Q3 2023 CVRx Inc Earnings Call
Speaker 1: transcript
Speaker 1: Greetings and welcome to the CVRX third quarter 2023 earnings.
Greetings and welcome to the C V Rx third quarter 2023 earnings call.
Speaker 1: transcript
Speaker 1: At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation.
At this time, all participants are in listen only mode.
<unk> and answer session will follow the formal presentation.
Speaker 1: transcript
Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, please press star zero on your telephone keypad.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker 1: transcript
Speaker 1: I would now like to turn the conference over to your host, Mike Valley, from ICR.
I would now like to turn the conference over to your host Mike Vallely from ICR Westwood.
Good afternoon. Thank you for joining us today for CVR <unk> third quarter 2023 earnings conference call.
Speaker 2: transcript
Speaker 2: Good afternoon. Thank you for joining us today for CBRX's third quarter 2023 earnings conference call.
Speaker 2: transcript
Speaker 2: Joining me on today's call are the company's President and Chief Executive Officer, Nabeem Murad and his Chief Financial Officer, Jared Ocho.
Joining me on today's call are the company's President and Chief Executive Officer, and it'd be mirrored and its chief financial Officer Jarrett Osha.
Speaker 2: transcript
Speaker 2: The remarks today will contain forward-looking statements, including statements about financial guide
The remarks today will contain forward looking statements, including statements about financial guidance.
Speaker 2: transcript
Speaker 2: statements are based on plans and expectations as of today which may change over time.
These statements are based on plans and expectations as of today, which may change over time.
Speaker 2: transcript
Speaker 2: In addition, 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 10Q that will be filed with the SEC.
In addition, <unk> actual results could differ materially due to a number of risks and uncertainties.
Cleaning those identified in the earnings release issued prior to this call and in the company's SEC filings, including the upcoming Form 10-Q that will be filed with the SEC.
Speaker 3: transcript
Speaker 3: I would now like to turn the call over to CBRX's President and Chief Executive Officer, Nadim Yared. Thank you, Mike, and thanks to everybody.
I would now like to turn the call over to <unk>, President and Chief Executive Officer Nadeem yard.
Thank you, Mike and thanks to everyone for joining us.
Speaker 4: transcript
Speaker 4: I'll begin today's call by providing an overview of our third quarter performance, followed by an operational update and a review of our financial results by our CFO Jared O'Shein.
I'll begin today's call by providing an overview of our third quarter performance, followed by an operational update and a few of our financial results by our CFO tried idose height.
Speaker 4: transcript
Speaker 4: Then I will conclude with our thoughts for the rest of the year before turning to Q&A.
Then I will conclude with our thoughts for the rest of the year before turning to Q&A.
We maintained positive momentum in the third quarter building on the strengths we delivered during the first half of 'twenty 'twenty C.
Speaker 4: transcript
Speaker 4: we maintain positive momentum in the third quarter, building on the strengths we delivered during the first half of 2023.
Speaker 4: transcript
Speaker 4: In particular, the performance within our US heart failure business continued to surpass our expectations by growing by more than 90% in the quarter.
In particular, the performance within our U S heart failure business continued to surpass our expectations by growing by more than 90% in the quarter.
This is a testament to our team's ability to accelerate adoption of baddest him through the increased case of our commercial organization and all the marketing and awareness efforts.
Speaker 4: transcript
Speaker 4: This is a testament to our team's ability to accelerate adoption of Peristim through the increased scale of our commercial organization and our marketing and awareness efforts.
Speaker 4: transcript
Speaker 4: Parastem therapy continues to gain traction and the feedback we receive from physicians and patients is very positive.
Better still centipede continues to gain traction and the feedback we received from physicians and patients is very positive.
Speaker 4: transcript
Speaker 4: Now, let's dive into the details of our performance.
Now, let's dive into the details of our performance.
Speaker 4: transcript
Speaker 4: Starting with the review of the quarter, worldwide revenue was $10.5 million, a 70% increase over the third quarter of 2022.
Talking with the review of the quarter words wise it hasnt yet.
$10 $5 million, a 70% increase over the third quarter of 2022.
This was a direct result of execution within our U S heart failure business, which grew by 92% over the prior year.
Speaker 4: transcript
Speaker 4: This was a direct result of execution within our US heart failure business, which grew by 92% over the prior year.
Speaker 3: transcript
Speaker 3: These results were achieved through the increased utilization of Peristem among our existing customer base, the continued addition of new active implanting centers, the measured expansion of new sales territories in the US and increased awareness among physicians and patients.
These results were achieved through the increased utilization of better stem among our existing customer base. The continued addition of new active implanting centers.
The expansion of new sales territories in the U S.
And increased awareness among physicians and patients.
Speaker 4: transcript
Speaker 4: As a result of our sustained top-line revenue growth stemming from our fullest investments in high return on investment initiatives, in combination with the prudent management of our operating spend, and our operating spending, we have a
As a result of our sustained top line revenue growth stemming from our focused investments in high return on investment initiatives in combination with the prudent management of our operating spend.
Speaker 4: transcript
Speaker 4: we have seen a continued reduction in our cash burn rate.
We have seen a continued reduction in our cash burn rate.
Speaker 4: transcript
Speaker 4: It is highly encouraging to see operating leverage within our business, and we anticipate this trend to be sustainable as we move into 2024 and beyond.
It is highly encouraging to see operating leverage within our business and we anticipate this trend to be sustainable as we move into 'twenty 'twenty four and beyond.
Turning to an update on our operational progress during the third quarter.
Speaker 4: transcript
Speaker 4: Turning to an update on our operational progress during the third quarter.
Speaker 4: transcript
Speaker 4: As a reminder, our focus areas are the continued expansion of our commercial infrastructure in the expansion of our clinical body of evidence.
As a reminder.
Our focus areas are the continued expansion of our commercial infrastructure and the expansion of our clinical body of evidence.
Starting with the expansion of our commercial infrastructure.
We've expanded our commercial reach adding three new U S sales territories as anticipated, bringing our total to 35.
Speaker 4: transcript
Speaker 4: We've expanded our commercial reach, adding three new US sales territories as anticipated, bringing our total to 35.
Speaker 4: transcript
Speaker 4: During the quarter, we also made progress with our marketing efforts, which included our direct-to-consumer and patient education program.
During the quarter. We also made progress with our marketing efforts, which included our direct to consumer and patient education programs.
Speaker 4: transcript
Speaker 4: As we move forward, we will continue working to fine-tune these initiatives to drive increased awareness of patients and healthcare providers.
As we move forward, we will continue working to fine tune these initiatives to drive increased awareness of patients and health care providers.
Moving to our second focus area is the expansion of our clinical body of evidence and in particular on the regulatory front.
Speaker 4: transcript
Speaker 4: Moving to our second focus area, the expansion of our clinical body of evidence, and in particular, on the regulatory front.
Speaker 4: transcript
Speaker 4: Our ongoing interaction with FDA regarding our potential label expansion following the post-market BHHF data continues to progress as expected. FDA has provided us with their initial feedback and we have responded to their questions.
Our ongoing interaction with FDA regarding a potential label expansion following the post market beat H F data continues to progress as expected.
F T S provided us with that initial feedback and we have responded to their questions.
We continue to anticipate a potential decision by year end.
Speaker 4: transcript
Speaker 4: we continue to anticipate a potential decision by year end.
Speaker 4: transcript
Speaker 4: Now for an update on CMS and the proposed outpatient prospective payment system or OPPS for 2024.
Now for an update on CMS and the proposed outpatient prospective payment system.
Or a P. P S for 'twenty 'twenty four.
Speaker 4: transcript
Speaker 4: Earlier this year, we submitted a request to CMS to be assigned a new Technology APC payment code as our transitional pass-through payment expires at the end of 2023.
Earlier this year, we submitted the request to CMS to be assigned and your technology APC payments code.
Our standardization and pass through payment expires at the end of 2023.
Speaker 4: transcript
Speaker 4: In August , the company presented before a CMS advisory panel and received a 5-0 vote in favor of mapping to the higher paying code, APC 1580, which reimburses approximately $45,000.
In August the company presented before the CMS Advisory panel and received a five oh votes in favor of mapping to the Hyatt P codes, a P C 1580, which seem versus approximately $45000.
Speaker 4: transcript
Speaker 4: While this is encouraging, it is important to note that this vote is non-binding.
While this is encouraging it is important to note that this vote is not binding.
Speaker 4: transcript
Speaker 4: If CMS instead decides to map Barostem to APC 5465 without the transitional pass-through payment for 2024, which is the basis for the company's plans,
If CMS instead decides to map better stem to a P. C 5465 without the transitional pass through payment for 'twenty 'twenty, four which is the basis for the company's plans then.
Speaker 4: transcript
Speaker 4: then the average reimbursement to hospitals will be approximately $3,000.
And then the average reimbursement to hospitals will be approximately $3000.
Speaker 4: transcript
Speaker 4: The final outpatient payments rule is expected to be published in late November .
The final outpatient payment through is expected to be published in late November.
Speaker 4: transcript
Speaker 4: We are pleased with the accomplishments of the third quarter and the overall progress throughout 2023.
We are pleased with the accomplishments of the third quarter and the overall progress throughout 'twenty two I see.
Speaker 4: transcript
Speaker 4: Our performance has been consistently strong, largely driven by exceptional growth in our US heart failure business.
Our performance has been consistently strong largely driven by exceptional growth in our U S heart failure business.
Speaker 4: transcript
Speaker 4: We have steadily expanded our commercial reach and made strides in marketing and patient education. Our ongoing discussion...
We have steadily expanded our commercial reach and made strides in marketing and patient education.
Our ongoing discussions with F D a.
Speaker 4: transcript
Speaker 4: and a positive vote from the CMS Advisory Panel in August are encouraging, though our guidance does not hinge on these outcomes.
And a positive vote from the CMS Advisory panel in August are encouraging the our guidance does not hinge on these outcomes.
Speaker 4: transcript
Speaker 4: We remain confident in our business to help bring relief to many patients suffering from heart failure.
We remain confident in our business to help bring relief to many patients suffering from heart failure.
Speaker 4: transcript
Speaker 4: I'll now turn the call over to Jared to review our financials. Got it?
I'll now turn the call over to <unk> to review our financials got.
Got it.
Speaker 3: transcript
Speaker 3: Thanks, Nitti. In the third quarter, total revenue generated was $10.5 million, representing an increase of $4.3 million, or 70%, compared to the same period live.
Thanks, Nadeem and the third quarter total revenue generated was $10.5 million, representing an increase of $4.3 million or <unk> 70 per cent compared to the same period last year revenue generated in the U S was $9 $6 million in the current quarter, reflecting growth of 90% over the same period last year.
Speaker 3: transcript
Speaker 3: Revenue generated in the US was $9.6 million in the...
Speaker 3: transcript
Speaker 3: reflecting growth of 90% over the same period last year. Heart failure revenue in the US totaled $9.4 million in the current quarter on a total of 303 revenue units compared to $4.9 million in the third quarter of last year on 167 revenue units.
Heart failure revenue in the U S totaled $9 $4 million in the current quarter on a total of 303 revenue units compared to $4 $9 million in the third quarter of last year on 167 revenue units. The increases were primarily driven by continued growth in the U S heart failure business as a result of the expansion into.
Speaker 3: transcript
Speaker 3: The increases were 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 the disease.
New sales territories, new accounts and increased physician and patient awareness, how embarrassing him at the end of the current quarter. We had a total of 159 active implanting centers compared to 91 on September 30th 2022 and 140 on June 30th 'twenty 'twenty. Three we also had 35 sales territories.
Speaker 3: transcript
Speaker 3: At the end of the current quarter, we had a total of 159 active implanting centers, compared to 91 on September 30, 2022, and 140 on June 30, 2023. We also had 35 sales territories in the U.S. at the end of the current quarter, compared to 23 on September 30, 2022, and 32 on June 30, 2023.
He is in the U S. At the end of the current quarter compared to 23 on September 30th 2022, and 32 on June 32023.
Speaker 3: transcript
Speaker 3: Revenue generated in Europe was $0.9 million in the current quarter, representing a decrease of 19% compared to the same period last year. Total revenue units in Europe decreased from 61 in Q3 of 2022 to 47 in the current quarter. The number of sales territories in Europe remained consistent at 6 for the three-month ended September 30, 2020.
Revenue generated in Europe, with zero point $9 million in the current quarter, representing a decrease of 19% compared to the same period last year total revenue units in Europe decreased from 61 in Q3 of 2022 47 in the current quarter. The number of sales territories in Europe remained consistent at six for the three months ended.
September 30th 2023.
Speaker 3: transcript
Speaker 3: Gross profit for the three months ended September 30, 2023 with $8.8 million, an increase of $4 million compared to the three months ended September 30, 2020.
<unk> profit for the three months ended September 30th 'twenty, 'twenty, three with $8.8 million, an increase of $4 million compared to the three months ended September 30th 2022 gross margin for the current quarter increased to 84% compared to 78% for the same period last year. This increase was due primarily to a decrease in that.
Speaker 3: transcript
Speaker 3: Gross margin for the current quarter increased to 84% compared to 78% for the same period like before.
Speaker 3: transcript
Speaker 3: This increase was due primarily to a decrease in the cost per unit, driven by an increase in the production volume.
Cost per unit driven by an increase in production volume.
Speaker 3: transcript
Speaker 3: Research and development expenses for the current quarter were $2.7 million, reflecting an increase of 18% compared to the same period last year. This change was driven by a $0.3 million increase in compensation expenses as a result of increased headcount and a $0.1 million increase in non-cash, stock-based compensation expenses.
Research and development expenses for the current quarter were $2.7 million, reflecting an increase of 18% compared to the same period last year. This change was driven by a zero point $3 million, increasing compensation expenses as a result of increased head count and a 0.1 million dollar increase in noncash stock based.
<unk> expense S.
Speaker 3: transcript
Speaker 3: SG&A expenses for the current quarter were $15.7 million, representing an increase of 23% compared to the same period last year. This change was primarily driven by a $1.9 million increase in compensation expenses for the current quarter.
SG&A expenses for the current quarter were $15 $7 million, representing an increase of 23% compared to the same period last year. This change was primarily driven by a $1 9 million dollar increase in compensation expenses, mainly as a result of increased head count the zero point $5 million increase in non.
Speaker 3: transcript
Speaker 3: mainly as a result of increased headcount, a $0.5 million increase in non-cash stock-based compensation.
Cash stock based compensation expense of zero point $3 million increase in marketing and advertising expenses associated with the commercialization of barrel stem in the U S and 0.1 million dollar increase in travel expenses.
Speaker 3: transcript
Speaker 3: a $0.3 million increase in marketing and advertising expenses associated with the commercialization of Barostim in the U.S. and a $0.1 million increase in travel.
Speaker 3: transcript
Speaker 3: Interest expense increased $0.5 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022. This increase was driven by the interest expense on borrowings under the loan agreement entered into on October 31, 2022. Other income net was $1.1 million in the current quarter compared to $0.3 million for the same period of life.
Interest expense increased zero point $5 million for the three months ended September 30th 20 twenty-three compared to the three months ended September 30th 2022. This increase was driven by the interest expense on borrowings under the loan agreement entered into on October 31, 2022.
Other income net was $1 $1 million in the current quarter compared to zero point $3 million for the same period last year.
Speaker 3: transcript
Speaker 3: The income in the third quarter of 2023 was primarily driven by interest income on our interest-bearing account.
The income in the third quarter of 2023 was primarily driven by interest income on our interest bearing accounts.
Speaker 3: transcript
Speaker 3: Net loss for the current quarter was $9 million or 43 cents per share, compared to a net loss of $9.8 million or 48 cents per share for the same period of life.
Net loss for the current quarter was $9 million or 43 cents per share compared to a net loss of $9 $8 million or 48 cents per share for the same period last year net loss per share was based on 20.8 million weighted average shares outstanding for the third quarter of 2023, and 26 million weighted average shares outstanding for the third.
Speaker 3: transcript
Speaker 3: Net loss per share was based on 20.8 million weighted average shares outstanding for the third quarter of 2023 and 20.6 million weighted average shares outstanding for the third quarter of 2022. At the end of the third quarter, cash and cash equivalents were 83 million dollars.
Quarter of 2022 at the end of the third quarter cash and cash equivalents were $83 million net cash used in operating and investing activities was $8 $2 million for the third quarter. This is compared to net cash used in operating and investing activities of $13 million for the three months ended June 32023.
Speaker 3: transcript
Speaker 3: net cash used in operating and investing activities was $8.2 million for the third quarter. This is compared to net cash used in operating and investing activities of $13 million for the three months ended June 30, 2023, which included our annual premium for our directors and officers insurance of approximately $2 million.
Which included our annual premium for our directors and officers insurance of approximately $2 million the improvement in our cash burn has been driven by improved gross margins increased productivity from our U S sales team and a reduction in our R&D spend associated with the beat H F trial now.
Speaker 3: transcript
Speaker 3: The improvement in our cash burn has been driven by improved gross margins, increased productivity from our U.S. sales team, and a reduction in our R&D spend associated with the BHF trial.
Speaker 3: transcript
Speaker 3: Now turning to guidance. For the full year of 2023, we now expect total revenue between $38.5 and $39 million, up from $37 to $38.5 million. We continue to expect full-year gross margin between 83% and 84%. And we now expect operating expenses between $77 million and $78 million, down from $78 to $80 million.
Now turning to guidance for the full year of 2023, we now expect total revenue between 38.5 and $39 million up from 37 to $38 $5 million. We continue to expect full year gross margin between 83% and 84% and we now expect operating expenses between seven.
<unk> 7 million and $78 million down from $78 million to $80 million for the fourth quarter of 2023, we expect to report total revenue between $10 5 million and $11 million I would now like to turn the call back over to Nadeem.
Speaker 3: transcript
Speaker 3: For the fourth quarter of 2023, we expect to report total revenue between $10.5 million and $11 million. I would now like to turn the call back over to Nadeem.
Thanks Jared.
Speaker 5: transcript
Speaker 5: Our approach to advancing the adoption of Perustin while upholding our financial stability has yielded positive outcomes once again, reflecting the effectiveness of our operational model. Our operations are performing well with steady revenue growth, improved margins, and a reduction in our cash burn.
Our approach to advancing the adoption of Pakistan, while upholding our financial stability has yielded positive outcomes once again.
<unk> the effectiveness of our operational model.
Our operations are performing well with steady revenue growth improves margins.
A reduction in our cash burn.
Speaker 5: transcript
Speaker 5: Our solid performance in the third quarter has led us to make another upward adjustment to our revenue projection for the year.
Our solid performance in the third quarter has led us to make another upward adjustments to our revenue projection for the year.
Speaker 5: transcript
Speaker 5: We're looking forward to carrying this momentum into this final quarter of 2023 and beyond. And now, I would like to open the line for questions. Operator?
We're looking for it to carrying this momentum into this final quarter of 2023 and beyond and now I would like to open the line for questions operator.
Thank you.
Speaker 1: transcript
Speaker 1: Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad and the confirmation tone will indicate your line is in the question queue. You may press star two.
Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.
You May press star two if he would like to remove your question from the queue.
Speaker 1: transcript
Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please when we poll for questions.
Speaker 1: transcript
Speaker 1: And our first question comes from the line of Robbie Marcus with JP Morgan.
And our first question comes from the line of Robbie Marcus with JP Morgan. Please proceed.
Speaker 6: transcript
Speaker 6: Hi, this is Alan, on for Robbie. Congrats on a good quarter. I just had one quick question to start on your forward-looking kind.
Hi, This is allen on for Robbie Congrats on the good quarter I just had one quick question to start on your forward looking guidance.
Speaker 6: transcript
Speaker 6: you've been able to pretty consistently guide and beat the guide several quarters in a row now. And when I look at your implied guidance for fourth quarter, given the really strong planting center as you had in third quarter, it looks like the benchmark should wind, it looks like kind of a very achievable floor once again. So what kind of dynamics are you seeing so far in October that lead you to believe that this is the right guide for fourth quarter?
Been able to pretty consistently guide and beat the guide you know several quarters in a row now and when I look at your implied guidance for fourth quarter, given the really strong banking center adds you had in third quarter and it looks like a benchmark.
Why do you know it looks like kind of a very achievable for once again, so what kind of dynamics are you seeing so far in October that lead you to believe that this is the right guy for fourth quarter.
Speaker 3: transcript
Speaker 3: Hi, Alan, this is Jared. I'll take that one. Thanks. Thanks for joining the call here. So yeah, we've continued to exceed expectations on our quarterly growth throughout 2023. You know, that includes the number of active implanting centers, but then also being able to exceed the top end of the guidance that we've given over the last few quarters.
Hi, Alan this is Jerry I'll take that one thinks thanks for joining the call here. So yeah. We've continued to exceed expectations on a quarterly growth throughout 2023 that includes the number of active implanting centers, but then also being able to exceed the top end of the guidance that we've given over the last few quarters.
Speaker 3: transcript
Speaker 3: So, we've been pretty happy with the growth that we've seen throughout 2023. I'd say the one thing to consider here for Q3 results as we march into Q4 was what we saw in Europe . Europe , you know, has continued to be flat, roughly around that $1 million mark on a quarterly basis. But again, most of our focus is in the US business and we're seeing really, really good results on that side of it.
So we've been pretty happy with the growth that we've seen throughout 2023, I'd say the one thing to consider here for Q3 results as we March into Q4 with what we saw in Europe. Europe has continued to be flat roughly around that $1 million Mark on a quarterly basis, but again most of our focus is in the U S business and we're seeing really really good reason.
So on that side of it.
Speaker 3: transcript
Speaker 3: One thing to call out, Nadine mentioned it earlier, was around the OPPS final ruling coming out in November .
One thing to call out and as he mentioned it earlier.
Earlier was around the O P. P. S final ruling coming out in November and we did mention that there's the nonbinding vote that when our direction. So it was five O in our favor.
Speaker 3: transcript
Speaker 3: And we did mention that there's the non-binding vote that went our direction. So it was 5-0 in our favor. And our base case is assuming that we don't get mapped to the new tech APC. That would increase the reimbursement for our hospitals. But if we are surprised and we do get mapped to that new payment code.
And in their base case is assuming that we don't get mapped to the new Tech a P. C that would increase the reimbursement for our hospitals, but if we are surprised and we do get mapped to that new payment code. There is a chance that some of our customers that maybe have had complicated add on payment calculations in the past.
Speaker 3: transcript
Speaker 3: there is a chance that some of our customers that maybe have had complicated add-on payment calculations in the past could delay procedures from December into January .
Could delay procedures from December into January so that they could potentially benefit from that more predictable payment code a P. C 1580, and that approximate reimbursement of $45000. So I think taking all of that into consideration. We've seen good results in the U S. You know kind of steady results in Europe and.
Speaker 3: transcript
Speaker 3: so that they could potentially benefit from that more predictable payment code, APC-1580, and that approximate reimbursement of $45,000. So I think taking all of that into consideration, we've seen good results in the US, kind of steady results in Europe , and then the unknown related to that payment code coming out in November .
And then the unknown related to that payment code coming out in November.
Speaker 3: transcript
Speaker 3: Just, you know, kind of all came together for the guidance that we put out for the 4th quarter. But again, we're really happy to be able to push that full year guidance number up.
Kind of all came together for the guidance that we put out for the fourth quarter, but again, we're really happy to be able to push that full year guidance number up.
Speaker 6: transcript
Speaker 6: And then just a quick follow up. I know the base case right now is that you don't get maps to one of the to one five eight zero and that you do stay on five four six five. But if you do get mapped to one five eight zero, we'll use them to be able to hold ASPs kind of where they are and like, you know, the 30,000 plus range. Thank you.
And then just a quick follow up I know the base case right now is that your golf game apps Wifi to Wifi base. There I know you do stay on five or six five but if you do get back to 1580, where you essentially being able to hold asps kind of where they are.
30000, plus range. Thank you.
Yeah.
Speaker 3: transcript
Speaker 3: Yeah, it's a good question. So I think we've seen ASPs north of that $30,000 throughout 2023. We've been really happy with the results so far this year based on that add-on payment that we have had.
Yeah. It's a good question. So I think we've seen a S. P is north of that $30000 throughout 2023, we've been really happy with the results. So far this year based on that add on payment that we have had a I think as we march into 'twenty 'twenty four without going into detailed guidance. There I think it would be hard to say that you could maintain those.
Speaker 3: transcript
Speaker 3: I think as we march into 2024 without going into detailed guidance there, I think it'd be hard to say that you could maintain those ASPs at that level longer term, but you could be approaching those numbers. Right? So maybe not exactly the 30 or $31,000, but maybe, you know, high 20s would definitely be conceivable.
S. P is at that level longer term, but you could be approaching those numbers right. So maybe not exactly the 30 or $31000, but maybe you know high twenty's would definitely be conceivable.
Speaker 1: transcript
Speaker 1: Our next question comes from the line of Matthew O'Brien with Piper Sandler.
Our next question comes from the line of Matthew O'brien with Piper Sandler. Please proceed.
Speaker 6: transcript
Speaker 6: Thanks for taking the questions. Just to maybe follow up a little bit on the last question.
Thanks for taking the questions just to maybe follow up a little bit on the last question.
Speaker 6: transcript
Speaker 6: about the unanimous vote. And I know, Nadeem and Jared, you're data-driven, but there's no guarantees I get all that. But I'm sure you've looked at this. How often will CMS look at something that has a unanimous vote and then say, no, we're gonna do something different? And then how often will they look at something like that and say, yeah, it makes sense. We're gonna go with this recommendation. Any kind of framework you can provide on that.
About the.
The unanimous vote and I I know Nadeem and Jared your ear jada, driven but yeah, there's no guarantees I get all that but.
I'm sure you've looked at this how often will CMS look it's something that has a unanimous vote and then say no we're going to do something different and then how often would they look at something like that and say yeah. It makes sense, we're going to go with this recommendation any kind of framework you can provide on that.
Speaker 5: transcript
Speaker 5: Good evening, Matt. And by the way, thank you for joining us. I know it's been a busy week for you with DCT and everything going on. Listen, no, actually we have not looked at statistics of the past and here to be exact. I don't have a percentage. But the vote is non-binding. This is a panel very similar to the FDA panel.
Good evening, Matt then by the way. Thank you for joining US I know, it's been a busy week for you with D C T and everything going on.
Listen no actually we have not looked at the statistics of the past and he has to be exact I don't have a percentage, but the vote is nonbinding are this is a pattern very similar to the F. D. A pilot FDA can follow the recommendation and they can just ignore it.
Speaker 5: transcript
Speaker 5: FDA can follow the recommendation and they can just ignore it.
Speaker 5: transcript
Speaker 5: We do not have any indications to believe it's going to go one way or the other, except to know that the chances of getting it have increased.
Well, we do not have any indications to believe it's going to go one way or the other except to note that the chances of getting it has increased.
That's all I can say right now Matt.
Okay that makes total sense and then my follow up is just on the label expansion.
Speaker 6: transcript
Speaker 6: Okay, that makes total sense. And then the follow up is just on the label expansion. Just talk to me a little bit about where you're at with that, that process and then maybe when we can get an update there.
Just talk maybe a little bit about where you're at with that are in that process and then.
Maybe when we can we could get an update there. Thank you.
Speaker 5: transcript
Speaker 5: Yeah, so under the medical device user fee agreement number five, which is the current agreement in place between FDA and the industry, FDA has 180 days to respond in 95% of the PMA supplements. So we hope that we are among those 95% where FDA will meet the 180 days clock.
Yeah, so the under the Baidu for the medical device user fee agreements Ah number five of which is the current agreement in place between FDA and the industry.
FDA has.
180 days to respond in 95% of the PMA supplement so we hope that we are among those 95% is weird FDA will meet the 180 days clock.
Speaker 5: transcript
Speaker 5: When we do the count of all of the stoppage days that happened during this interactive session between when FDA give us feedback and we respond to the feedback. When we add all of those stoppage, we still have time to get to the 180 days in this year. Before end of December , but again, it's no guarantee that we fit within the 95% committed numbers of PMA supplement that FDA commits to do within 180 days.
When we do the count of all of the stoppage days that happened. During this you know interactive session.
Session begin to an F. D. A you know give us feedback and respond to their feedback when we add all of those stoppage. We still have time to get to the 180 days in this year before the end of December but again its no guarantee that we set within the 95% committed numbers off PMA supplement that actually are committed to do within 180 days.
Understood. Thanks, so much.
Thank you Matt.
Speaker 1: transcript
Speaker 1: The next question comes from the line of Margaret Kaser Andrew with William Blair.
The next question comes from the line of Margaret Kayser, Andrew with William Blair. Please proceed.
Speaker 7: transcript
Speaker 7: Hey, good afternoon, guys. Thanks for taking the questions. I wanted to maybe start on utilization. I know you guys have been pretty vocal about new center utilization, maybe doing one or two patients up front, then waiting for a few months, then maybe progressing until they get to 24 months plus. But you've added quite a few of these centers. Maybe there's a bigger cohort within that 6 to 12 months. Any trends that you guys can walk us through, or is it a pretty large scatter plot within that?
Hey, good afternoon, guys. Thanks for taking the question.
I wanted to maybe start.
And I know you guys have been pretty vocal about new center utilization, maybe to add one or two patients upfront and waiting for a few months maybe progressing.
Totally get to 24 months to watch, but now you've added quite a few of these centers, there's a bigger cohort within that six to 12 months any trends that you guys can walk us through where you know there's been a pretty large scatter plot.
That group.
Speaker 3: transcript
Speaker 3: Hi, Margaret, thanks for the question. Yeah, I think the trends have continued to be what we've seen in the past where we saw a lot of those centers coming on board, treating a handful of patients, and then waiting for the results both for the reimbursement because of the complexity of the add-on payment, that TPT, but then also wanting to see the impact on their patients themselves. No matter how much clinical data there is, they still want to see how it works in their patient.
Hi, Margaret Thanks for the question Yeah, I think the trends have continued to be what we've seen in the past, where we saw a lot of those centers coming on board treating a handful of patients and then waiting for the results both for the reimbursement because of the complexity of the add on payment that T. P T.
But then also wanting to see the impact on their patients themselves no matter how much clinical data there is they still want to see how it works in their their patients and then after about six seven months of waiting to see what those answers are then they start treating more and more patients over time and the trend has continued whereas the longer an account is active the more pace.
Speaker 3: transcript
Speaker 3: And then after about six, seven months of waiting to see what those answers are, then they start treating more and more patients over time. And the trend is continued where the longer an account is active, the more patients they're treating on average. And so we've seen that trend continue here into the third quarter.
<unk>, they're treating on average and so we've seen that trend continue here into the third quarter.
Speaker 7: transcript
Speaker 7: OK, that's helpful. And then you also referenced previously in quarters that you did see kind of this high level of interest at your booth following some of the data presentations earlier this year. Has that continued? Has there been follow through and not only follow through of continued interest, but maybe making it their way through the hospital processes to get barostimin?
Okay. Yeah. That's helpful. And then you also referenced previously and in quarters that you did see kind of a high level of interest at your booth.
Ah you're following some of the data presentations earlier this year.
Has that continued as there been follow through in and not only follow through continued interest that maybe you're making.
Making it their way through the hospital.
To get Arab step.
Speaker 5: transcript
Speaker 5: Hey Margaret, yeah, thank you for the question. Actually, we had recently another scientific meeting, the Heart Failure Society of America.
Hey, Mike Yeah. Thank you for the question actually we are we had recently had another scientific meeting the heart failure Society of America.
Speaker 5: transcript
Speaker 5: where in my opinion and opinion of our team this has been by far the best
Where in my opinion independent if our team. This has been by far the best scientific meeting that see Fedex has even been participant to we would have the Darling here of that Congress and there was another a couple of opportunities during that a scientific session to have these two got X data presented again.
Speaker 5: transcript
Speaker 5: scientific meeting that CVRX has ever been a participant to. We were the darling here.
Speaker 5: transcript
Speaker 5: of that Congress, and there was another couple of opportunities during that scientific session to have the CVRX data presented again to heart failure specialists. So that is increasing the exposure of this data through those scientific meetings to centers. Questions so far? I can't comment on it specifically one by one, but we have not seen any negative impact.
The heart failure specialists, so that is increasing the exposure of this data through those scientific meetings.
The centers.
Questions, So far I I can't comment on it specifically one by one but we have not seen any negative impact and all I can point out as to the results. He added the additional centers to say that if there was an impact so far it has been positive net debt.
Speaker 5: transcript
Speaker 5: And all I can point out is to the results here, the addition of centers to say that if there was an impact so far, it has been positive net. Okay, it looks like I got past zero for zero.
Okay.
That's it. Thank you guys appreciate it thank you.
Speaker 1: transcript
Speaker 1: And our next question comes from the line of Alex Nowak with Craig Hallam. Please.
And our next question comes from the line of Alex Nowak with Craig Hallum. Please proceed.
Speaker 8: transcript
Speaker 8: Okay, great. Good afternoon, everyone. Congrats on the really nice results here. I want to ask on GLP-1, it's obviously all the talk out right now in MedTech. There's been some talk about what it can do around heart failure symptoms in obese patients. There's some studies that are ongoing right now about assessing it in the preserved ejection heart failure side of it. How do you think about GLP-1's changing the potential patient pool for Barostim-1?
Okay, great. Good afternoon, everyone. Congrats on the really nice results here I wanted to ask on G. O P. One that's obviously all the talk outright right now in Med Tech.
And talk about what it can do around heart failure symptoms and obese patients. There's some studies that are ongoing right now about assessing it in preserved ejection heart failure side of it.
How do you think about GMP ones changing the potential patient corporate parents them longer term.
Yeah, Hey, Alex and again, thank you for joining us.
Speaker 5: transcript
Speaker 5: Yeah, hey, Alexa again, thank you for joining. I know it's a busy week for you to listen regarding. We're excited about the positive impact of that therapy on obesity and type 2 diabetes clearly patients needed some solution. And this is from our perspective, a welcome solution to many patients.
I know, it's a busy week for you to listen regarding jet fuel and we are excited about the positive impact of that set up here on obesity and type two diabetes diabetes clearly.
Clearly patients are needed some solution and this is from our perspective, a welcome solution to many patients.
However.
Speaker 5: transcript
Speaker 5: One of the early results from that drug in heart failure.
One of the early.
Early results from that drug in heart failure.
Speaker 5: transcript
Speaker 5: was to note that the heart rate unfortunately increases with this drug. And we all know that in heart failure we reduce ejection fraction.
Was to note that the heart rate Unfortunately increases with this drug and we all know that in heart failure with reduced ejection fraction.
Speaker 5: transcript
Speaker 5: An increased heart rate is considered the safety concern. So we've seen some publications, particularly more recent one by Dr Murray among others and Dr Butler highlighting this fact and raising the question whether this drug can be studied safely. In the half-rest patient population, the other thing I would like to note is paradoxically when a patient has a heart failure with reduced ejection fraction.
An increased heart rate is considered a safety concern. So we've seen some publication specifically a more recent fund by Doctor Modi among others inductor Butler, highlighting this fact and raising the question whether this drug can be studied safely and they have for that patient population.
The other thing I'd like to note, there's a paradoxically when a patient has a heart failure with reduced ejection fraction.
Heavier weight is not necessarily a negative outcome as compared to.
Speaker 5: transcript
Speaker 5: Heavier weight is not necessarily a negative outcome as compared to lesser weight, i.e. patients who have more or larger weight actually have better outcome in f- viewer.
That's the way I E.
Ah patients will have well that have more or larger weight actually have better outcome and how fast.
Speaker 5: transcript
Speaker 5: than patients who are super lightweight or super thin. It's a paradox. This is one of those disease areas where a weight-reducing drug might not necessarily be beneficial. Now, with all that said, we don't know until they run clinical trials, so we will keep a watchful eye on all of these developments. But—
Then patients who are super lightweight or Super said, it's about a it's a paradox out yes. This is one of those disease areas where a.
A way to reducing the drug might not necessarily be beneficial.
Now with all that said, we don't know until they run their own clinical trial. So we will keep a watchful eye on all of these developments but.
Speaker 5: transcript
Speaker 5: No matter what, we do not expect any material impact to our business.
No matter, what we do not expect any material impact to our business.
Okay. It makes total sense. Thank you and I might have missed this in the prepared remarks, the pullback in opex than even invent a new rep hires.
Speaker 8: transcript
Speaker 8: Okay, makes total sense. Thank you. And I'm going to miss this in the prepared remarks. The pullback and the off-ex spend even have meant the new rep hires. The R&D side makes sense, but GNA, I feel the marketing, why some of the cost reduction is there, what happened, and is that pretty sustainable? Those, I guess, a good cost basis to continue for 2024 on your path to cash flow breaks.
R&D side makes sense, but G&A sales.
So the marketing why why some of the cost reductions there what happened and is that pretty sustainable those cause I guess of good cost basis to continue for.
For 2024 on your path to cash flow breakeven.
Yeah, Hi, Alex I'll take that one, yes, I wouldn't call it necessarily a pullback in our spend but more pointing towards seasonality in the second quarter, we often see some additional spend related to trade shows in our sales and marketing line. So seen us move into the third quarter with more revenue and a little bit less than overall sales and marketing isn't a surprise necessary.
Speaker 3: transcript
Speaker 3: Yeah, hi Alex, I'll take that one. Yeah, I wouldn't call it necessarily a pullback in our spend, but more pointing towards seasonality in the second quarter. We often see some additional spend related to trade shows in our sales and marketing line. So.
Speaker 3: transcript
Speaker 3: seeing us move into the third quarter with more revenue and a little bit less in overall sales and marketing isn't a surprise necessarily. So I do think that the leverage we're seeing in this model on the sales and marketing side is definitely sustainable as we move forward, continue to grow and see more of that.
So I do think that the leverage we're seeing in this model on the sales and marketing side is definitely sustainable as we move forward continue to grow and see more of that.
Speaker 3: transcript
Speaker 3: Total coming down to the bottom line to help us out and reduce that cash burn number on the R and D side of the house. This is, you know, planned right? So we, we expected to start slowing down after we left the 2nd quarter. So, seeing that reduction in research and development was in line with expectations for us. Excellent.
Total coming down to the bottom line to help us out and reduce that cash burn number on the R&D side of the house. This is you know planned right. So we expect it beat hff's spend to start slowing down after we left the second quarter. So seeing that reduction in research and development was in line with expectations for us.
Excellent I appreciate the update thank you.
Speaker 1: transcript
Speaker 1: And our final question comes from the line of Frank Tackenen with Lake Street Capital Markets.
And our final question comes from the line of Frank <unk> with Lake Street Capital markets. Please proceed.
Speaker 9: transcript
Speaker 9: Hey, great. Thanks for taking the questions. I wanted to start with one related to the initial FDA feedback you spoke to, Nadim. I'm assuming you can't go into great detail, but my assumption being you've remained in the 180-day window within 2023. It's fair to assume that some of the interaction is less impactful or we can say maybe non-crucial to the approbability or maybe it was more streamlined. Can you comment on that at all or if there was any significant questions that they presented to you?
Hey, great. Thanks for taking the questions I wanted to start with one related to the initial FDA feedback you spoke to you in a deep I'm, assuming you can't go into great detail, but my assumption being you've you've remained in the 188 day window within 2023, it's fair to assume that some of the interact.
And as is less impactful or or we can say, maybe non crucial to a probability or maybe it was a more streamlined can you comment on that at all or if there was any.
Significant questions that they presented to you.
Hey, Frank how are you.
Speaker 5: transcript
Speaker 5: Hey, Frank, how are you a super smart question? Yeah, I would you are correct. I prefer not to negotiate with FDA in the public eyes in here that said, you are correct. And one thing when FDA submit a question.
It's a super Smart question.
Yeah, I I would you are correct I prefer not to negotiate with the FDA and the public is India.
Ed.
You are correct. The one thing when FDA submit a question.
Irrespective of the difficulty of the question. The clock has stopped right and then we have to answer the question and provide the data that we feel comfortable.
Speaker 5: transcript
Speaker 5: Irrespective of the difficulty of the question, the clock is stopped, right? And then we have to answer the question and provide the data that we feel comfortable that this additional data or additional analysis answer the question of FDA.
This additional data or additional analysis and so the question of F D. A.
Speaker 5: transcript
Speaker 5: And here kudos to our team and the steering committee with whom we're working to be able to get these questions, analyze the data, write the answer and submit the answers to the FDA in a timely fashion that's whereby all of the clock stoppage when added together. They still allow us to hit the 180 days in this year.
And he had kudos to our team and the steering committee with whom we're working to be able to get these questions analyze the data right. The NSAID and submit the answers to the FDA in a timely fashion that whereby all of the clock stoppage when added together they still allow us to hit the 180 days and this year.
Yeah.
Speaker 5: transcript
Speaker 5: But I let me be clear to one thing, you cannot infer from
But I, let me be careful I think you cannot infer from that.
Speaker 5: transcript
Speaker 5: Any elements on the severity of the question or the nature of the question the fact that our team has done a fantastic job to respond very quick.
Andy elements on the severity of the question or the nature of the question. The fact that our team has done a fantastic job to respond very quickly.
Speaker 9: transcript
Speaker 9: Got it. Fair enough. Makes sense. And then wanted to theorize a little bit into 2024. Assuming some of these items end up in your favor, I understanding you guys are assuming base case, but assuming some end up in your favor, can you maybe talk about if there would be any material commercial changes, whether that's headcount, accelerations, direct to consumer or anything in that category?
Got it fair enough makes sense and then wanted to theorize a little bit into into 2024 are assuming some of these items end up in your favor I understand you guys are assuming base case, but assuming some of them in your favor can you maybe talk about if there would be any material commercial changes, whether that's head count.
Celebrations are direct to consumer or anything in that category.
Frank I Love the question, but at this point I think we're going to pass on providing any additional color on 2024, I think we're feeling really positive based on the results. We've seen so far in 2023 and pretty hopeful based on you know the nonbinding vote that we got from the adviser.
Speaker 3: transcript
Speaker 3: Frank, I love the question, but at this point, I think we're going to pass on providing any additional color on 2024. You know, I think we're feeling really positive based on the results we've seen so far in 2023. And pretty hopeful based on the non binding vote that we got from the advisory panel on what. What we could possibly see for a payment level for 2024.
The panel on what what we could possibly see for a payment level for 2024, but at this point I don't think we're going to commit any additional add.
Speaker 10: transcript
Speaker 3: But at this point, I don't think we're going to commit any additional ads or additional spend until we actually see the real results come out here from the letter in later November .
Ads or additional spend until we actually see the real results come out here from the.
The letter in later in November.
Got it fair enough I'll stop there thanks for taking the questions.
Operator: Greetings and welcome to the CVRx 3rd quarter, 2023 earnings call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation.
Thank you.
Speaker 1: transcript
Speaker 1: Ladies and gentlemen, we have reached the end of the question and answer session. I'd like to turn the call back to Nadine Yarad for closing remarks.
Ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Nadeem yard for closing remarks.
Operator: If anyone should require operator assistance during the conference, please press star zero on your cell phone keypad. As a reminder, this conference is being recorded.
Speaker 5: transcript
Speaker 5: Thank you operator and thanks again to everyone for joining us for our third quarter earnings call. We appreciate your ongoing support and we look forward to updating you on our progress on our next update.
Thank you operator, and thanks again to everyone for joining us for our third quarter earnings call. We appreciate your ongoing support and we look forward to updating you on our progress on our next update.
Mike Vallie: I would now like to turn the conference over to your host, Mike Vallie, from ICR Westwick. Good afternoon. Thank you for joining us today for CVRx's 3rd quarter, 2023 earnings conference call. Joining me on today's call are the company's president and chief executive officer, Nadim Yared, and its chief financial officer, Jared Oasheim. 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.
Speaker 1: transcript
Speaker 1: Thank you. This concludes today's conference. You may now disconnect your lines at this time.
Thank you. This concludes today's conference you may now disconnect your lines at this time.
Good day.
Mike Vallie: In addition, actual results could differ materially due to a number of risks and uncertainties, including those identified in the earnings release issue prior to this call, and in the company's SEC filings, including the upcoming form 10Q that will be filed with the SEC.
Nadim Yared: I would now like to turn the call over to CVRx's president and chief executive officer, Nadim Yared. Thank you, Mike, and thanks to everyone for joining us. I'll begin today's call by providing an overview of our 3rd quarter performance followed by an operational update and a review of our financial results by our CFO, Jared Oasheim.
Nadim Yared: Then I will conclude with our thoughts for the rest of the year before turning to Q&A. We maintain positive momentum in the 3rd quarter, building on the strengths we delivered during the first half of 2023. In particular, the performance within our US heart failure business continued to surpass our expectations by growing by more than 90% in the quarter. This is a testament to our team's ability to accelerate the adoption of Palestine through the increased scale of our commercial organization and our marketing and awareness efforts. Palestine's therapy continues to gain traction and the feedback we receive from physicians and patients is very positive.
Jared Oasheim: Now, let's dive into the details of our performance. Starting with the review of the quarter, worldwide revenue was $10.5 million, a 70% increase over the 3rd quarter of 2022. This was a direct result of execution within our US heart failure business, which grew by 92% over the prior year. These results were achieved through the increased utilization of Palestine among our existing customer base, the continued addition of new active and planting centers, the measured expansion of new sales territories in the US and increased awareness among physicians and patients.
Jared Oasheim: As a result of our sustained top-line revenue growth stemming from our fullest investments in higher return on investment initiatives, in combination with the prudent management of our operating spend. We have seen a continued reduction in our cash burn rate.
Nadim Yared: It is highly encouraging to see operating leverage within our business and we anticipate the strength to be sustainable as we move into 2024 and beyond.
Nadim Yared: Turning to an update on our operational progress during the third quarter. As a reminder, our focus areas are the continued expansion of our commercial infrastructure and the expansion of our clinical body of evidence. Starting with the expansion of our commercial infrastructure. We've expanded our commercial reach adding three new U.S, sales territories as anticipated, bringing our total to 35. During the quarter, we also made progress with our marketing efforts, which included our direct to consumer and patient education programs. As we move forward, we will continue working to fine tune these initiatives to drive increased awareness of patients and healthcare providers.
Nadim Yared: Moving to our second focus area, the expansion of our clinical body of evidence, and in particular, on the regulatory front. Our ongoing interaction with FDA regarding our potential label expansion following the post-market BTHF data continues to progress as expected. FDA has provided us with their initial feedback and we have responded to their questions. We continue to anticipate a potential decision by year end.
Nadim Yared: Now, for an update on CMS and the proposed outpatient prospective payment system or OPPS for 2024. Earlier this year, we submitted a request to CMS to be assigned a new technology APC payments code as our transitional pass-through payment expires at the end of 2023. In August, the company presented before a CMS advisory panel and received a 5.0 vote in favor of mapping to the higher paying code APC 1580, which reimbursees approximately $45,000.
Nadim Yared: While this is encouraging, it is important to note that this vote is non-binding. If CMS instead decides to map better stem to APC 5465 without the transitional pass-through payment for 2024, which is the basis for the company's plans, then the average reimbursement to hospitals will be approximately $30,000.
Nadim Yared: The final outpatient payment rule is expected to be published in late November. We are pleased with the accomplishments of the third quarter and the overall progress throughout 2023. Our performance has been consistently strong, largely driven by exceptional growth in our U.S, heart failure business. We have steadily expanded our commercial reach and made strides in marketing and patient education. Our ongoing discussions with FDA and a positive vote from the CMS Advisory Panel in August are encouraging though our guidance does not hinge on these outcomes. We remain confident in our business to help bring relief to many patients suffering from heart failure.
Jared Oasheim: I will now turn the call over to Jared to review our financials. Thanks, Nadim. In the third quarter total revenue generated was $10.5 million, representing an increase of $4.3 million or 70% compared to the same period last year. Revenue generated in the US was $9.6 million in the current quarter, reflecting growth of 90% over the same period last year. Heart failure revenue in the US totaled $9.4 million in the current quarter on a total of 303 revenue units compared to $4.9 million in the third quarter of last year on 167 revenue units.
Jared Oasheim: The increases were primarily driven by continued growth in the US heart failure business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostom. At the end of the current quarter we had a total of 159 active implining centers compared to 91 on September 30th, 2022, and 140 on June 30th, 2023. We also had 35 sales territories in the US at the end of the current quarter compared to 23 on September 30th, 2022, and 32 on June 30th, 2023.
Jared Oasheim: Revenue generated in Europe was $0.9 million in the current quarter, representing a decrease of 19% compared to the same period last year. Total revenue units in Europe decreased from 61 in Q3 of 2022 to 47 in the current quarter. The number of sales territories in Europe remained consistent at 6 for the three month ended September 30th, 2023. Gross profit for the three month ended September 30th, 2023 was $8.8 million and increase of $4 million compared to the three month ended September 30th, 2022.
Jared Oasheim: Gross margin for the current quarter increased to 84% compared to 78% for the same period last year. This increase was due primarily to a decrease in the cost per unit driven by an increase in the production volume. Research and development expenses for the current quarter were $2.7 million, reflecting an increase of 18% compared to the same period last year. This change was driven by a $0.3 million increase in compensation expenses as a result of increased debt count and a $0.1 million increase in non-cash stock-based compensation expense.
Jared Oasheim: SG&A expenses for the current quarter were $15.7 million, representing an increase of 23% compared to the same period last year. This change was primarily driven by a $1.9 million increase in compensation expenses mainly as a result of increased debt count, a $0.5 million increase in non-cash stock-based compensation expense, a $0.3 million increase in marketing and advertising expenses associated with the commercialization of Barostom in the US and a $0.1 million increase in Expenses.
Jared Oasheim: Interest expense increased $0.5 million for the three months ended September 30th, 2023, compared to the three months ended September 30th, 2022. This increase was driven by the interest expense on borrowings under the loan agreement entered into on October 31st, 2022. Other income net was $1.1 million in the current quarter compared to $0.3 million for the same period last year. The income in the third quarter of 2023 was primarily driven by interest income on our interest bearing accounts.
Jared Oasheim: Net loss for the current quarter was $9 million or $0.43 per share compared to a net loss of $9.8 million or $0.48 per share for the same period last year. Net loss per share was based on 20.8 million weighted average shares outstanding for the third quarter of 2023 and 20.6 million weighted average shares outstanding for the third quarter of 2022. At the end of the third quarter, cash and cash equivalents were $83 million.
Jared Oasheim: Net cash used in operating and investing activities was $8.2 million for the third quarter. This is compared to net cash used in operating and investing activities of $13 million for the three months ended June 30, 2023, which included our annual premium for our directors and officers insurance of approximately $2 million. The improvement in our cash burn has been driven by improved gross margins, increased productivity from our US sales team, and a reduction in our R&D spend associated with the BDHF trial.
Jared Oasheim: Now turning to guidance. For the full year of 2023, we now expect total revenue between $38.5 and $39 million, up from $37 to $38.5 million. We continue to expect a full year gross margin between 83% and 84%.
Jared Oasheim: And we now expect operating expenses between $77 million and $78 million, down from $78 to $80 million. For the fourth quarter of 2023, we expect to report total revenue between $10.5 million and $11 million.
Nadim Yared: I would now like to turn the call back over to Nidim. Thanks, Charlotte. Our approach to advancing the adoption of para stem while upholding our financial stability has yielded positive outcomes once again reflecting the effectiveness of our operational model. Our operations are performing well with steady revenue growth, improved margins, and a reduction in our cash burn.
Nadim Yared: Our solid performance in the third quarter has led us to make another upward adjustment to our revenue projection for the year. We're looking forward to carrying this momentum into this final quarter of 2023 and beyond.
Operator: And now I would like to open the line for questions, operator. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star keys. One moment please, we'll pull for questions.
Robbie Marcus: And our first question comes from the line of Robbie Marcus with JP Morgan.
Jared Oasheim: Please Hi, this is Alan on Parabi. Congrats on the good quarter. I just had one quick question to start on your forelooking guidance. You know, you've been able to pre-consistently, you know, guide and beat the guide, you know, several quarters in a row now. And when I look at your implied guidance for fourth quarter, given the really strong planting center ads, you had third quarter, it looks like, you know, the benchmark should want, you know, it looks like kind of a very achievable floor once again. So what kind of dynamics are you seeing so far in October that we do to believe that, you know, this is the right guide for fourth quarter?
Jared Oasheim: Hi, Alan, this is Jared. I'll take that one. Thanks.
Jared Oasheim: Thanks for joining the call here. So yeah, we've continued to exceed expectations on our quarterly growth throughout 2023. You know, that includes the number of active and planting centers, but then also being able to exceed the top end of the guidance that we've given over the last few quarters. So we've been pretty happy with the growth that we've seen throughout 2023. I'd say the one thing to consider here for Q3 results as we march into Q4 was what we saw in Europe.
Jared Oasheim: Europe, you know, has continued to be flat roughly around that $1 million mark on a quarterly basis, but again, most of our focus is in the US business, and we're seeing really, really good results on that side of it. One thing to call out, and he mentioned that earlier was around the OPPS final ruling coming out in November, and we did mention that there's been unbinding vote that went our direction. So it was 5.0 in our favor, and in our base case is assuming that we don't get mapped to the new tech APC that would increase the reimbursement for our hospital, but if we are surprised and we do get mapped to that new payment code, there is a chance that some of our customers that maybe have had complicated add-on payment calculations in the past could delay procedures from December into January, so that they could potentially benefit from that more predictable payment code, APC-1580, and that approximate reimbursement of $45,000.
Jared Oasheim: So I think taking all of that into consideration, we've seen good results in the US, kind of steady results in Europe, and then the unknown related to that payment code coming out in November just kind of all came together for the guidance that we put out for the fourth quarter, but again, we're really happy to be able to push that full year guidance number up.
Jared Oasheim: And then just a quick follow-up. I know the base case right now was that you don't get mapped to 1580, and then you do stay on 5465, but if you do get mapped to 1580, will you essentially be able to hold ASPs kind of where they are in the 30,000 plus range? Thank you. Yeah, it's a good question. So I think we've seen ASPs north of that $30,000 throughout 2023. We've been really happy with the results so far this year based on that add-on payment that we have had.
Jared Oasheim: I think as we march into 2024 without going into detailed guidance there, I think it'd be hard to say that you could maintain those ASPs at that level longer term, but you could be approaching those numbers, right? So maybe not exactly the $30,000 or $31,000, but maybe, you know, high 20s would definitely be conceivable.
Matthew O'brien: Our next question comes from the line of Matthew O'Brien with Piper Sandler. Please proceed. Thanks for taking a question. Just to maybe follow up a little bit on the last question about the unanimous vote. I know Nadim and Jared you're you're dreaded driven, but there's no guarantees I get all that, but I'm sure you've looked at this. How often will CMS look at something that has a unanimous vote and then say no, we're going to do something different. And then how often will they look at something like that and say, yeah, it makes sense. We're going to go with this recommendation.
Nadim Yared: Any kind of framework you can provide on that? Good evening, Matt. And by the way, thank you for joining us. I know it's been a busy week for you with DCT and everything going on. Listen, no, actually we have not looked at statistics of the past in here to be exact. I don't have a percentage. But the vote is not binding. This is a panel very similar to the FDA panel. FDA can follow the recommendation and they can just ignore it.
Nadim Yared: We do not have any indications to believe it's going to go one way or the other except to note that the chances of getting it have increased up. I thought I can say right now, Matt. Okay, that makes total sense.
Nadim Yared: And then the follow-up is just on the label expansion. Just talk to me a little bit about where you're at with that process and then maybe when we can get an update there. Thank you.
Nadim Yared: Yeah, so the under the medical device user fee agreement number five, which is the current agreement that in place between FDA and the industry. FDA has 180 days to respond in 95% of the PMA supplements. So we hope that we are among those 95% that where FDA will meet to 180 days clock. When we do the count of all of the stoppage days that happen during this, you know, interact with, you know, session between an FDA, you know, give us feedback and we respond to the feedback.
Nadim Yared: When we add all of those topics, we still have time to get to the 180 days in this year before end of December. But again, it's no guarantee that we fit within the 95% committed numbers of PMA supplement that FDA commits to do within 180 days. Understood. Thanks so much. Thank you, Mike.
Malgorzata Andrew: The next question comes from the line of Margaret Kaser Andrew with William Blair. Please proceed. Hey, good afternoon guys. Thanks for taking the questions. I wanted to maybe start on utilization. I know you guys have been free vocal about new center utilization. Maybe do I want or two patients up front and waiting for a few months and maybe progressing until we get to 24 months plus. But now you've added quite a few of these centers. Maybe there's there's a bigger cohort within that six to 12 months. Any trends that you guys can can walk us through or, you know, is it a pretty large scatter plot, you know, within that group.
Nadim Yared: Hi, Margaret. Thanks for the question. Yeah, I think the trends have continued to be what we've seen in the past where we saw a lot of those centers coming on board treating the handful of patients. And then waiting for the results both for the reimbursement because of the complexity of the add on payment that TPP. But then also wanting to see the impact on their patients themselves, no matter how much clinical data there is, they still want to see how it works in their their patients.
Nadim Yared: And then after about, you know, six, seven months of waiting to see what those answers are, then they start treating more and more patients over time. And the trend is continued where the longer an account is active, the more patients they're treating on average. And so we've seen that trend continue here into the third quarter. Okay, that's helpful. And then, you know, you also referenced previously in quarters that you did see kind of as high level of interest, your booth, you know, following some of the data presentations earlier this year. Has that continued, has there been follow through and, you know, not only follow through continued interest, but maybe, you know, making it their way through the hospital processes to get their own stem on board.
Nadim Yared: Hey, Margaret, yeah, thank you for the question. Actually, we had recently, another scientific meeting, the Heart Failure Society of America, where in my opinion, in the opinion of our team, this has been by far the best scientific meeting that CVRx has ever been participant to, we were the darling here of that Congress and there was another couple of opportunities during that scientific session to have the CVRx data presented. Again, the Heart Failure Specialist, so that is increasing the exposure of this data through those scientific meetings to centers.
Nadim Yared: Questions so far, I can't comment on it specifically one by one, but we have not seen any negative impact and all I can point out is to the results here, the addition of centers to say that if there was an impact so far, it has been positive netted. Okay, fantastic.
Malgorzata Andrew: Thank you guys, appreciate it. Thank you.
Alex Noak: And our next question comes from the line of Alex Noak with Craig Hallum, please proceed. Okay, great.
Nadim Yared: Good afternoon, everyone. Congrats on the really nice results here. I want to ask on GOP1 that's obviously all the talk right now in MedTech. You know, there's been some talk about what I can do around heart failure symptoms and obese patients, there's some studies that aren't going right now about assessing it in the preserves, the ejection heart failure side of it. How do you think about GOP1's changing the potential patient pool for Barro's similar term?
Nadim Yared: Yeah, hey, Alex and again, thank you for joining. I know it's a busy week for you to listen. Regarding GOP1, we're excited about the positive impact of that therapy on obesity and type two diabetes. Clearly, patients needed some solution and this is from our perspective, a welcome solution to many patients. However, one of the earlier results from that drug in heart failure was to note that the heart rate unfortunately increases with this drug.
Nadim Yared: And we all know that in heart failure with reduced ejection fraction, an increased heart rate is considered the safety concern. So we've seen some publications, particularly in more recent one by Dr. Murray among others and Dr. Butler, highlighting this fact and raising the question whether this drug can be studied safely in the half rough patient population. The other thing I would like to note is paradoxically when a patient has a heart failure with reduced ejection fraction, heavier weight is not necessarily a negative outcome as compared to lesser weight.
Nadim Yared: Patients who have have more or larger weight actually have better outcome in half rough than patients who are super lightweight or super said it's a paradox. This is one of those disease areas where a way to reducing the drug might not necessarily be beneficial. Now, with all that said, we don't know until they run their untenical trials so we will keep watchful eye on all of these developments. No matter what, we do not expect any material impact to our business. Okay, make total sense.
Nadim Yared: Thank you.
Jared Oasheim: And I might have missed this in the prepared remarks, the pullback and op-ex spend even immense new rep hires. The R&D side makes sense, but GNA for the marketing, why some of the cost reduction is there?
Jared Oasheim: What happened? And is that pretty sustainable? Those, I guess, a good cost basis to continue for 2024 on your path to cash flow break even? Yeah, I'll take that one. I wouldn't call it necessarily. I'll pull back in our spend, but more pointing towards seasonality in the second quarter, we often see some additional spend related to trade shows and our sales and marketing lines. So seeing us move into the third quarter with more revenue and a little bit less than overall sales and marketing isn't a surprise necessarily.
Jared Oasheim: So I do think that the leverage we're seeing in this model on the sales and marketing side is definitely sustainable. As we move forward, continue to grow and see more of that total coming down to the bottom line to help us out and reduce that cash per number. On the R&D side of the house, this is planned. So we expected BDHF spend to start slowing down after we left the second quarter. So seeing that reduction in research and development was in line with expectations for us.
Jared Oasheim: Excellent. Oh, I appreciate the update.
Jared Oasheim: Thank you.
Frank Takkinen: And our final question comes from the line of Frank Takenin with Lake Street Capital Markets. Please proceed. Hey, great. Thanks for taking the questions. I wanted to start with one related to the initial FDA feedback you spoke to, Nadim. I'm assuming you can't go into great detail but my assumption being you've remained in the 180 day window within 2023 is fair to assume that some of the interaction is less impactful or we can say maybe non-crucial to the probability or maybe it was a more streamlined.
Frank Takkinen: Can you comment on that at all or if there was any significant questions that they presented to you? Hey, Frank, how are you? A super small question. Yeah, I would you are correct. I prefer not to negotiate with FDA in the public eyes in here. That said, you are correct on one thing. When FDA submit a question irrespective of the difficulty of the question, the clock is stopped, right? And then we have to answer the question and provide the data that we feel comfortable that this additional data or additional analysis answer the question of FDA.
Frank Takkinen: And here Kudos to our team and the steering committee with whom we're working to be able to get these questions, analyze the data, write the answer and submit the answers to the FDA in a timely fashion that's, you know, whereby all of the clock stoppage when added together, they still allow us to hit the 180 days in this year. But I let me be clear one thing. You cannot infer from that. Any elements on the severity of the question or the nature of the question, the fact that our team has done a fantastic job to respond very quickly. B. Got it. Fair enough to make sense.
Nadim Yared: And then wanted to theorize a little bit into 2024, assuming some of these items end up in your favor, I understand you guys are assuming base case, but assuming some end up in your favor, can you maybe talk about if there would be any material commercial changes, whether that's headcount, accelerations, direct-to-consumer, or anything in that category? Frank, I love the question, but at this point, I think we're going to pass on providing any additional color on 2024.
Nadim Yared: I think we're feeling really positive based on the results we've seen so far in 2023, and pretty hopeful based on the non-binding vote that we got from the advisory panel on what we could possibly see for a payment level for 2024. But at this point, I don't think we're going to commit any additional ads or additional spend until we actually see the real results come out here from the letter in later November. Got it. Fair enough. I'll stop there. Thanks for taking the questions.
Operator: Thank you.
Operator: Ladies and gentlemen, we have reached the end of the question and answer session.
Nadim Yared: I'd like to turn the call back to Nadine Yard for closing remarks. Thank you, operator, and thanks again to everyone for joining us for our third quarter earnings call. We appreciate your ongoing support, and we look forward to updating you on our progress and our next update.
Nadim Yared: Thank you.
Operator: This concludes today's conference. You may now disconnect your lines at this time.