in with the assumption that January was going to be a pretty tough month, then we'd be able to recover from a fast peak fast fall from micron.

In the months of February and March and really the way that it's played out as kind of as expected for Q1 guidance so that.

A pretty significant slowdown in the number of procedures being performed in the month of January .

Then as we get into the first and now the second week of February we're starting to see some recovery on those procedure numbers.

Okay, and then maybe maybe for.

Nadeem just just.

Maybe under the surface, what youre seeing from a new New center existing center utilization perspective.

Yes, so excellent question Matthew So first let me add to what John is saying about equivalents, yet we expect it for.

The Q4 that all Micron will hit Us in January and then things will start settling down similar to what we've seen with a delta wave back in December .

And we're starting to see increased utilization now the question is.

It is our expectation for February and March to recover for the full quarter in line with.

Our ability to get to the.

Estimates of the guidance they provide for us.

And we believe the answer is absolutely yes, so from that perspective, it's good news in here. The fact that we are seeing an improvement in the Covid situation late in January early February .

In regard to customers and what we're seeing at the site level.

We added in Q4 eight sites.

We signed up contracts with more than eight.

Beautiful thing, though that was happening Matt is we have seen an increased <unk>.

Utilization.

And the sites that have been with us more than 12 months.

So number one there is no fatigue it is not a novelty where they jump on a bandwagon and then they switch no.

Okay threat is.

Sure.

If you recall the <unk> west.

Forecasting for the long term that we will get to an average of one patient per center per month in the long run right. Now we have a handful of centers that we've opened up more than a year ago that had exceeded.

These numbers, so we're very satisfied with whats right Matthew.

Got it.

I appreciate that.

And then the follow ups for Jared on the on the.

Cost side of things.

First of all just for clarification your Opex when you're talking about Opex you can just talk on SG&A plus R&D is that right.

Right now.

Just how what else is really contributing to a higher opex number here in 'twenty two and then when it may kind of stabilize a little bit from these elevated levels.

Yeah. So I'll go through the couple of different components here. So first on research and development line. So we are expecting to see an increased spend in that line in 2022 compared to 2021 as we look at the different programs that <unk> mentioned number one the <unk> program, we're going to continue to enroll more patients in that program.

And treat more patients this year than what we did last year. So we will see a step up in investment in.

That program the second use related to the morbidity mortality data collection. So there is effort and spend that will go into the data collection, but then also in the monitoring of all the sites before we'll be able to submit the data to FDA. So a lot of that spend will be taking place here in 'twenty two as well. So we will see a step up in research and development this year compare.

2021.

For the sales and marketing side of the house, we continue to add new dimensions for that account manager positions. So that we can get them trained up over that six month period and open up a territory for each of those account managers, but we're also making investments in market development reps to help lessen the burden on those physician groups.

So, but they need to spend less time educating the referral cardiologists about the therapy. So that our team can go out there and take on some of that burden for the team.

Great. Thank you so much.

Yes, Thanks, Matt.

Thank you.

Our next question comes from the line of Margaret Kaiser with William Blair. Your line is open.

Hi, everyone. This is actually Brandon on for Margaret Thanks for taking the question Nadeem you were talking a little bit about how COVID-19 and then a little bit of the staffing shortages.

Have caused some procedures to be pushing I think that would be interpretation of mentioning that you had signed on more accounts than you were reporting us implanting centers.

Is there kind of curious if you can give a little bit of an intra quarter update or on the delayed cases specifically.

Are those accounts that you've signed on starting to ramp back up as the omicron has subsided.

Yes, great.

Great question Brandon So.

We tried to explain the dynamics, but.

When you look at.

The impact the percentage of our business coming from accounts opened more than 12 months.

That percent of our business is going to increase.

We started 2021 with.

11 accounts open and we ended up with 46.

This year, we're starting with 46.

And we'll be adding about 36 over the year, but you think that the 36 will be adding in 2022 over the 46 of last year is almost 40% or 50% but.

More than 80%.

Of our revenue units in 2022, which come from accounts that have already implemented in 2021.

You see how that dynamic plays.

Our growth is.

Hinging, Yes of course on opening up new accounts, but more so is on increasing the utilization on existing accounts.

And what.

And you'll see that ratio is changing over the years, because we started from a very small base and that's why we get to this year, where I'm heading into 2022, we expect 80 or 82% of our revenue to come from.

The hospitals are the sites that did.

The first implant last year.

So I don't know if that helps you.

And so the question that Youre asking me Brendan if not pleased to be articulated.

No that's helpful. Thanks.

You were getting to the point of kind of what I was asking I was just trying to understand the cadence of when those accounts activate given like you said they are important to growth going forward, but that's that's helpful color to think about.

Growth in the next three or four quarters.

Just another question focusing a little bit on.

Reaching those long term goals you had what's working in those accounts and as we move through 'twenty. Two how do you implement that same playbook into the rest of the user base.

Yes, when we look back it's a great question actually when we look back about what's works well in accounts that they've been working with US 12 months or more.

That's the common denominator, which is great that means wait and time will heal it but that's one element, but we cannot just asked on it and think that everything will be the same so.

Our patient and physician education campaign continues and.

One thing that I mentioned last month, when we had.

During the JP Morgan called with Ravi asked me the question about what Youre doing to alleviate the concerns about the staffing shortage staffing and so forth.

When we look at hospitals, we verify that they've got staff everything is working but if we see them struggling with trying to step in and see what are the tasks that we can take on for example patient education instead.

Instead of having the physician or nurse practitioner spend 15% to 30 minutes to educate the patient about the mechanism of action of fetish, Tim on what to expect.

Before during and after the procedure. We do this we can do that with our team and that those are some of the elements that help us make the business more predictable.

What are customers for those sites.

Now if we go back and look at the sites about whats the whats the common trait of the sites over performing versus those underperforming. There is no rule I cannot stand here and tell you well the academic sites are doing better than the private side or the SCS are doing better than hospital is not it's a site that has been working with us.

More than 12 months is doing better.

Site that just started the last six months.

Got it thank you very much.

Thank you Brian .

Thank you. Our next question comes from the line of Bill <unk> with Canaccord. Your line is open.

Great. Thanks, Good evening, thanks for taking my questions.

Just.

<unk> started commercialization you've learned a couple of things in from listening to the call.

Maybe some incremental investments the prior team the market development group team.

DTC I was wondering how much of that is incremental from what you thought 12 or 24 months ago, and then as you look at what's incremental how much of that do you think is going to be scalable, where it's more of an upfront cost than something that you have to kind of add one to one over time.

Great question.

So prior to US we knew from the beginning that we needed a program, we particularly have learned by observing other similar companies will have an active implantable device selling it into a market where they did not have full coverage decisions.

It's a temporary thing the tradeoff alright, it will last for few years, but then after the wide when we have enough volume to work with payer by payer to get them to do the coverage decision analysis on us and it will be positive and then they can analyst coverage is then yes didn't need for the prior half theme will shifts.

DTC.

Is a different beast, we did not expect.

That will be investing in DTC impact early in the process.

So because of those two reasons our investment in DTC right now is larger than what we expected.

To be doing at this stage now if it was not providing goods.

Return on investment than by return on investment Im not meeting yet the revenue itself, but rather than leading indicators that would lead us to forecast with revenues in the future. We would not be investing these amounts now will this grow yes.

And again, how do I know I'm looking at other companies similar to us and their investment in this field the need to educate patients at the same time that you are educating physicians.

And that doesn't seem to be a substitute to DTC to educate patients directly.

The market development team.

That we.

Have started building to educate the referring physician.

This one we talked about it earlier, we decided to do it this something last year with a couple of pilots and those couple of pilots turned out to be pretty positive. So we're encouraged by this result, and we are duplicating the small than elsewhere in the country, so that seems to be.

Our operating.

Operator Monday at our way of operating as a business pick a couple of geographies try something new and new products. It could be something that has been utilized for rapid biotech companies market development or therapy development apps have been utilized by Medtronic and Boston scientific and other established companies for many many years, but for US It was new run it.

And a couple of geographies verify that is suitable to our therapy and the dynamism about Alex surrounding our therapy and then if it works if the numbers feel good, particularly when you look at the leading indicators.

And then we started investing more in expanding lease.

I don't know John if you can comment on.

Bill's question about the numbers themselves.

Yes.

Go in details on numbers of what's changed from what we thought a year ago.

Is a pretty different business from where we were at that point in time in December 2020 still.

Art of Covid.

Pre IPO less money on the balance sheet and trying to decide where we're going to make investments as a company right, but when I look at where we are at the end of 2021 and the investments we're making in 'twenty. Two I think it is an add for the Mds <unk> at this point in time in the business and again part of this is driven by.

The need to alleviate workload on the new customers that they can get programs up and running get these physicians educated on what this device can do for their patients for DTC again, it's working with centers.

Are open for business can treat patients with our device and starting to educate patients in and around.

Those activated centers so that they know that this therapy is available to them and that's.

A bit of a step up from where we were a year ago because of the success, we've seen along the way.

Or the R&D side of the house. Some of this is shifting spend money that we thought we'd be spending a little bit earlier in 2021 seeing that shift into 2022 and part of that is just driven by COVID-19 and not being able to get some of the work done that we wanted to get done.

In the last 12 months.

Okay, and then if I could have a follow up I mean, I think the one kind of theme. We're hearing at least I'm hearing is that the time is your friend in your early accounts are becoming a productive.

I mean, that's that's good news right and it sounds like it's repeatable and Youre able to drive it.

Is there is it like after 12 months historically when you really see that benefit is it more of a six month type of thing.

12 months is the number you have given us but is there anything.

Else that we could see.

Where it is today and then.

These investments how should we think about this like this will pull this into instead of 12 months six months or how do we think about that and Thats. All I have thank you.

Yes.

Very good question, what when we plotted all of the <unk> units.

Starting from TV or being the time or the day of the first implant of our new accounts right and your lineup all of the accounts like this and then you add them up and you try to analyze that month by month, what is happening right you would see a first blip. The first two months 123 revenue units.

And sometimes the silence for three four months.

And then they stopped doing one every other month for another six months and then they started getting closer to a one month and im talking get averages alright.

That initial blip as that trial periods, they try to III patients many of our customers.

Got hurt many years ago.

When they embarked on a new therapy, such as carriage events, where they had probably getting reimbursed or with watchman, where the reimbursements was less than that costs. Initially if you recall.

Before they embark and do hours month month after month administration, but on the physicians to say.

Let's do few patients you can observe the clinical outcome on those patients we can observe the payments on those procedures and if both are positive then you can continue and that's what we're seeing at the macro level and the good news here all of our accounts are continuing.

As far as I know right now looking at.

All of the accounts.

All of the 4% to six accounts have done and continue working with our <unk>.

Which is great news right now would DTC accelerate this possibly after month six meaning when they get to month six now they go to their organic patient flow.

And initially of course, they stopped with the sicker patients right. Because then your therapy and then they start expanding a little bit closer to the center of the distribution and the disease progression.

With DTC helped with a physician, except the patience with it the middle of the distribution in terms of the disease severity.

If the patient is knocking on that dosing doctor treated with this device.

I think the answer is yes, our experience in previous trials, whether it was in hypertension, a decade ago and heart failure more recently have shown that physicians have more.

Okay.

Courage, maybe that'll word, but at least more appetite.

Of trying a new procedure, particularly before it gets an FDA approval on patient if the patient has already knocking on the door say Dr. Please give me this therapy.

So yes, it could help from month six and beyond we're not there yet and our data to be able to confirm that it's all speculation at this stage for now I would say Ben.

Although our guidance in terms of what we are saying what you're forecasting we have lot of data that we're looking at our early indicators versus trailing indicators are starting to line up so our ability to forecast the future pending any other major crisis like another COVID-19 wave or something our ability to forecast business when it going a business as usual it seems to be pretty solid right now so we will.

Very happy with it with our data.

Great. Thank you for taking my questions.

Thank you Bill.

Thank you.

I am showing no further questions in the queue I would now like to turn the call back over to <unk> for closing remarks.

Yes, thank you operator.

Thanks again, everyone for joining us for our fourth quarter earnings call I know, it's late in the day, particularly for those on the East Coast. We appreciate your ongoing support.

We look forward to updating you on our progress on our next update Goodnight.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Q4 2021 CVRx Inc Earnings Call

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