Q3 2024 Inari Medical Inc Earnings Call
Speaker Change: Good day and welcome to the Annari Medical 3rd quarter of 2024 earnings call. All participants will be in a listen-only mode, which you need any assistance on today's call, please signify conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star, then one on your telephone keypad. And to withdraw your question please press star then two. On today's call we ask that you please let me yourself to one question and one follow up during Q&A.
Speaker Change: Also, please be aware that today's call is being recorded.
Speaker Change: I would now let you turn a call over to Marissa Byich, Vice President and Mr. Relations. Please go ahead. Thank you, operator and welcome to an artist conference call to discuss our third quarter, twenty twenty four financial performance.
Marissa Byich: Joining the on-state call are Drew Hykes, President and Chief Executive Officer and Kevin Strange Chief Financial Officer.
Speaker Change: This call includes forward-looking statements within the meaning of the private securities litigation reform act of 1995.
Speaker Change: Statements made on this call that do not relate to matters of historical fact.
Speaker Change: should be considered forward looking statements.
Speaker Change: including statements related to an R-E's estimated full year 2020-4 revenue, operating loss or profitability expectations, and the expected operating performance and potential strategic benefits of lymphlobe.
Speaker Change: These statements are based on an Aurek's current expectations, forecasts and assumptions, which are subject to inherent uncertainties, risks and assumptions that are difficult to predict.
Speaker Change: Actual outcomes and results could differ materially from any results, performance or achievements, expressed or implied by the forward-looking statements due to several factors.
Speaker Change: Please review in our most recent filings of the SEC, particularly the risk factors described in our latest forum 10K for additional information.
Speaker Change: Any forward-looking statements provided during this call, including projections for future performance, are based on management expectations as of today.
Speaker Change: and are a undertakes no obligation to update these statements, except those required by applicable law.
Speaker Change: On today's call, we will refer to both Gap and Non Gap's natural measures in announcing our Q3 2024 results.
Speaker Change: Please refer to today's press release for a reconciliation of the non-gap measure discussed on this call and referred to in the release.
Speaker Change: The press release is inspired to company the call or available on our website at anorymedical.com
Speaker Change: According up to these call, we'll be available on our website by 5pm Pacific Time today.
Speaker Change: and with that I'll turn the call over to Drew Hykes, President and Cheapings Executive Officer.
Drew Hykes: Thank you all for joining our call today. In 2, 3, we continue to drive strong adoption of our therapies, resulting in a record revenue of 153.4 million and 21% year over year growth.
Drew Hykes: Based on our year-to-day progress, we're pleased to raise our full-year revenue guidance and reaffirm our expectations to reach sustained operating profitability in the first half of 2025.
Drew Hykes: Before proceeding, I'd like to formally welcome Kevin Strange, our new CFO to today's call.
Drew Hykes: With over 15 years of experience including over four years here at Annari, Kevin Brings tremendous expertise, judgment and leadership to our C-suite. He is also shown a steadfast commitment to our mission and patience.
Drew Hykes: Additionally, I'd like to thank Mitchell for his contributions. As a reminder, Mitchell will remain with an arts or early January as we continue the transition.
Drew Hykes: Turning back to our quarterly results, we drove strong performance across the entire and our portfolio, including in our marketing, leading PE and DBT therapies, and in our emerging therapies portfolio.
Drew Hykes: We also delivered robust growth in our international business.
Drew Hykes: As we advance into the fourth quarter, we are as excited as ever about our leading position in large and underserved vast of the markets.
Drew Hykes: This is especially true as we await the presentation of Pureless Data at the TCT Symposium tomorrow. We believe this presentation marks the beginning of a golden era of randomized controlled data focused on from back to meet for patients suffering from VTE.
Drew Hykes: In Q3, our global VT revenue was 145.3 million, up 19.7% versus the prior year, underpinned by our commercial expansion and market development efforts.
Drew Hykes: During the quarter, we saw stable underlying market and share dynamics.
Drew Hykes: The market for U.S. V.T. procedures remain significantly under penetrated, and as the market leader, we continue to expect to drive robust growth and adoption of mechanical trim back to me for years to come.
Drew Hykes: Our VT Focus Salesforce, the largest in the industry, continues to mature as we hire reps and split turrets warriors at a measured pace.
Drew Hykes: The team is making progress in helping their hospital customers build VTX-Lone's programs To help ensure that each patient diagnosed with a DBT or PE is giving consideration for international therapy.
Drew Hykes: We are excited that a substantial opportunity remains ahead and we look forward to continuing to drive higher adoption and penetration across our account base.
Drew Hykes: Turning to our clinical work, we're proud to usher in the Golden Era of Randomized Control Traudate and VTE through the presentation of our curious data tomorrow. As a reminder, Pyrrletz is the first of our three major RCTs to complete enrollment.
Drew Hykes: Curly Swiss Design to evaluate patient outcomes using flow-tribert as compared to catheter directed thrombolysis.
Drew Hykes: As a reminder of the patient population addressed by this study, we believe the annual incidence of intermediate high risk PE is approximately 280,000 patients.
Drew Hykes: All of whom are eligible for mechanical turnbacks to me with flow-triever.
Drew Hykes: Of these patients, today we believe only 15-20% were about 50,000 patients annually received any type of
Drew Hykes: We estimate that of those 50,000, about one third or 15,000 patients are still being treated with catheter direct to thrombolitis.
Drew Hykes: Based on our ASP's, we therefore see roughly a $150 million opportunity to convert the remaining cash to direct a thrombolytic procedures to mechanical trim back to meal of flow-triver.
Drew Hykes: Of course, this is alongside the opportunity to continue to convert to 80% of patients still being treated by conservative medical management with any coagulation alone.
Drew Hykes: To tomorrow's day to be positive, over time we would expect many more patients to receive mechanical turnback to me treatment with our flow-tube of device. Due to its unique, large-fore aspiration technology and blood-returned capability.
Speaker Change: Data from the trial will be presented at TCT by Dr. Wisdom Jever, Professor of Medicine at Emory University School of Medicine During the late breaking clinical trial session at 11.44 am Eastern Time tomorrow
Speaker Change: I look forward to talking with many of you on-site and hope many of you will also join us for our pureless discussion happening at 2 p.m. Eastern Time tomorrow following the late breaking clinical trial session.
Speaker Change: Beyond Purless, we're making progress on enrollment and are two other currently active RCTs, both of which compare our products to conservative medical management.
Speaker Change: Perlist 2, comparing Flotry with an any-quigulation alone in PE and Defiance, can turn Clotryver to any-quigulation alone in DBT.
Speaker Change: We believe our investment in these studies will further advance the field, change guidelines, extend our leadership position and ultimately change the standard of care in VTE away from conservative medical management to frontline treatment with flow-triver and clot-triver.
Speaker Change: Turning toward global emerging therapy's business, in Q3, we delivered over 8 million in emerging therapies revenue, up 64% versus the prior year.
Speaker Change: We're expect emerging therapies to deliver a strong finish to the year with several Q4 Cadilless already in place and still others coming soon.
Speaker Change: Years of purposeful investment in this segment has led to the addition of four distinct patient populations outside of VTE, together comprising a $4 billion tan in the U.S. alone.
Speaker Change: and our chronic venous disease portfolio, we continue to advance the adoption of venacore, following our full marker release earlier this year.
Speaker Change: As a reminder, physicians are using V-NICOR as both a tool to treat CBD and in certain cases to augment treatment and DVT.
Speaker Change: The addressful market and CBD includes an annual incident of approximately 100,000 patients, representing a $1 billion US term, and a substantial prevalence pool of over 1 million patients.
Speaker Change: CLTI also remains an exciting opportunity for us.
Speaker Change: Lumplow offers new hope for the 55,000 patients per year suffering from no option CLTI, translating into a $1.5 billion US town.
Speaker Change: I am pleased to report that our U.S. launch is progressing well.
Speaker Change: As we formally anniversary the addition of lymphloatwenari were making great progress. As of the end of Q3, we received back approvals in over 50 of the approximately 200 high volume lymphs out of the center of the excellence that comprise our early launch target.
Speaker Change: We look forward to supporting initial procedures and growth over time across these and more centers.
Speaker Change: In addition, we've been hard at work to iterate on the first generation lymphlo system as is the anary way.
Speaker Change: Earlier in the quarter, we received PMA approval from the FDA for our next gen-stent delivery system. I'm happy to share that we are now in limited market release. We look forward to getting the broad commercialization of this key component in 2025.
Speaker Change: Continuing with our work on Limflow, I'm pleased to highlight that the end tap proposed earlier this year for Limflow procedures performed in the inpatient setting. Wenzun into effect as planned at the beginning of October.
Speaker Change: Thanks to the N-TAP, reimbursement for inpatient procedures has now increased by as much as $16,250.
Speaker Change: Regarding outpatient procedures, as noted on our last call in Q3, CMS proposed to increase hospital outpatient reimbursement for the limb probe procedure from 27,500 to 35,000 dollars, a meaningful increase.
Speaker Change: This enhanced reimbursement is relevant to the roughly 20% of lymphless locations currently performed in a hospital outpatient setting.
Speaker Change: We're expect to see the final ruling from CMS for outpatient reimbursement in the next two months.
Speaker Change: In a cute, lemascemia, I'm pleased to share that we've recently received 5K clearance for our next Gen Art System and have come as the limited market release.
Speaker Change: This product serves a $600 million US-TAM characterized by tremendous on metneeds and elapsed for personal tools.
Speaker Change: Artics will not only address patients who would have been treated surgically, but we believe this second generation device improves upon other repurposed end-of-astro-replatforms.
Speaker Change: We plan to commence the full marker release later in Q4.
Speaker Change: Our final emerging therapies market addresses the treatment of AVFistula class using our in-throw device. Based on physician feedback, we're working on a second generation in-throw platform, and we look forward to bringing it to market next year.
Speaker Change: As evidenced by the great progress made year to date, we're confident our emerging therapies business can one day account for at least 20% of an already revenue.
Speaker Change: Finally, I would like to discuss another record quarter in our international business.
Speaker Change: Revenue of 11.5 million was up 76.4% versus the prior year.
Speaker Change: Strans was primarily driven by adoption of our solutions in Europe.
Speaker Change: In the last time, we recently received regulatory approval for FloatTuber in Brazil and are in the early stages of our launch in that market.
Speaker Change: We're also making continued progress on our expansion efforts into both China and Japan.
Speaker Change: In China, we've been hard at work for two years to gain regulatory clearance for October and Float Reaver.
Speaker Change: of late in conjunction with the National Medical Product Administration, we ran a 25-patient study for caught-tree-we're in China.
Speaker Change: We're excited that we've recently completed that study and have submitted the data to the NMPA.
Speaker Change: We're now finalizing our Go to Market Strategy and we'll have more to share about that by your end.
Speaker Change: Turning to Japan, we're pleased to announce we obtained PMDA regulatory approval for our
Speaker Change: Looking ahead, our next step in Japan will be in the form of a post-market study of approximately 100 patients supported by a recently established distribution agreement in Japan.
Speaker Change: Thank you, Cluesion. We're excited about the progress we're making internationally and expect total international sales to one day account for at least 20% of an already revenue.
Speaker Change: Before turning things over to Kevin, I'd like to highlight, as we always do, a patient story that demonstrates the impact of our technology.
Speaker Change: and Highlights, the kind of patient that makes the pureless study so relevant.
Speaker Change: The 58-year-old woman in Louisiana was admitted to her local hospital where she was determined to have an intermediate risk pulmonary embolism with large copper.
Speaker Change: Revisitions for familiar only with the Eco-Stromulated Procedure.
Speaker Change: Despite 11 hours of a litac confusion in the ICU, her improvement was only marginal.
Speaker Change: Given that she has completed the recommended treatment, she was discharged home with the hope that she would recover on oral and sexual regulation.
Speaker Change: Unfortunately, that same evening she was taken to a different hospital with persistent symptoms of trouble breathing and passing out.
Speaker Change: For CT scan, show no change in a clock for a minute from before.
Speaker Change: Dishaustable with the assistance of an arm Medical, had developed a comprehensive PE through Back to Me program and had several physicians well versed in using the flow-tree
Speaker Change: In a short 45-minute procedure, the patient had all of the acute and chronic thrombus removed from her lungs.
Speaker Change: The Flow Samored device was successful used to safely return 600ccs of the patient's own blood back to her.
Speaker Change: She was discharged home the following day and has since recovered completely.
Speaker Change: This case highlights the limitations of catheter-directed trombolytic therapy, primarily incomplete trombo's resolution and ICU-length of state.
Speaker Change: The case also points the need to educate more physicians about the benefits of flow-triver, which include immediate symptom relief, rapid heart recovery and short length of stay.
Speaker Change: These benefits are directly attributable to the flow-triversystems unique mechanism of action, which offers both best and classroom back to me and the safety of blood return.
Speaker Change: Our Purlist study will directly address the thousands of patients like this one.
Speaker Change: With that, we'll now turn the call over to Kevin.
Kevin: Thanks Drew, turning through our third quarter 2024 results. And Ari's revenue for the third quarter of 2024 was 153.4 million, up 21.4% over the same period of the prior year.
Kevin: This represents sequential growth of over 7.6 million.
Kevin: Global VTE revenue in the third quarter was 145.3 million, up 19.7% over the same period of the prior year.
Kevin: Global Emerging Therapies Revenue in the third quarter was 8 million, up 64% for the same period of the prior year. International revenue of 11.5 million was up 76.4% compared to the prior year.
Kevin: Our best-in-class gross margin was 87.1% for the third quarter of 2024 compared to 88.5% in the prior year period.
Kevin: The year of your change was due to product mix, the ramp up costs associated with new products and increasing internationalization of the business.
Kevin: Sequential Gross margins improved by 80 basis points over Q2 2024.
Kevin: Operating expenses were 147.1 million in the third quarter of 2024, compared with 109.8 million for the same period in the prior year.
Kevin: R&D expense was 29.4 million in the third quarter of 2024, compared with 21.5 million for the same period of 2023.
Kevin: The increase in R&D expenses was primarily due to a one-time non-cash impairment charge associated with previously capitalized software development costs.
Kevin: Increases in personnel related expenses, clinical and regulatory expenses.
Kevin: We anticipate R&D expense as a percentage of revenue to decrease sequentially in the final quarter of 2024 to a level similar to that of YouTube.
Kevin: SGNA expense was 18.3 million in the third quarter of 2024, compared with 85.6 million for the same period of the prior year.
Kevin: The increase in SG&A expense was primarily due to increases in personnel-related expenses as a result of increased head count and increased commissions, share-based compensation, legal, marketing and other admin expenses.
Kevin: As anticipated, SGNA is a percent of revenue moderated closer to the level we saw in Q1.
Kevin: We anticipate SGNA expense as a percentage of revenue will further decrease in the final quarter of 2024.
Kevin: In the third quarter of 2024, the change in our fair value adjustment of our contingent consideration liability was 6.6 million, as our limphlo business continues with exciting progress.
Kevin: Amortization expense related to the acquired and tangible asset was 2.5 million, and acquisition related expenses were 0.3 million.
Kevin: In the third quarter of 2023, we had acquisition related expenses of 2.7 million.
Kevin: In our report, I gap operating loss of 13.6 million in the third quarter of 2024. I compared with a gap operating income of 2.1 million for the same period in the prior year.
Kevin: On a non-gap basis, which excludes acquisition-related expenses, acquired, contangible asset amperization, changes in the fair value of our contingent consideration.
Kevin: and impairment of capitalized software from related costs. The third quarter operating loss was .4 million.
Kevin: The non-gap adjustment included 2.7 million related to acquisition related expenses in the third quarter of 2023.
Kevin: Net loss was 18.4 million for the third quarter of 2024, compared to a net income of 3.2 million for the same period of the prior year.
Kevin: The basic and fully diluted net loss per share for the third quarter of 2024 was 31 cents on a weighted average basic and diluted share count of 58.4 million.
Kevin: This compares with a basic and fully diluted net income per share of six cents and five cents on a weighted average basic and diluted share count a 57.4 million and 58.6 million respectively in the same period of the prior year.
Kevin: As we execute against our goals of driving strong growth and leverage within the business, we are also maintaining a thoughtful approach to managing our balance sheet.
Kevin: In the third quarter of 2024, our cash flows provided by operating activities for 1.9 million.
Kevin: We look forward to driving improvement in this area going forward.
Kevin: At the end of the third quarter, we held a healthy balance of cash and investments, totaling 111.6 million.
Kevin: We remain confident in our ability to self-fund our business and strategic objectives with our current cash and access to liquidity.
Kevin: We anticipate our cash balance will remain above 100 million for the duration of the year.
Kevin: Turning to our 2024 outlook.
Kevin: We are raising our full year 2024 revenue guidance to 601.5 to 604.5 million.
Kevin: An increase of 3.5 million at the midpoint of our prior guidance range, reflecting growth of 22.5% over 2023.
Kevin: Our guidance reflects contributions from all three of our growth pillars, BTE, emerging therapies, and international.
Kevin: Lastly, I would like to comment on an Irish progress towards profitability.
Kevin: We are continuing to invest in our strategic objectives to drive growth by remaining fully committed to achieving sustained operating profitability.
Kevin: Looking ahead, we will continue to strengthen our profitability profile and feel very confident in delivering our commitment to sustained gap operating profitability in the first half of 2025. We also anticipate roughly break even gap operating income in Q4 of this year.
Kevin: With that, I'll turn the call back to the moderator for questions. For the Q&A segment, we will be joined by Dr. Tom Tue and R.E. Chief Medical Officer.
Speaker Change: We will now begin the question and answer session.
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Speaker Change: into a draw question, please press star then too.
Speaker Change: Again, we ask that you please limit yourself to one question and one follow up on today's call.
Speaker Change: At this time, we will take our first question which will come from Calam Tetsch Marsh with Morgan Stanley. Please go ahead.
Speaker Change: Thanks for taking the question guys, just wanted to get your views on Core VT Market Health as we push into 2025.
Speaker Change: Right now I think the streets modelling, U.S.V.T. revenue growth in the loads of meetings, which kind of lags that 18 to 22% you've caught out previously. So we just appreciate any sense of how you're thinking about the core market next year and the moving parts we should keep in mind as we refine our models. Thanks.
Speaker Change: Yeah, thanks for the question, Kyle. I can get sort on that in Kevin and Tom, and want to join in as well. But I think you heard in the prepared remarks, our view in Q3 was that the market was stable, with what we've seen earlier in the year, a stable underlying market dynamics.
Speaker Change: [inaudible]
Speaker Change: but suffices to say we see a long runway for continued robots froze within DTE.
Speaker Change: and we're going to keep investing in the areas that are going to drive that growth and purpose build technology and high quality data, you know, including our CT data starting tomorrow morning with Turlist.
Speaker Change: with continuing to invest in our commercial footprint, and our market development efforts under VTS funds, all of that gives us confidence that there's a long run way to give them how early we are in collecting this market away from conservative medical management to the mechanical turn back to me with flow-tree and clock-tree with frontline.
Speaker Change: Great and then just on Limflow. Obviously you mentioned you got the end tap in play now. So what kind of up-ticking procedure do you want are you anticipating here? Or just any colour of what you've seen so far in October would be really helpful.
Speaker Change: because I think emerging therapies may be missed our estimates slightly in Q3, so just to appreciate any kind of sense of the growth algorithm for this part of the business as we exit the year in Fishings 2025. Thanks a lot.
Speaker Change: Yeah, thanks, Calum. I can get started on that one as well.
Speaker Change: You know, so limb flow was an important part of the growth we saw in emergent therapies in Q3. It grew
Speaker Change: 60-some percent year-on-year. We did see some roughly flat sequential growth in emergent therapies but lymph flow within emergent therapies did grow sequentially Q2 to Q3. We're coming up on a year anniversary with lymph flow.
Speaker Change: and we are very pleased.
Speaker Change: with the early commercial ramp.
Speaker Change: We had always viewed 2023, 2024 rather, as you know, as a foundation-building year with Limplon. I think that's largely the work we've accomplished.
Speaker Change: We've strengthened the supply chain, we've gotten the team aligned and organized. We, of course, have gotten NTAP and NewTek APC both in place for enhanced reimbursement. NTAP, as you mentioned, went online October 1.
Speaker Change: and that will further enhance what was already.
Speaker Change: a pretty attractive economic value proposition.
Speaker Change: So we're seeing nice growth with lymph flow month after month, quarter after quarter.
Speaker Change: and we anticipate that growth certainly to continue next year with the foundation that we've established here in 24. We're going to be able to leverage that foundation to really have a strong, really first commercial year in 2025 with LIMFLO, and clearly the NTAP is going to provide a nice tailwind for those efforts.
Speaker Change: And our next question will come from Marie Thibault with BTIG. Please go ahead.
Marie Thibault: devices built in. What's kind of a thing to look for?
Marie Thibault: percent year-to-date.
Marie Thibault: We feel like the raise that we've afforded here throughout the year of $15 million at the midpoint.
Marie Thibault: really
Speaker Change: drives where we want to be towards the end of the year. And that's really reflective of the confidence that we have in the business overall. There are obviously some moving pieces here that we've got heading into the end of the year with ARCTICS just coming online now.
Speaker Change: We've got PeerList that's going to be rolling out here shortly, and we've got Lintelo, of course, that's going to be coming online with the NCAPS.
Speaker Change: But overall, I think the confidence here is reflected in the $3.5 million raise at the midpoint, and we feel good about the guidance raise here to 22% for the year.
Speaker Change: Yeah, thanks for that Marie. I think as you look out in 25 with international I think first and foremost we're anticipating continued robust growth
Speaker Change: out of Western Europe. That region has been leading the way internationally. I would anticipate they will continue to do so in 2025. We've got a nice footprint established in Europe. We've got enhanced reimbursement established in a number of European markets, Germany, for instance. I think all that is going to continue to drive robust growth out of Europe in 2025.
Speaker Change: Alongside that...
Speaker Change: I think in 2025, you're going to see more meaningful contributions from growth.
Speaker Change: from the other international markets, and there's maybe 12 or 15 other markets.
Speaker Change: So I think you're going to see those markets contribute alongside.
Speaker Change: And then finally, as you first talked about, you know, we've been hard at work to get
Speaker Change: On to the market in both China and Japan. We're very close in both of those. You heard some of the recent progress in China
Speaker Change: We have completed 25 patient study in market, which we've submitted to the NMTA in Japan. We do have regulatory clearance now for Clotrivor and are finalizing reimbursement in Japan. So we've made some nice progress and I think looking ahead to 25.
Speaker Change: I think both China and Japan will help contribute. You know, we're going to have to ramp in those markets, just like you've seen us.
Speaker Change: undertaking other markets, but I think clearly getting into those large Asian markets and beginning to do the work we need to do
Speaker Change: And our next question will come from David Rescott with Baird. Please go ahead.
David Rescott: Great. Thanks for taking the questions and congrats on the quarter here. I wanted to ask a little bit about, you know, maybe just your high-level thoughts on what you're thinking about peerless. I know we'll get some, you know, better details on that pretty soon, but just wanted to think, you know, should the results there bear out to be positive in the way that you're expecting, you know, what level of investment do you think you could put behind this to either, you know, sustain the growth you have, maybe try to pull some leverage for some accelerating growth, how should we just start to think about that. And again, appreciate we'll have more details once results are out.
Speaker Change: Yeah, thanks for the question, David. As you can tell, we're very excited to bring the Pure List data to light. This is the first RCT in the pulmonary embolism space in about 10 years, so I think we're also excited to
Speaker Change: really raised the bar in terms of meaningful endpoints.
Speaker Change: that patients and physicians and hospitals.
Speaker Change: care about.
Speaker Change: As far as resourcing this, we anticipate a lot of marketing activity, not just intense around the time of the announcement, but also sustained, because I think, as you heard in the prepared remarks, there's still a lot of unmet need. We think a third of patients in the US who get intervention for PE are getting CDC, and I think that is a large opportunity to improve patient care and also drive revenue.
Speaker Change: Okay, thanks. Maybe on Limflow, I heard some of the comments already, you know, there, I'm curious for the accounts that you're in, maybe if you could give us a sense for, I guess, one, relative to the goals you made earlier this year around the number of accounts you get into, maybe where you stand today, and then for those accounts that you are already in, you know,
Speaker Change: Any call around what those accounts look like as it relates to monthly procedures, the reorder rates, anything there would be helpful. Thank you.
Speaker Change: Sure, David, I can try and answer those. So, you heard in the prepared remarks that we've now gained access to over 50 initial accounts.
Speaker Change: and that is part of that initial group of 200 high-volume Linsalvage Centers of Excellence.
Speaker Change: So we've made some nice progress here out of the gate in 2024. We're probably a little ahead even of where we had expected to be at this point.
Speaker Change: in terms of account opening. So we feel pretty good about the commercial ramp to date. We've got work to do from a market development standpoint. That is work we knew we were going to have to undertake, and that's work we're actively chipping away at as we speak. These are patients that are not being cared for.
Speaker Change: and most cases by interventionalists.
Speaker Change: These are patients that are being cared for in wound care and podiatry, and in some cases even out in the community with GPs. So we've got work to do to help identify those patients and get them in front of a physician that can really assess whether or not lymph flow is a new option for those patients.
Speaker Change: So, that's work that we knew we would be focused on, and sure enough, that is exactly what we did.
Speaker Change: where our team is spending time understanding what that work looks like, what we need to do, what barriers we need to knock down. But suffice it to say, we, like the progress we've made to date, tons more work ahead of us, but so far so good in what we've seen to date from a commercial standpoint.
Speaker Change: And our next question will come from Chris Pasquale with Nephron Research. Please go ahead.
Speaker Change: Thanks. A couple questions on ARDICS.
Speaker Change: Excited to see that product back in the market. Just curious how you're going to position it
Chris Pasquale: In that segment, relative to its strengths versus competitive systems, is there a particular subset of patients for whom that product is going to be a much better option than what's already available?
Speaker Change: Yeah, thanks, Chris. I can maybe talk about some of the commercial aspects of it and then maybe Tom can chime in on the
Speaker Change: the clinical part of your question.
Speaker Change: So, we are a week or two into the LMR, we got 510k clearance, maybe it's just a week ago now. So, still pretty early, but so far so good. We've got some really good feedback from the initial set of cases.
Speaker Change: As you recall, this has been a
Speaker Change: almost a two-year journey to get back into the market with Artix, this next-gen platform with Artix. So we're really excited to be back in the market.
Speaker Change: Over half of them are still being treated with open surgical approaches, and we believe that a purpose-built tool like ARDICS is going to be a better option for the patients that are currently being treated with other endovascular platforms. So still early, we need to
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Speaker Change: Maybe with that, Tom can back clean up on some of the clinical parts of your question.
Tom Tue: Yeah, Chris. So you asked about how we might position the strengths of ARDICS in the market. You know, if you recall, the acute limb ischemia market is a mature market. These
Tom Tue: patients get treated. Unfortunately, the treatments that exist currently have significant limitations, either because of open surgery or need for multiple interventions, the use of lytics.
Tom Tue: And, you know, frankly, the aspiration thrombectomy system that is used in a lot of procedures is inadequate for removing clot and results in distal embolization. We believe in ARDEX.
Tom Tue: We have a toolkit that's the all-in-one solution that you have the best-in-class mechanical thrombectomy, best-in-class aspiration, and the results that we've seen, as Drew alluded to, early on, but still fantastical results that just haven't been able to be achieved with the technology to date. So we can't wait to get more experience, and then once we get through the early phases, then release it broadly across our customer base.
Speaker Change: Thanks, that's really helpful. And then just on the core VTE business, curious any differences in trends you're seeing between the two segments there, DVT versus PE? Our sense has been that the PE is continuing to grow a bit faster, just curious if you're seeing the same.
Speaker Change: Yeah, I think that's right, Chris. You know, you heard in the prepared remarks, pretty stable trends we saw as we moved through Q3.
Speaker Change: I think that's true within PE. I think that's true within DVT.
Speaker Change: and I think our view is exactly what you shared. I think at the margin, the PE segment of the market has been growing faster on a marginal basis than DBT and I think that was a pretty consistent trend that we saw unfolding Q3.
Speaker Change: Thanks.
Speaker Change: And our next question will come from Stephanie Piazzolla with Bank of America. Please go ahead.
Stephanie Piazzolla: Hi, thanks for taking the question. I just wanted to follow up on peer lists. You called out the 150 million opportunity that the data could help open up. Maybe if you can elaborate a little bit more on how quickly this revenue opportunity could come through, or how quickly you expect doctors to change practice from the data if it's positive.
Speaker Change: Great. Thanks for the question, Stephanie. And like we said, we're very excited to bring this data to light tomorrow at the TCT meeting.
Speaker Change: Mind you, even with a highly successful trial, I think it takes time for physicians to really read and comprehend the results and then put those conclusions into practice. So I suspect what we'll see is the continued erosion of CDC market share and probably relegating that therapy to very niche uses. But I think the bulk of that transition is going to be a 2025 progress.
Speaker Change: Thank you. And maybe just to follow up, I just wanted to clarify on the U.S. vs. O.U.S. performance in VTE. We estimate that the U.S. VTE market grew in the mid-teens consistent with prior quarters. Is that a fair assumption and is it still fair to assume that most of the O.U.S. revenue is from VTE vs. emerging therapies? Thank you.
Speaker Change: Yeah, thanks for that, Stephanie. So the overall growth globally for VTE and Q3 was 20%. A little bit faster than that OUS, a little bit slower than that here in the US. We don't break out specifically
Speaker Change: the U.S. versus O.U.S., but that at least gives you some context around the two. And again, relatively stable trends.
Speaker Change: in Q3 compared to what we've seen historically. And then finally, the last part of your question, yes, the vast majority of our revenue, OUS, is indeed from VTE.
Speaker Change: That will likely change over time as we work to bring some of our emerging therapies to the international markets. But today, at least, the vast majority of OUS is directly attributable to VTE.
Speaker Change: And our next question will come from Larry Beagleson with Wells Fargo. Please go ahead.
Speaker Change: Hi, it's Leigh calling in for Larry. Thanks for taking the question. Nice quarter. My first question, Drew, at our health care conference last month when you were asked about 2025, you talked about aspiring to be a 20% grower and you're confident that will continue to be the company's target going forward. So the question there is, you know, are you confident that you can grow 20% in 25? Current consensus is closer to 18% growth and I have a follow-up.
Drew Hykes: So looking ahead to 2025, we are very excited about the runway that we see for continued robust growth across all three parts of the business.
Drew Hykes: Within VTE, of course, we're going to be able to continue to leverage Peerless, as you heard Tom describe. We've got new products coming in VTE next year, continued traction and work with VTExcellence.
Drew Hykes: Emerging Therapies will be a big year for us next year with Ardix and full market release with the first full year of lymph flow commercially. We've got a next-gen product coming in Infril.
Drew Hykes: Continued traction with CBD.
Drew Hykes: You heard me describe earlier the catalyst in international...
Drew Hykes: across Europe and LATAM and Asia-Pacific and some of the new markets coming online as well. So, you know, over the next 60 days, we will take all of that into account.
Drew Hykes: We'll have a chance to look at Ardex in the first 60 days and Peerless in the first 60 days, all of that.
Drew Hykes: But to be clear, what remains unchanged is our commitment to continued premium robust growth.
Drew Hykes: That will remain our top priority in 2025. Alongside that, a second clear priority is going to be the work we're going to continue to do in Path to Profitability. And you've heard Kevin describe some of the recent progress here, even this year, and our confidence looking ahead.
Drew Hykes: for that progress to continue. Last thing I'd point to relative to guidance next year is that philosophically...
Drew Hykes: We will continue our historical approach. When we put a number out from a guidance perspective, we want to be highly confident in delivering on that number, and I think that's another part of our guidance that won't change looking ahead to next year.
Speaker Change: That's helpful, thank you. And just for my follow-up on China and Japan, I didn't know if your comments were related to quatriver. Is there an up-to-the-arm flow triver in those markets? And any additional color you can provide on the post-market study in Japan and the distribution agreement? Thank you for the questions again.
Speaker Change: Sure. Thanks, Clay. So we've been working the last couple years to gain regulatory and reimbursement approval in both China and Japan for both float reaver and collapse reaver.
Speaker Change: In both of those markets, for different reasons, Klotzriever has led the charge.
Speaker Change: and is a step ahead of where we are at with Flow Treeworks.
Speaker Change: So, as we enter those markets initially, we'll be doing so with Klott Triever initially and then following that commercial effort, we'll follow with FlowTriever to get regulatory reimbursement and commercial traction with the second product.
Speaker Change: The 25 patient study that I described, to be clear, was in China. That was a study that we conducted with Klotzrieger, in market, in China.
Speaker Change: with acute endpoints. We submitted that data set to the NMPA and that data will be part of their final regulatory assessment for China approval.
Speaker Change: In Japan, as you heard us describe in the prepared remarks, we do have PMDA regulatory approval.
Speaker Change: We anticipate finalizing reimbursement approval here in Q4, and that will set the stage for us
Speaker Change: to do our initial work in Japan, which will be in the context of a 100-patient post-market study, which is a requirement from a regulatory perspective. So that will be the initial commercial effort will be in the context of that 100-patient post-market study.
Speaker Change: But maybe last thing, just to answer the question on the distribution agreement, we did enter into a third-party distribution agreement in Japan for a partner to help us commercialize ClockTreeWorks as it comes to market here, so that's another new update that we've provided in the prepared remarks. Thanks, Clay.
Speaker Change: And our next question will come from Bill Plevenik with Canaccord Genuity. Please go ahead.
Speaker Change: Hey, it's Zachary on the line for Bill. Thanks for taking the question. So it sounds like LoomFlow is progressing really well in terms of both the reimbursement and back approvals. As we adjust our models tonight, what should we expect in terms of 2025?
Speaker Change: So you heard us describe 2024 as a foundation-building year for LIMFLO. That's really going to set the stage for us.
Speaker Change: to drive meaningful growth out of Lymphlo in 2025.
Speaker Change: and that is going to be building off the foundation of supply chain work that we've done this year, the NTAP, the team being aligned, New Tech APC coming online, all those things contributing to the growth within emerging therapies.
Speaker Change: and 25. Clearly, lymph flow is going to be an important part of the growth story with emerging therapies.
Speaker Change: And along the way, as a backdrop, we'll continue to do the work with VenaCore and RevCore in chronic venous disease. So, lots of nice catalysts shaping up in emergent therapies next year, and I think the top of that list is going to be the growth we're anticipating out of LymphLobe.
Speaker Change: And our next question will come from Michael Sarkom, with Jeffries. Please go ahead.
Michael Sarkom: Good afternoon and thanks for taking my questions.
Michael Sarkom: A follow-up on peer lists. Assuming tomorrow we see or it shows what you're expecting it to show, you know, good outcomes, do you expect ANARI will, you know, benefit entirely from that study or is there potential for a class effect that could, you know, just lift mechanical thrombectomy more broadly?
Speaker Change: Thanks for the question, Mike. I don't think there's going to be a class of sex attributable to peerless because I think
Speaker Change: FlowTriever isn't a class of its own. Remember the peerless study randomizes FlowTriever to catheter-directed thrombolysis And when we're talking about the FlowTriever procedure There's only one device that has the kind of efficacy for thrombectomy as well as the safety of blood return
Speaker Change: that is the FlowTrevor system. So I think that the results, if positive, are going to be directly assigned to the FlowTrevor treatment arm. And frankly, if other companies want to try to gain benefits, they should do their own studies.
Speaker Change: Got it. Thanks, Thomas. And just one quick, one last quick one. Can you just comment on any trends in pricing in the core US VTE market?
Michael Sarkom: So Michael, I think the trends in pricing again were stable in the year. We've described in the past that pricing is a modest tailwind for us.
Michael Sarkom: We take price or attempt to take price as contracts come up for renewal.
Michael Sarkom: that was certainly the case in Q3. And then the second tailwind that we derived from a pricing standpoint
Michael Sarkom: is the Continued Conversion.
Michael Sarkom: accounts onto our VTE PPP pricing program, which mathematically ends up creating a bit of a tailwind. So those are the dynamics we saw in Q3, and again, very consistent with what we have described in the past.
Speaker Change: Our next question will come from Richard Newitter with Truist Securities. Please go ahead.
Speaker Change: Hi, good evening, this is Rodney, and for Rich, thanks for taking the question. So just to one, I guess, on the next-gen delivery system, can you talk a little bit about what the actual improvement is that can make you able to win-share in that case?
Speaker Change: So, a little garbled there, but I think you're asking about the next-gen ARDIC system and what attributes of it gives us confidence we're going to be able to take share. Did we get the question right? Yes, that's right. Okay. I think Tom can...
Tom Tue: Can take that one. Yeah, thanks for the question. We are really excited to bring Artix back to market, as you've heard in the comments already. If we rewind back a year and a half to the first generation Artix.
Tom Tue: What we recognized was that there was a great need for mechanical thrombectomy for the acute limb ischemia market.
Tom Tue: And that obviates some of the shortcomings of both surgery, lytics, and other approaches.
Tom Tue: The Ardex Gen 1 system was very safe, but we realized we could improve with some of the ease of use with how the components work together as well as to improve the thrombectomy results. And we believe with this new generation of Ardex...
Tom Tue: which has a protection scheme to reduce distal embolization, has an upgraded funnel, as well as a mechanical thrombectomy platform that we're gonna really realize the promise of what this technology can bring.
Speaker Change: Thanks. And then I guess my next question is on the T&L. You know, we're all trying to kind of calibrate our models for 2025. Is there anything you'd want to point out in terms of this pathway to sustained operating profitability? You know, it looks like R&D is taking a pretty big step down this year, but the street has it stepping back up next year. Just hoping you give us some color on clips and tapes and where should we be thinking about where the profit and deprivation are coming from for next year. Thanks.
Speaker Change: Yeah, thanks for the question. This is Kevin again.
Kevin: So, overall, I think we feel good about the progress that we're making on the operating income line. In Q3, you saw a $9 million sequential improvement on a gap basis.
Kevin: from Q2, excluding the one-time impairment charge that we talked about, it would have been closer to $13 million sequential improvement. We saw nice improvement on the SG&A line.
Kevin: and General Stability on the R&D line.
Kevin: As we talked about on the last call, SG&A, we expected to step down to a more normalized level like Q1, and it did this quarter in Q3, so we're really pleased with that. And R&D, excluding the one-time charge.
Kevin: was roughly in line with Q2. So looking ahead, as we discussed...
Kevin: In the script, we do see SG&A continue to step down in Q4 relative to Q3. And we would expect general stability, if not a bit of improvement on the R&D line as well. Overall, that lands us in an area that's roughly break-even from an operating margin perspective in Q4, which we're very pleased with.
Kevin: And we think we're well on our way to driving incremental operating leverage into the first half of 2025. And as you heard, again, in the script, we remain fully committed to driving to sustain gap operating profitability in the first half of 2025.
Speaker Change: We have time for about one to two more questions on today's call. Our next question here will come from Matthew Blackman with Steeple. Please go ahead.
Matthew Blackman: Oh great, can you hear me okay?
Matthew Blackman: Thank you.
Matthew Blackman: Thanks for taking the questions. I've got two. Drew, on Peerless, I think the quote from the prepared remarks is that if we get a quote-unquote a positive readout, we'll see CDT conversion. So I guess that begs the question of what you think constitutes a positive readout, if you're willing to share, and then one follow-up.
Drew Hykes: Sure, thanks for that Matt. So this study was purposely designed with meaningful clinical endpoints as the win-loss ratio composition
Drew Hykes: That's exactly what physicians have been asking for. We have moved past the era where surrogate endpoints
Drew Hykes: are going to inform clinical decision making. As a result, if you look at the five
Drew Hykes: components of the win-loss ratio. Each of them are important for clinical decision-making. Each of them reflect important outcomes for patients. That's the design of the study and that's what you're going to see presented tomorrow.
Drew Hykes: and the Late Breaker tomorrow morning.
Drew Hykes: The opportunity for us, if it is positive, is meaningful.
Drew Hykes: As you heard Tom describe, 280,000 patients, we believe 15,000 of those are still today
Drew Hykes: being treated with catheter-directed thrombolytics. That's exactly the readout that Pure List is going to shine a light on.
Drew Hykes: So we're very excited.
Drew Hykes: to get the data out tomorrow morning. This has been a...
Drew Hykes: 3-year journey to get to this point, so exciting to be on the eve of that readout tomorrow morning.
Speaker Change: Understood, thank you. And then just on VTE Excellence, where are you in terms of accounts across the three phases of the program? Just remind us what the trigger points would be to move from one phase to the next and how long that transition often takes and whether that transition period is moving faster recently, or just any color on an update on the VTE Excellence program.
Speaker Change: Sure, Matt. I can put a little more color on that. So, recall that our view is all 1,700 of our accounts are in some phase of a journey towards emerging as a VTE Center of Excellence.
Speaker Change: The vast majority of our accounts are in the earliest phase of our program, what we call Engage. In that phase, you know, the work is focused on spreading awareness, on establishing a solid foundation, on ensuring that the interventionalists
Speaker Change: are getting solid outcomes in their first set of cases.
Speaker Change: We do some work in the first phase to ensure that the coding and billing
Speaker Change: is being done correctly and that the hospital is receiving credit for the work that they're doing from a reimbursement standpoint. All that characterizes the kind of work we do and engage. And still today, the vast majority of our accounts are still in that phase. The penetration into the TAM in that phase is in the low single digits, just getting started and laying the foundation.
Speaker Change: From there, we have accounts graduating to the second phase, what we call Empower.
Speaker Change: And in this phase, we're really focused not only on broadening awareness amongst the interventionalists, but also amongst all of the non-interventional stakeholders that help care for these patients. So the emergency room physicians, the hospitalists, the pulmonologists, the hematologists,
Speaker Change: All of the other caregivers, we spend a lot of time in Empower engaging and raising awareness among that group of caregivers. We also spend time focused on the administrators in the Empower phase to ensure that they appreciate not only the clinical benefits,
Speaker Change: of Float River and Clout River, but also the economic value proposition that goes along with our therapies. And as a result, they're supportive of the program building effort and investing into the program building effort. We've got a couple hundred accounts.
Speaker Change: in that Empower phase and the TAM penetration in that phase is in the double-digit range. And then the final phase from there
Speaker Change: is a group of accounts that have graduated onto what we call Excel and these are accounts that are beginning to perform as true VTE centers of excellence.
Speaker Change: They've got well-defined care pathways and algorithms. Many of them have a dedicated VTE coordinator in place. Many of them are taking advantage of artificial intelligence-based.
Speaker Change: Diagnostic programs to ensure that patients are flagged. All of those are hallmarks of our most advanced group of accounts. We've got several dozen accounts in that phase.
Speaker Change: and the TAM penetration in that group is north of 20%. We've got several that are north of 50%, so it gives us some confidence.
Speaker Change: We're moving in the right direction.
Speaker Change: That is all the time we have for questions today. We will now conclude our question and answer session in addition to the call. Thank you all very much for attending and participating in today's conference. You may now all disconnect your lines and have a great day. Thanks, everybody. Take care.