Q3 2022 Inari Medical Inc Earnings Call
Good day.
Welcome to the NRG Medical Inc. Third quarter 2022 earnings conference call.
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I would now like to turn the conference over to Caroline corner Investor Relations. Please go ahead. Thank you operator welcome.
Okay.
Joining me on today's call that Bill Hoffman.
Hey, Mike.
And Michel Chief Financial Officer.
This call will include forward looking statements within the meaning.
Private Securities Litigation Reform Act of 1995, all statements made on this call that do not relate to matters.
These statements, including statements regarding the markets in which you already operate.
And expectations for how these products and technology pent up demand for <unk> product.
As expected financial performance expenses and position in the market.
Fact of COVID-19 on our operations and then our customer conference.
These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual work.
Performance or achievements to differ materially from any result performance or achievements expressed or implied by the forward looking statements.
Please review and ours must be filings with the SEC, particularly the risk factors described in our report on Form 10-K for the year ended December 31, 2021 additional information.
The forward looking statements provided during this call, including projections for future performance are based on management's expectations as of today and <unk> undertakes no obligation to update these statements except as required by applicable law.
In our press release with third quarter 2022 results are available on <unk> website, www dot and already medical Dot com under the investors section and includes additional details about <unk> financial results.
Web site also has the latest SEC filings, which you are encouraged to review a recording of today's call will be available on our website by five P. M. Pacific time today now I'd like to turn the call over to Bill for his comments and third quarter of 2022 fitness highlights.
Thank you Caroline and thank you everyone for joining us today.
Our third quarter was perhaps the most productive in our history as a public company.
Revenue growth was again strong and we executed crisply across all of our growth drivers.
In fact since our last earnings call, we obtained FDA clearance for three new products.
Two of which are already in full market release and.
And we reported three new important data readouts in late breaking clinical trial presentations at major major medical conferences, TCP and vivo.
Drew will share some detail about all of this shortly.
But we'd like to start now as we always do with a patient story back.
We're going to share three short patient stories, one for each of our new products.
A couple of months ago, a 58 year old man, an otherwise good health presented to a hospital in Florida was severely swollen legs and in horrible pain.
Was diagnosed with a critical limb threatening condition called critical limb ischemia caused by blood clots in.
And the arteries of his leg.
He had been treated with the same condition a few months earlier via an open surgical resection hand in fact adjust endured two days in the ICU on a thrombolytic trip.
Road by an Endovascular thrombectomy procedure in which a competitive product sale.
<unk> III move his blood clots he.
He was treated with the new <unk> Arctic system and in less than 60 minutes is pain was gone and his legs returned to normal size discharged from the hospital.
The very next day.
In September a new mom, just 26 years old and too long for postpartum presented to an emergency department in Arkansas severely swollen legs and has significant pain.
Because she had a history of blood clotting disorders positions in place several years earlier, you've been at cava filter to prevent a pulmonary embolus.
That filter was now full of plants.
<unk> from just below her chest.
Her knees on both way.
The new and our approach right. She is delivered from her neck.
To just below her heart to ensure no clot embolize for her lungs.
While multiple and already devices were used to remove all of the massive amount of plot in her abdomen pelvis legs. She was home the very next day with her new baby.
Finally also in September a man in his eighties.
With a history of chronic knee pain any history of surgeries reported progressive and significantly worsening symptoms of pain and swelling in both legs.
Had been treated only with anti coagulation for multiple diagnoses of DVT for many years and is now suffering from chronic clos extending from his pelvis to his ankle.
Physician use cloth schriever bowl to remove all of the cloud above his needs.
And the new and Ari in thrilled device to remove the clot below.
Total one already device time on this complex procedure with just 31 minutes.
Charged from the hospital a couple of days later with greatly diminished pain and no remaining swelling misled.
None of these procedures, where possible just a few months ago and in fact two of these patients that already failed multiple treatment attempts with other therapies.
These patients matter to us very much every patient has a history a story of life people, who care about them.
We are committed above all changing lives most beautiful way we are.
We're just getting started.
I'd like now to turn the call over to drew hikes will by the time you hear formerly from him again.
Our next Chief Executive Officer.
Thanks, Bill I'd like to start with a brief summary of our financial performance. Our revenue in Q3 was $96 2 million up $23 3 million or 32% from the same quarter last year.
Results in our core business were driven by strong procedural growth across both cloud schriever and flow through of our product line.
On a sequential basis procedure growth during the quarter was more than enough to offset the revenue contribution as we saw in Q2 from the introduction of bold and entry 24.
We are pleased with how our business performed in Q3 and enthusiastic about how we are positioned for both the remainder of this year as well as 2023.
With that I'll now turn to our growth drivers.
Our first growth driver is the expansion of our sales organization.
You'll recall that we committed to at least 275 territories by the end of 2022 in.
In Q2, we hired our largest sales class ever nearly achieving this goal by mid year, we accelerated our hiring in anticipation of introducing several new products in the second half of the year.
In Q3, we intentionally hired a smaller group and exited the quarter with just over 275 territory.
We continue to believe when fully built out our sales organization will rival the largest in the interventional space, we still have a long way to go.
Continued expansion of our sales organization resulted in smaller and smaller territory. This positions us well to execute on our second growth driver, which is increasing penetration in existing accounts.
Despite our commercial success the vast majority of <unk> patients continues to be treated with anti coagulation alone and never even see a physician with the skills and expertise to make the most informed clinical decisions.
Our goal is to establish systems and processes similar to stroke and MRI that ensure patients are consistently identified screened and evaluated by VT expert.
Our VTS Excellence program is a comprehensive and repeatable approach to connecting VT patients the VT expert.
We have invested heavily in this effort and we believe it is paying off.
We are systematically moving customers to the most advanced stage of <unk> excellent.
Tam penetration rates at these centers are several times greater than our median customer.
Our third growth driver is to build upon our base of clinical evidence.
The past several months have been the most productive in our history in terms of both the quantity and quality of data produced.
First outcomes from the full U S cohort of the Flash registry were presented as a late breaking clinical trial at TCT in September .
Flash is the largest device study ever conducted in the field of P/e enrolling 800 patients across 50 centers.
The study evaluated real world patient outcomes after treatment of P with flow trooper once again, the safety profile was pristine.
The major adverse event rate with just one 8% and on a single device related major adverse event was reported.
Efficacy was also unmatched mini.
Many patients showed meaningful hemodynamic improvements, while still on the Cath lab table.
This again confirms what patients consistently report they feel better immediately.
Most importantly, all cause mortality at 30 days was only <unk>, 8%, which is extraordinary given the 10% mortality consistently seen an update to that.
I'll come a registry of almost 6000 patients.
These results are unprecedented and <unk> thrombectomy.
Rapid thrombus extraction will flow treatment is not only safer than conservative medical management.
Fundamentally alters the natural course of the disease.
Next 30 day outcomes from the fully enrolled 500 patient all Comer club registry were presented as a late breaking clinical trial earlier this week at Veeva vein.
Cloud as the largest mechanical thrombectomy study ever conducted on DVT patients.
Hi, Trevor again demonstrated an excellent safety profile with just one patient experiencing a device related serious adverse events.
Efficacy was unparalleled.
Independent core lab adjudication showed complete or near complete thrombus extraction and 90% of patient <unk>.
In fact, nearly two thirds of patients showed 100% of clot removal, which has never been demonstrated in any DVT trial ever.
Not surprisingly patients experienced immediate symptom relief more than 90% were free of moderate and severe post robotic syndrome at 30 days.
Removing all of the clot matters.
Also presented as a late breaker at vivo vein was a propensity matched comparison of patients treated in the cloud registry versus patients treated with Pharmacopeia canticle thrombectomy in the landmark NIH sponsored attract trial.
Nearly twice as many cloud patients showed complete clot removal compared to attract patients were treated with competitive technology.
Complete cloud clearance improves patient outcomes.
Not surprisingly then cloud patients showed significantly lower rates of pts compared to attract patients.
The three key takeaways from the <unk> studies, our first cloud Schriever is safe.
Gotcha very moves more clot than any device ever studied.
And third <unk> achieved best in class patient outcomes.
This gives us great confidence that defiance, a randomized control trial will establish clocks river a standard of care for DVT treatment.
Enrollment begins in Q1 2023.
Finally, we are excited to update you on purely.
Peerless you will recall is our 550 patient RCT comparing flow Trevor to catheter directed lytic therapy for the treatment of <unk> patients.
Study sites continue to activate and enrollment is well ahead of our expectations.
We will update you periodically on both Peerless and defiance.
We remain committed to the production of high quality data and a lot of it this.
This commitment is based on our sense of responsibility to physicians and patients and we believe the implications will be increasingly clear not only for adoption and growth, but also for differentiation from current and future competitors.
Our fourth throat drivers to expand our product portfolio, we have several exciting developments to share here as well.
First <unk> has now transitioned to a full market release.
The devices a sheet that provides protection to the heart and lung very complex DVT and IDC procedures.
This is important not only in at least 15% of our own procedures, but useful in a large percentage of DVT intervention completed with other devices.
<unk> feedback has been highly positive.
<unk> will be sold outside of our per procedure pricing and carries an average selling price of $4000. It represents a significant potential revenue opportunity.
<unk> is also now in full market release.
<unk> system designed for small vessels, including Avi Fistulas and veins in the upper extremity and below the knee.
We believe the combined total addressable market is 250 to 300000 procedures per year in the U S alone at.
At an ASP of $4000.
<unk> represents an additional $1 billion market opportunity.
<unk> continues to perform well in limited market release the.
This system combines both aspiration and mechanical thrombectomy to treat peripheral arterial thrombosis.
The system was designed to achieve complete clot removal, while minimizing the risk of distal embolization.
We estimate the annual incidence of peripheral arterial thrombosis in the U S is approximately 80000 cases.
With a target asps of $7500.
<unk> represents an incremental market opportunity of $600 million.
We will share additional updates on Arctic as we progress through the remainder of the LMR.
In summary during 2021, we launched five major new products the.
To date in 2022, we have launched six new products, including solutions to address three new Tam.
As a result, our total Tam has increased from $5 8 billion to over $8 billion in the U S and over $20 billion globally are.
Our pipeline is full and we look forward to sharing additional new product releases soon.
Our last growth driver is expansion into international markets.
Q3 marked another quarter of record case and revenue growth for O U S business driven by continued adoption in Europe .
We have an established an initial commercial footprint across the entire European market and are largely following the same playbook in commercial system as our U S business.
Beyond Europe . We also saw strong case growth during the quarter in our existing markets in Latin America, Canada and Asia Pacific.
We are continuing to work towards additional market launches across these regions during the remainder of this year and into 2023 <unk>.
Despite this progress as we've noted previously international will not be a material component of our overall revenue mix for the near term.
Taken together, we believe we are making excellent progress across all of our growth drivers our.
Our strategy is working and we believe we can and will grow consistently for many quarters and years to come despite all our progress make no mistake. We are just getting started.
With that I'd like to turn things over to Mitch.
Thank you drew and good afternoon, everyone.
<unk> revenues for the third quarter of 2022 were $96 2 million up $23 3 million or 32% from $72 9 million for the same period of prior year.
Paired to Q3 of 2021, our revenue growth was due to continued efforts to open new customer accounts expand our sales force and deepen our relationship with existing customers.
Also been successful introducing multiple new products to expand both the flow Cheever and clock Schrieber product line.
The revenue split between product lines with substantially the same year over year with 31% of our revenue derived from sales, but cheaper products during the third quarter of 2022.
Versus 30% in 2021, and 69% derived from sales of <unk> compared to 70% in 2021.
Gross margin was 88, 5% for the third quarter of 2022, compared with 93% for the third quarter of 2021. The decline was primarily due to the addition of new products to our flow cheaper toolkit, which add additional cost to goods sold due to our per procedure pricing approach.
Operating expenses were $94 9 million in the third quarter of 2022, compared with $68 6 million for the same period of the prior year.
R&D expense was $19 1 million in the third quarter compared with $12 5 million for the same period of 2021.
The $6 6 million increase in R&D expense was primarily driven by an increase in head count as well as product development and clinical evidence development costs.
These initiatives are consistent with the company's previously discussed growth drivers.
G&A expense was $75 8 million in the third quarter of 2022, compared with $56 1 million for the same period of the prior year the.
The $19 7 million increase was primarily due to personnel related expenses as we increased head count across the organization and secondarily due to higher marketing costs travel expenses and facility related costs.
Net loss for the third quarter of 2022 was $10 2 million compared to net loss of $2 8 million for the same period of the prior year.
Basic and fully diluted net loss per share for the third quarter of 2022 was 19.
Just on the weighted average basic and fully diluted share count of $53 5 million east compared with a basic and fully diluted net loss per share of <unk> based on a weighted average basic and fully diluted share count of $50 million for the same period of the prior year.
Before I move on to the balance sheet updates I'd like to comment briefly on the company's Q3 operating loss of $9 8 million as you know we continue to invest aggressively in our growth drivers. This has served our patients a company well and contributed to our significant growth I'd like to reiterate that we intend to be consistently profitable.
Commencing in the first half of 2024.
Moving to the balance sheet, our cash and investments at the end of Q3 totaled $319 2 million consisting of $83 5 million of cash and $235 7 million of short term investments.
By way of reference our cash and investments as of the end of Q2 2022 were $335 million.
Our cash flows used in operating activities was $13 1 million for the third quarter of 2022 compared to cash flows used in operating activities of $5 6 million in the third quarter of 2021.
Next I would like to address <unk> financial guidance for the full year 2022, we are raising our revenue guidance to 373 to $3 5 million.
From the existing range of $360 million to $370 million.
Consistent with prior years, we will provide 2023 guidance early next year. However, if it's not apparent from our prior remarks, we remain extremely bullish in our business and our ability to grow next year and beyond.
With that I'd like to turn the call back to the moderator for questions.
The Q&A segment, Bill drew and I will be joined by Dr. Tom Two <unk> Chief Medical Officer.
Thank you we will now begin the question and answer session.
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Today's first question comes from Travis Steed Bank of America. Please go ahead.
Hey, great. Thanks for taking my question and congrats on a good quarter I.
I guess, just a follow up on some of the 2023 comments.
Committed to some strong growth, but that's right.
Is that 20% growth right now.
Kind of curious if that's a good place to be for now and when you think about that number it seems like the base business alone could continue doing 20% growth kind of longer term I don't know if you'd be willing to say that on the base and then.
Any color on how to think about the new products.
Yes, thanks for that Travis. This is drew I can start on that and then Mitch maybe want to follow up with some of the more specifics on the financials, but yes, Charles I think in general as you heard we feel really good about how we're positioned here looking ahead to the end of this year and that carries through right.
Through 2023 as well we've got the Mega class that is ramping and kind of hitting the sweet spot of their productivity.
We've got not one but two new products now.
And full market release, representing incremental revenue opportunity we have.
Got our VTS <unk> program that is really starting to click on all cylinders and gain meaningful traction.
We've got new data that we're able to leverage both with flash as well as just this week with the cloud data set as well so taken together, we feel very confident.
Looking ahead to the end of this year and out into 2023 as well, we're going to stop short of providing any specific guidance on 2023 today that will come early next year.
But did want to reiterate how confident we are feeling when we look across all of our growth drivers with that I don't know Mitch. If you have anything you wanted to a couple of comments to add to that.
This was our year over year growth I believe is about 32% quarter to quarter. So I think we feel like we continue to have a business with a tremendous amount of growth potential.
Because of the current penetration rate in the addressable market. We think this business has a very attractive growth opportunities for many quarters and years to come I think you also asked about the new product contribution and maybe I can just comment that as we were kind of working through Q4, we have the two new products.
<unk> announced in full market release, we're working through the Vac approval process and other things with our hospital customers.
Kind of getting stuff out into the field.
We're excited about the potential we see for these two new products.
As you know both of them actually are incremental to the <unk>.
Especially given the clarity of our products, which had been selling for some time.
And I think as we get into the first part of next year, we'll continue to find ways to update you on the progress that we're making with <unk> products and their acceptance in the marketplace.
Alright. Thank you thanks for the color and fully understand in 2023.
I guess the follow up would be on an opex.
Growth.
I was kind of curious how youre thinking about that given your commitment to somewhat profitable profitability moving forward.
It requires something around like 10% opex growth of it'd be closer to the 40% that you did this quarter.
Is there any kind of help on how you're thinking about managing expenses and the operating expenses moving forward.
Yes, so I can start on that one I think you've seen us invest aggressively across all five of those growth drivers and that's been intentional and deliberate.
The result has served us really well served patients really well it is.
Allowed us to build.
Some impressive capabilities and competencies that we're going to be able to leverage going forward.
Relative to the profitability I think youre going to see us begin to make meaningful progress on our operating income as we move through next year and look ahead to 2024.
Got some some advantages in that effort starting with gross margins in the mid to high 80%. We've got a really efficient commercial system on top of that and I think we're gonna be able to make progress.
Towards that longer term profitability goal simply.
Simply by easing off the gas and some of these areas that we've been investing in.
Got an infrastructure now that we've established in clinical but I do think gives us a base to build on its operating leverage opportunities.
In the same regard in the R&D organization I think we've established and built an engine and infrastructure that we can and will leverage from an operating perspective going forward. So I think youll see us make progress along those lines as we move through 2023, and you heard Mitch reiterate.
Our intention to be consistently profitable as we enter the first half of 2024 and that continues to be how we're thinking about.
Operating income in Opex investment from here forward.
Thanks Travis.
Sorry, Travis just comparing the Q3 figures for example for R&D and SG&A. So Q3 of 2022 and you compare back to Q3 of 2021.
So we had significant growth for the reasons that you explained, but we would expect as we move into the 2023 timeframe that youll see.
Much more moderate growth in the R&D line. The SG&A line I think we would primarily be growing due to the S. Part of that as opposed to the G&A part of that and we feel like <unk> really terrific.
<unk> to leverage in and reap the benefits of these investments we've been making across our five growth drivers.
Great. Thanks for that and congrats again on the quarter. Thanks.
Thanks Travis.
Our next question today comes from Cecilia furlong with Morgan Stanley . Please go ahead.
Hey, great. Good afternoon, and thank you for taking my questions I wanted to start with some of the new product launches today. If you could just talk about both approaches and in through really where you are at this point from an account introduction standpoint, and if you could talk about into 2004 to how that's ramped from our account penetration.
And then and it's tied in with that too any way you could frame or quantify just the sequential net headwinds from new product introductions in <unk>.
Sure. So I can start on some of those so for both <unk> and it's really hurt us.
Talk about now moving into full market release. So during Q3, we completed the limited market release with both of those platforms and in that process, we collected not only clinical and technical feedback from how the products were performing but also some important commercial feedback as well and all of that informed.
The decision in both cases to move into full market release with pro treatment and thrill and that's the phase we're in now.
Sitting in Q4.
That means we've got the products broadly released the entire field organization has access to those products and we are in the process of bringing both of those platforms to the broader account base keep in mind that requires us to navigate through the.
The vac approval process and.
And gain approval and get those products established in the hospital and purchased inventory on the shelf initially.
Initial in servicing and training completed with the staff. So theres. Some work obviously required here as we move through that FMR and we're still in the early phases with both approach or even intro of that FMR work.
As a result, we would anticipate pretty modest revenue contributions at least in Q4 from those two products given the work we need to do.
That I described in the early phase of the FMR looking out to 2023, I think we will anticipate obviously more meaningful.
Revenue contribution from those two.
Specifically.
<unk> hundred 24, which is another product you mentioned on that has been in full market release now for some time, you've heard us talk about the initial.
Revenue that were generated by by placing in through 'twenty four and bold.
Back in Q2.
And at this point in through 'twenty, four is being used north of 90% of our flow Trevor procedures here in the U S are using entry 24. So it's been broadly adopted at this point.
Maybe just to touch on the last new product that you did mentioned, but just to touch on Arctic we are moving through the LMR still with that product. We are getting good feedback where like what like what we're seeing but we have more work to do to get through the remainder of that LMR and we'll keep everyone posted as we finish up that LMR on Arctic <unk>.
The other thing you'd want to.
Beyond that I think you also asked about the headwinds from Q2.
And as Joe just mentioned, we had a really terrific acceptance as we launch the bold and the.
Into 'twenty four project.
Products in Q2, and those two products, obviously that with some revenue in Q2 that doesn't appear in Q3, but we are pleased with the performance of the quantity of your franchise in Q3.
The procedure growth and the other things that we normally would be looking at to sort of make sure we have a healthy and growing business there.
And if I could just follow up.
Around your your recent classes Salesforce hires what youre seeing from a productivity standpoint at this point and then recognizing it's early in some of these product launches, but just your initial take on how youre thinking about.
Either a single sales force going forward on our thoughts around potentially a second source to really drive penetration of your whole product portfolio.
Sure so from a productivity standpoint, the biggest dynamic was us bringing onboard that mega class that you've heard us reference back one quarter ago now that was the largest class that we had ever brought on we did that intentionally looking ahead to the second half of the year. When we knew we'd have these new product launches to focus.
On but as a result of bringing on that big bolus of.
New sales professionals, obviously, the productivity took a hit as a result anytime you bring on a large class like that we have been digesting that class over the last 90 days now and we're starting to see the productivity recover just what we would anticipate and what we've seen with every other class. So we like what we're seeing so far.
We did hire a much more modest class here exiting the quarter. So we're continuing to kind of arrest and digest and allow that mega class to ramp up their productivity curve.
While also focusing on.
Some of the new product launches.
We have decided for now to bring pro treatment in thrill out in the bag of the existing sales organization that was a decision that was informed by the information we collected during the LMR, we think given the overlap in the site of service and the overlap in the interventional call point as well.
That it makes good sense to start those two products.
In the.
The large sales organization.
Keep a close eye on anything that would signal that were distracting.
The <unk> business, but right now we think it makes the most sense to put all of that and the existing channel.
If we do decide at any point that we'd be better served to have a separate sales organization. We believe given the characteristics of.
All of these new markets that we've targeted we would largely nonetheless be able to follow the same.
Commercial system and the same commercial playbook that we've developed for VT, even if we were going to stand up a separate organization. So we will continue to keep an eye on all of those considerations as we move through the initial FMR and get a better sense of how the products performing in a broad release.
Thank you for taking the questions.
Thanks Cecilia.
And our next question today comes from Larry <unk> with Wells Fargo. Please go ahead.
Good afternoon. Thanks for taking the question just wanted to start with the implied Q4 guidance Matt Bye.
So about 18% year over year at the midpoint, it's only up about 2% quarter over quarter last year, Europe , 14% quarter over quarter.
Is there if something was there something one time in Q3 or is this something you are seeing in the environment that makes you cautious given that call. It 18% at the midpoint, how should we think about that in the context of next year and I had one follow up.
Yeah, Larry Thanks for the question, Yes, I think as we were looking at Q4, obviously, we're pleased with the opportunities that you've heard us described including the new products in the field, which are sort of getting out there into the hospital we're not we're.
We're not necessarily seeing a lot of contribution from those products yet in Q4, but excited about the potential that they represent for 2023.
We are still wrestling with some of the staffing shortages, which I think you've kind of heard about from everybody in queue for us.
The challenging quarter, sometimes in some of the holidays that go on during the quarter. So I think as we were.
Thinking through the quarter and.
Thinking about how we would likely finish the year. We just wanted to be very confident about that and make sure. We did not get ahead of ourselves from a guidance point of view.
We are very excited obviously as we've expressed about 2023 and we're bullish about the prospects of the business next year.
That's helpful. I wanted to ask on the <unk> the feedback has been very good.
True.
Where do you see this going in terms of percent of your DVD pvt cases today.
Do you see an opportunity for protein outside with competitor devices and how much pull through do you think this could.
Good drive for your devices in other words, you know people switching from competitor devices to appropriate. Thank you.
Yes, sure. Thanks for that Larry So if we go back a year or even a year and a half.
The early days of the development work with <unk> as we shared that product with some of our Kols and gathered feedback on the pipeline that one product approach. We've always stood out immediately with many of the DOCSIS is addressing a significant unmet need and being a very novel solution and so we were.
Encouraged by all that and I think.
Everything we saw during the LMR has I think underscored the value that that product.
It has the potential to address a significant unmet need.
We believe at a minimum.
Appropriate can be used in about 15% of our existing DVT procedures and those are the more complex DVT cases, where they've got not only involvement in the femoral segment, but also up in the <unk>.
<unk>, a cable and they've got a significant clot burden that they may be concerned about <unk> as they work to address the clot.
Exactly what we saw play out in the LMR and I think going forward. We are encouraged that that's what we're going to see and broad commercial release as well.
That utility is present not only in our own country of our cases are one DVT cases, but we also believe <unk> can provide value and clinical utility even in DVT interventions that are being done with competitive platforms and I think it's a way for us to add value in those procedures and obviously in the process.
Yes, I have some real commercial advantages in that as well. So we're encouraged by what we saw in the LMR and I think as we move through the FMR hopefully those same advantages.
We will come will come through as well.
Alright, thanks, so much guys.
Thanks, Larry.
Our next question today comes from Sean Lavin with <unk>. Please go right ahead.
It looks like they have my predecessor still on this is marine Tivo from BTG.
Thanks for taking the call.
Thanks.
So don't be surprised that nobody is asking questions.
Congrats on a very nice quarter.
Wanted to ask one here my first question here on the procedure environment. You mentioned just in response to the prior question. So wrestling with some staffing shortages I know in the prior quarter, you talked about reduced interventional capacity would love to get an update on.
How things are going it certainly didn't seem to impact this quarter's results.
Yes, somewhere I think in general our sense is those staffing shortages are certainly still present in the vast majority of our accounts and that's true across the country.
So they haven't been magically addressed.
We do believe and I think you've heard this from others as well that they've stabilized and I think in some cases or many cases hospitals have.
Become more adept at navigating their way around those staffing shortages, but they are still present.
We're able to execute through them, we've got a nice.
<unk>.
Story, we're able to tell around.
Modest footprint positive economic value proposition of single center intervention, so and a lot of ways those staffing shortages, we're able to to navigate our way through them and I think that's exactly what you saw us do in Q3, so there's still out there they are stable and we're finding a way to.
To help patients despite some of those headwinds.
Okay. That's good to hear maybe I'll ask my second question, a little away from results in the conversations I have with investors, we still hear a lot of questions and competitive chatter.
Wanted to hear from you in your own words I guess.
Your thoughts on some of this.
Competitive chatter, what you hear out in the marketplace.
We should be taking away from from all of that thank you.
Yes.
Over the last 12 months.
We have been asked pretty consistently about Jedi and Wolf in Angio, Vac and health of clot Hunter.
Quick clear the share on the <unk>.
Just goes on and on.
At the same time over the last year to be candid I don't think.
Any of those platforms have had a meaningful impact in the market and I think theres a couple of reasons for that first reason as you've heard us share. This in the past this is harder than it looks.
The idea of simply getting a quick five 10-K for a catheter platform and bring it to market and experiencing explosive growth or a big impact I think it's simply harder than it looks and there is much more work to do from a development standpoint, certainly from a clinical standpoint to get some of these new platforms.
Forms on label for P/e.
From a regulatory and commercial standpoint, all of it is harder than it looks.
Secondly.
I think being able to compete.
These new platforms based upon a widget alone I think is also increasingly difficult and I think it stands in contrast to how we have approached the market. Even if you look just over the last year at what we've been able to accomplish in that same timeframe.
We're at 275 north of 275 sale.
<unk> professionals.
Closing in on 350 people in our field organization. If you include our sales leadership team our national accounts team, our health economic and market access team or in our solutions group team closing in on 350 people.
Across that organization, our VTS excellence program.
Built out now in a very comprehensive way in a way that we think is going to be repeatable and scalable and helping develop.
These these VT programs and innovation engine.
Two dozen.
Programs in development.
New markets, new patient populations fourth generation product now flow <unk> cloud <unk> nine separate tools in the <unk> toolkit five in the cloud trigger toolkit I think all of that speaks to how comprehensively. We are approaching this market the kind of investments that we've been making.
Consistently across those growth drivers and I think it stands in contrast to some of these emerging competitors.
Clinical is another area that I think.
We have approach and I think in a very differentiated.
<unk> approach, Tom do you want to.
Talking about clinical yes, I'd love to maybe just to add one more point to that.
As these markets grow and as our customers become more sophisticated you see an ever increasing value placed on high quality data and of course, we have.
Very large the largest ever prospective registries in flash and cloud you see sophisticated statistical analysis.
Comparing our results to former landmark studies like attract there's just no other competitor out there that's leading the way in this.
In both quantity as well as quality.
Not to mention to simultaneously run RCT and possibly more to come. So we're really excited that not only are the devices working the commercial.
Engine is humming along but.
You heard me described earlier, we do need to navigate our way through the back approval process for each of those two new products as we enter the initial phases of this full market release.
So as a result, we would anticipate pretty modest revenue contributions here in queue for.
From.
From pro trees and and thrill.
On the Rep productivity side, yes, those those Mega class.
Reps are ramping through their productivity curve and hitting the sweet spot of their productivity.
At the same time as you heard Mitch described.
As we've always said when we put a number out there we want to be highly confident in our ability to hit.
That commitment we do have the staffing shortages that are still out there that you heard us talk about we've got seasonality with the holidays here at the end of Q4 I think all of that is included in the guidance that you heard Mitch.
Put out.
Thank you that.
Okay.
And then just I was wondering if you could give us some qualitative just on.
Historically, you've talked about accounts and a new county, that's kind of where you in that transition of bringing a new accounts versus going in deeper and if you could quantify maybe the new account growth on a percentage basis year over year and then just lastly for me any commentary on ESP trends. Thanks.
Yeah. So from an account standpoint, Bill we're we're closing in probably north of 1500 accounts at this point active accounts across the country. So we continue to add.
Each and every quarter.
That new AD rate is slowing as you would anticipate we've talked about someplace in the neighborhood of 2000 target accounts. So we're.
Approaching the later innings of that account build out which is exactly what you would expect as a result.
The vast majority of cases and incremental case growth in the quarter is already coming from establish accounts in fact in Q3, 98% of our cases came from existing accounts from accounts, where we had already established a presence in and we're driving deep.
For adoption.
Particularly by leveraging our VT excellence.
Program so.
I think that will continue to be the stories. We look ahead to 2023 clearly.
Penetration adoption.
Will continue to drive the vast majority of our growth and already candidly are doing so already.
Relative to Asp's the second part of your question.
Stability across the board in Q3, no big changes from that standpoint.
We're still able.
As contracts come up for renewal to take price.
Tend to take price and we succeed more often than we fail.
We're able to point to some of the new products that we have brought forward underneath that purpose he'd your price.
Model.
As rationale for those price uplifts or at least price stability, if we're not able to get the uplift. So no big changes there and I think all that continues to reflect the strong underlying economic value proposition that both products and joy.
Great. Thanks for taking my questions.
Thanks Bill.
Thank you and our next question comes from out of meter Piper Sam.
Some are please go ahead.
Hi, good afternoon. Thank you for taking the questions and congrats on the progress.
Maybe to star wanted to ask about clock cheaper bold and see if there's any update their <unk>.
In terms of uptake, where do volume stand with that product.
Our clinicians using bold predominantly for chronic clot or you also seen a mix of chronic and acute plot use and just how do we think about that application over time, then I have a follow up.
Yeah.
Thanks So.
Just to remind everybody on bold so that is the same clock tuber platform with one key improvement and that is.
A stronger radio for some leading edge of the coring element, we did we did that really too.
To design it to do a better job on tenacious chronic clot.
Bold as in about 50% of our accounts at this point.
Seeing it used kind of at the frontline.
Go to product for all DVT interventions, both acute and chronic.
We're clearly getting good feedback on how it performs in all of those settings.
I think in many cases it can result in fewer passes just because it's doing a better job of removing the cloth.
So it is being used as a workhorse and what would be historically, our core DVT products at the same time bold is also I think giving us access for the first time.
To that new chronic venous disease patient population patients that have truly chronic clot that is months or even years old and that bold is strong enough to try and address the underlying cause of their disease.
Bold in that sense is the first of what will be a toolbox that we will build out over time, a purpose built toolbox specifically for chronic venous disease, you heard us talk about some of the new tools that we're going to add to that toolbox and we have a stent cleaner product. It's now branded as Rev core, which will come out next year would kind of suck.
Recanalization tool there'll be added to that toolbox.
All of those designed specifically for this chronic venous disease patient population. This massive group of patients with spectacular unmet needs, where we believe we can help make a difference by addressing the underlying cause of their disease. So we're in the early stages of focusing on that patient population, but bold is front and center today for that effort.
As well.
That's really helpful. Drew thank you for that and the follow up wanted to ask about <unk> you are randomized control trial with Clark Schrieber versus anticoagulants.
I think I heard that's going to start enrolling in Q1, how quickly do you think that trial can enroll are you able to share any details at this point in time.
And I think I heard you.
Mentioned that you think.
Cloud fever can become standard of care. If it's successful so maybe just flush that out a little bit as well. Thanks again for taking the clients.
This is Tom I'll I'll talk with that question. So firstly defiance, which is in <unk> in the Dvt's space is comparing clock schriever, two anticoagulation for treatment of Julio femoral DVT.
Design of defiance was based on our vast experience using the cloud 500 data, which you saw presented Monday morning, and I think really serves as the next phase of our understanding of interventions treatment for DVT two updates on.
Rather.
Long in the tooth now attracts data so we have some comparisons of clouds to attract which.
Offers very good commentary as to the progress we've made in our technology, but defiance as in RCT that is true stated previously may very well change the standard of care for this disease state.
As far as the specifics.
DVT trials, historically do take a little bit of time to enroll.
Heightened level amongst our customers is high.
We're going to kick off Q1, once we complete.
The site selection process I think there's gonna be a lot more to say about this specific trial design as well as some of the outcomes.
Thank you.
Thanks, Adam.
Alright next question comes from Richard Lunar was through security. Please go ahead.
Hi, Thanks for taking my questions just a couple here.
On the.
Data that you had it veins flashing the clock Register.
Curious the data sets there what was the feedback and do you do.
Do you expect any material impact.
To the market adoption curve here from beads, or you really kind of looking more for defiance Peerless does that except.
The tone for standard of care type potential.
This is Tom here I was in the room when the two cloud 500 datasets.
Datasets were presented and I will tell you there were two different reactions that I detected. The first was one of <unk>.
Nodding confirmation that yeah of course cloud is safe.
<unk> is the best in class device for thrombus removal not much of a surprise for many people in the room who've had caught schrieber experience on the other hand, I would say the overarching take home message from the audience was that the level of sophistication of this data as well as.
The quantity of the patient studied in the abstract after abstract publication after publication podium presentation. One after the other is something that is just unparalleled compared to some of the <unk>.
More.
Early entrance that our competitors had to offer at this late breaking clinical trial presentation.
As far as commercial adoption is concerned I think that really is dependent on our commercial team's ability to communicate the value of this.
Clinical data certainly not all of our users have the opportunity to attend these meetings or even read the updates on online and I think there's always the boot.
Boots on the ground hand to hand combat, but we've armed our commercial team with the best possible information with which they can use to influence their customers.
Great.
And then just two quick ones. Additionally, on how should we think about new products impacting your gross margin, especially as.
With separate AFP and been moving through 2023, and then just on your Rep hiring it's one of the more impressive faster bigger cadences obscene of hiring rep. So quickly.
What's your confidence in being able to bring everyone kind of up to predict productivity curve in a predictable fashion, we've seen territory splitting in the past when it's happened as aggressively come with some pain. So I just would love to hear how you guys are insuring. The Onboarding goes smoothly, there's no hiccups. Thanks a lot.
Ah Richard Thanks for those.
First on the margin on the new products.
Pro trees is priced as a standalone skew at 4000.
And trail also priced separately from flow treatment cloud schriever as a separate.
System based price also a 4000 the margin profile of each of those is fairly similar in the same neighborhood as flow Traver and cloud Schrieber I think is Mitch talks about.
Mid to high eighties is a pretty good range for our gross margin.
That includes the impact of those new products and.
In terms of the productivity and.
The new folks were brought on board.
It's been a very fast ramp.
We've done that intentionally.
As part of our overall commercial system.
Many of those ads and certainly all of the recent ones are in the.
In the nature of a territory split.
In that position than both the legacy Rep and the new Rep to look after smaller territories and as a result have bandwidth could do the kind of work we need to do for BT excellence.
And driving adoption and penetration so that's been a key part of our overall commercial system.
Compensation.
Program that aligns the sales professionals incentives towards territory splits.
Usually for up device company Ah splits good for the company and not so advantageous for the sales professional we've been really deliberate about designing a compensation program that actually aligns the reps.
And has them.
Welcoming territory splits as a result, and that's been a key part of why we've been able to add as quickly as we have up to now and will continue to be a key part of our system going forward as well.
Thank you.
Yep. Thanks, Richard.
And unfortunately it comes from the <unk>. Please go ahead.
Good afternoon, and thanks for squeezing the in here.
So my first question just to follow up on artists.
Talking about having some more work to do you know being in the LMR can you just talk about or elaborate on.
What's next work do you have to do that is remaining and maybe the timing left before you can transition to FMR.
Sure Michael So.
<unk> just to remind everybody that is a product designed for peripheral arterial thrombosis.
Two part system today, we've got a balloon guide sheath with.
Provides proximal flower asked and prevents distill embolization and then a second component that system to mechanical thrombectomy <unk>.
Component as well.
We've gotten good feedback on how that system has performed and the LMR and.
And we're about where we thought we'd be at this point keep in mind that as a smaller market.
Then some of these other new markets were getting into and as a result, we knew that the LMR would likely take a little longer we don't have a specific timing.
Timeline associated as Lmr's, we're really most focused on is gathering the clinical and technical and commercial information that we're seeking the LMR so that will be what governs the timing from here.
Certainly it will likely last through the rest of this quarter and into next year before we're in a position to decide whether or not that product and system is ready for.
<unk> Prime time and for full market release, but so far so far so good and we like what we're seeing and hearing from the docks and we'll keep.
Executing on the LMR and keeping you appraised.
Praise as we move forward.
Great. Thank you and follow up is just on the V. C E. Excellent program, you've talked about some hospital staffing shortages and impacting procedures.
You're working around those I was just curious what type of impact does that have on progress you're making an excellent program just with the thought that once we do get to a point, where a hospital staffing resolved and.
And there are less capacity constraints, you expect to see an acceleration in progress.
What your beauty E excellent program is driving.
To do that work associated with VT excellent to do the work to develop these programs and systematically identify risk stratify and bring these patients forward to to caregivers it really understand the disease.
To do that kind of work you need folks to have bandwidth at the hospital and so certainly for instance, during the pandemic the height of the pandemic.
That was a challenge if your hospitals inundated with with.
Covid patients you understandably don't have a lot of time or bandwidth.
To focus on program development for VT E. I think in some ways. A similar theme is played out with some of these staffing shortages at the height of those challenges.
Some accounts they simply didn't have bandwidth and time to be able to focus on.
Program development and do the kind of work in partnership with Us to develop these programs I think in both cases, both with Covid as well as with the staffing shortages the environment is more conducive today.
There is more bandwidth today more receptivity.
For us to do that work in a partner with accounts in those ways. So I think certainly in Q3.
We began to see a more.
Conducive operating environment, and I think we're seeing good traction and increasing impact from that VT excellent effort and program.
Michael and stuff I can just add I, if you think about the.
I think you mentioned during his comments you know, we're just getting started sometimes here say that.
Excellence is <unk> is a great example of that and we're making great progress getting good traction in many hospitals and some of the academic medical centers, though.
[noise] surprised anybody they're looking for more data so as I think as you think forward over the next year or two three and you see is completing the enrollment in a randomized clinical trials and reported in those results. Ultimately you can kind of see multiple ships coming into harbor at the same time, and that's something I think thoughts and beliefs.
Cause a change not only in standard of care, but hopefully a change in the intervention rates and the products that are being used in the marketplace and so we're really playing a long game here and we appreciate the support of all of our investors who have that kind of share that vision for where we wanted to go with this business.
That's helpful. Thank you.
Thanks, Michael.
And our next question comes from the <unk> with the combo. Please.
Please go ahead.
Hey, good afternoon, Thanks for taking my question.
Focus only been on the O U S expansion.
Any major improvements in reimbursement.
Across any of the geographies.
And just a little bit of color on the expansion of the commercial precedent across.
Dragan fees that you currently.
[noise] are already in specifically, Germany would love to know kind of how the sales team is going on that front.
And lastly, just from the O U S revenue standpoint.
Would love to know the cadence of growth.
Quarter over quarter, I know sequentially too, but has that growth rate similar over the last.
Quarters or would love to get a <unk>.
Gage at that.
Sure sure Thanks for those.
So we.
We saw a record growth and Q3 across the U S.
Franchise and that was driven primarily through our efforts in Europe , we do have that initial commercial footprint established.
And I think on a go forward basis.
More of the growth will come from productivity gains from that existing initial investment in infrastructure that we built as opposed to.
Probably adding as aggressively as we've added over the last year. So I think we will see us begin to grow into that investment and I think additional.
Going forward will be more governed by productivity gains and gated too.
Growth.
In terms of the reimbursement.
Big <unk>.
Changes in Q3, we've got.
And Germany, we're still doing work to get reimbursement established broadly in France.
We're doing some work in the UK so no big announcements are changes.
Just continued execution and continued growth and candidly continued record.
Revenue in case growth, albeit still at a scale as you heard us.
Talk about that that's still not material to the broader overall commercial franchise.
Great maybe if I could just follow up and just compare the OAS expansion opportunity with new products here I guess from a materiality standpoint for revenue Yeah would you expect kind of poetry or text and trail.
In combination to here in the U S.
More material than O U S over the next year.
You want to take that y'all try I'm trying to get started on that one.
So we are as you've heard has talked about the U S revenue.
Said that.
But it was a record quarter, we're really pleased with the growth of the business outside the U S.
Having said that it's not material from the point of view of breaking an AD on our financial statements and I think we would sort of be following a similar approach with the new products again very excited to two new products that are in full market release.
Working through the hospitals that processes those are going to begin to get some traction in queue for but more significant progress in 2023 and as those become more significant contributors to the business you know from a revenue point of view and will will ultimately break does that in our financials I think for the <unk>.
A term we don't expect that they are going to sort of.
<unk> that kind of a magnet.
Magnitude relative to the revenue, which is being produced by the <unk> by the flow cheaper franchises.
Oh, Thank you very much.
Thank you to.
Ladies and gentlemen, this includes sleeves question answer session.
Conference call.
You all for attending various presentation, you may not as furniture lines and have a wonderful evening.
Thanks, everybody. Thank you.
[noise].