ACADIA Pharmaceuticals Inc.

Good afternoon, and welcome to the Inari Medical fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Caroline Corner, Investor Relations. Please go ahead.

Thank you, Operator. Welcome to NARI's fourth quarter 2022 earnings call. Joining me on today's call are Drew Hikes, President and Chief Executive Officer, and Mitch Hill, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the markets in which Inari operates, trends and expectations for Inari's products and technology, trends and demand for Inari's products, Inari's expected financial performance expenses and position in the market, and the impact of COVID-19 on Inari's operations and Inari's customers' operations. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results, performance, or achievements to differ materially from any results, performance, or achievements expressed or implied by the forward-looking statement. Please review ANARI's most recent filing with the SEC, particularly the risk factors described in ANARI's annual report on Form 10-K for the year ended December 31, 2022, for additional information. Any forward-looking statements provided during this call, including projections for future performance, are based on management's expectations as of today. ANARI undertakes no obligation to update these statements except as required by applicable law. Inari's press release of fourth quarter 2022 results is available on Inari's website, www.inarimedical.com, under the Investors section, and includes additional details about Inari's financial results. Inari's website also has the latest SEC filings, which you are encouraged to review. A recording of today's call will be available on Inari's website by 5 p.m. Pacific time today. Now, I would like to turn the call over to Drew for his comments and fourth quarter 2022 business highlights.

Thank you, Caroline, and thank you everyone for joining us today. Our fourth quarter was successful and highly productive. Revenue growth was strong and we executed crisply across all our growth drivers. We presented important new data from the two largest prospective thrombectomy studies ever conducted in DVT and PE, and we initiated full market release of two new products, all while continuing our work to drive market expansion and uptake of our devices. I will share additional detail about all of this shortly. But we'd like to start now, as we always do, with a patient story which highlights the clinical impact and continued competitive advantage of our purpose-built technology. Last month, a 50-year-old man in Texas with complex DVT involving both legs and a clotted IBC filter presented to the hospital. A consulting interventionist decided to trial a new 16 French device to gain an understanding of how it performed. Despite the device's purported ability to minimize blood loss, over 1,000 milliliters of blood was removed, which is 20% of the patient's total blood volume. After over two hours of work, the physician abandoned the device trial due to inability to remove residual thrombus combined with safety concerns related to the significant blood loss. The physician then opted for treatment with the clot treater system, and in 30 minutes, the patient was completely thrombus-free. That portion of the procedure only resulted in 10 milliliters of additional blood loss. We believe this case highlights the fundamental shortcomings of competitive platforms which fail to remove all the clot while resulting in significant blood loss. Blood loss adds time and complexity for the physician operator, is economically disadvantageous for the hospital, and most importantly, is dangerous for the patient. VT patients who require just one unit of transfusion, roughly 200 milliliters, are associated with a three-fold increase in mortality, double the hospital costs, and 66% increase in 30-day readmission. In contrast, our clot-triever and flow-triever systems have been purpose-built to safely and effectively remove all the clot in both DVT and PE and to do so with minimal blood loss. In fact, the blood loss from clot-triever reported in our clout registry was just 40 milliliters, and the blood loss from flow-triever reported in our FLASH registry after the introduction of FlowSaver was just 100 milliliters. Now I'd like to provide a brief summary of our Q4 financial performance. Our revenue in Q4 was $107.8 million, at the high end of our pre-announced revenue range of $107 to $108 million, and up 30% year-over-year and 12% sequentially from Q3. The performance was driven by robust underlying procedure growth across both the clot-triever and flow-triever product lines. We are pleased with how our business performed in Q4 and enthusiastic about how we're positioned heading into 2023 and beyond. Our end markets are large and remain highly underpenetrated. And while we continue to view competition in VTE as potentially additive to our efforts to develop the market, make no mistake, as the clear market leader, we're highly confident in our ability to maintain our competitive position relative to devices with inferior safety or efficacy profiles. Our patients deserve the best possible outcomes, and we remain steadfast in our mission. With that, I'll now turn to our growth drivers. Our first growth driver is the expansion of our sales organization. We ended the year with just over 280 US sales territories. Following the hiring of our largest sales class to date back in Q2, we intentionally moderated our hiring in Q3 and Q4. we're pleased with the resulting operating leverage and productivity gains we're beginning to recognize with our sales force. Consistent with that approach, in 2023, we expect to continue adding sales professionals each quarter, albeit at a more measured pace, and anticipate ending the year with at least 310 territories. Continued expansion of our sales organization results in smaller and smaller territories. This in turn positions us well to execute on our second growth driver, which is increasing penetration in existing accounts. Despite our commercial success, the vast majority of VT patients continue to be treated with anticoagulation alone and never even see a physician who is a VT expert. Our goal is to establish systems and processes similar to stroke and MI that ensure patients are consistently identified, screened, and evaluated by VT experts. Our VT Excellence program is a highly differentiated, comprehensive, and repeatable approach to partnering with hospitals to do just that. We're leveraging the capabilities we have created and are continuing to see solid progress moving our customers through to the most advanced phases of VT Excellence, where TAM penetration is several times higher than in the earlier phases. Although VT Excellence is proven to be very effective at developing the VT market, We believe it also clearly differentiates us from competition. Our third growth driver is to build upon our base of clinical evidence. The past several months have been among our most productive ever. We presented key updates from our clout and flash registries in September and October. These studies once again highlighted that clot trevor and flow trevor are safe, remove more clot than any other devices ever studied, and achieve best-in-class patient outcomes. Importantly, The data also show our devices are highly effective with only a small amount of blood loss. This gives our physician customers the confidence to treat VTE patients completely and remove all the clot without compromising patient safety. Looking ahead, the FLAME study has been accepted as a late-breaking clinical trial at the American College of Cardiology conference in early March. FLAME is the largest-ever prospective study in high-risk PE. These are the sickest 10% of PE patients who are in active hemodynamic collapse. We believe FLAME will change the standard of care in high-risk PE. Importantly, the results could also broaden adoption of flow treatment therapy within intermediate-risk PE patients. Keep in mind, the intermediate-risk PE patient population is five times larger than the high-risk PE patient population. Turning to our RCTs, We're pleased to recently announce the first enrollment in our Defiance RCT, comparing clot-triever to anticoagulation alone. The study is designed to establish clot-triever as the standard of care for DVT treatment. We're also seeing robust enrollment in our Peerless RCT, comparing flow-triever to catheter-directed lytic therapy for the treatment of PE patients. If successful, Peerless will usher in the end of lytic-based interventions in intermediate-risk PE. The significant investment we have made in our clinical competencies is paying off, and we believe our commitment to generating high-quality data will help change the standard of care in VTE. Although this commitment is based upon a sense of responsibility to physicians and patients, it also serves to further differentiate and distance Inari from both current and future competition.

Our fourth growth driver is to expand our product portfolio.

We have several updates to share here as well. First, Protreve has been in full market release for the past several months. Protreve is a device that provides protection to the heart and lungs during complex DVT procedures involving extensive clot. We are pleased with how the launch is progressing and encouraged by the enthusiastic feedback from physicians. We estimate Protreve can be used in approximately 15% of our existing DVT procedures. We believe a large percentage of competitive DVT interventions could also benefit from Protreve. The device is generally sold outside of our per-procedure pricing at an ASP of $4,000, representing a meaningful revenue opportunity. InThrill is also progressing well in the early stages of full market release. InThrill is a thrombectomy system designed for small vessels, including AV fistula and veins in the upper extremities and below the knee. We estimate the combined total addressable market is 250,000 to 300,000 procedures per year in the U.S. alone. An ASP of $4,000, Enthral represents an additional $1 billion market. We're also making progress on the development of our purpose-built Chronic Venous Disease Toolkit. With an annual incidence of roughly 100,000 patients and a prevalence of over 1 million, Chronic venous disease represents the largest incremental unmet need that we are addressing. We know that unlocking this opportunity will require us to leverage the same types of market development capabilities we have established while working in VTE. Next, I want to provide an update on ARDX, our system that combines both aspiration and mechanical thrombectomy to treat peripheral arterial thrombosis. Although this is a mature market, there is still a high reliance on thrombolytics and open surgery. We recently completed the ARDIX Limited Market Release, or LMR. We observed some excellent case outcomes, and the system exhibited a pristine safety profile. Despite this, we have decided to implement some improvements to the system based upon physician feedback we gathered during the LMR. We expect the ARDIX toolkit to reenter LMR in 2024 once this work is completed. We remain committed to addressing important unmet needs in this patient population and will release ARDEX broadly when it meets the high standards that we and our customers expect. In summary, our pipeline is full and we anticipate a steady cadence of additional product launches in 2023, a clear reflection of the investment we have made in innovation. Our last growth driver is expansion into international markets. Q4 marked another quarter of record case in revenue for our international business. Based upon continued growth and relevance, we're pleased to provide a revenue breakout for the first time. Growth in the quarter was 144% over Q4 of 2021 and up 27% sequentially. For the full year of 2022, our international business generated revenue of $9.4 million compared to $2.6 million in 2021. Our performance was primarily driven by continued adoption in Europe. On the product front, we were pleased with the recent MDR approval of Flowsaver. Beyond Europe, we also saw strong case growth during the quarter in our existing markets in Latin America, Canada, and Asia Pacific. We recently completed our first cases in Australia, New Zealand, and Argentina, and we anticipate additional launches later this year. In China and Japan, we're continuing to pursue regulatory approval while also exploring our go-to-market strategies. I'd like to close by commenting on my first 60 days as CEO. We completed 2022 with a record Q4 driven by strength across our core business. That momentum carried through into 2023 and we're off to a strong start with January and February among the best months we have ever had. In short, I could not be more excited about the health of our business and the bright future of our company. Our markets are large, the unmet needs are significant, and we have never been more confident in our ability to compete. Most importantly, we are serious about our responsibility to do better for our patients. I have no doubt we can and will grow consistently for many quarters to come. With that, I'd like to turn things over to Mitch.

Thank you, Drew, and good afternoon, everyone. Inari's revenues for the fourth quarter of 2022 were $107.8 million, up $24.6 million, or 30%, from $83.2 million for the same period of the prior year, and up 12%, or $11.6 million sequentially, over the third quarter of 2022. Compared to Q4 of 2021, our revenue growth was due to our continued efforts to open new customer accounts, expand our sales force, and deepen our relationship with existing customers. In 2022, we significantly expanded both the Flowtriever and Clottriever product lines and also began commercializing the ProTrieve and InThrill products. The revenue split between product lines was similar year over year, with 32% of our revenue derived from the sale of Clottriever and other systems during the fourth quarter of 2022 versus 30% in 2021. and 68% derived from the sale of FlowTriever systems compared to 70% in 2021. Gross margin was 87.8% for the fourth quarter of 2022 compared with 90.1% in the fourth quarter of 2021. The decline was primarily due to the addition of new products to our FlowTriever system toolkit. This adds additional cost of goods sold due to our per procedure pricing model. Operating expenses were 100.5 million in the fourth quarter of 2022, compared with 73.2 million in the same period of the prior year. R&D expense was 20.4 million in the fourth quarter, compared with 18.7 million for the same period of 2021. The 1.7 million net increase in R&D expense was primarily driven by an increase in headcount, offset, by a one-time licensing cost in Q4 of 2021 that didn't recur in Q4 of 2022. SG&A expense was $80.1 million in the fourth quarter of 2022 compared with $54.5 million for the same period of the prior year. The $25.6 million increase was primarily due to personnel-related expenses as we increased our headcount and secondarily due to higher travel expenses. Net loss for the fourth quarter of 2022 was $5.8 million compared to net income of $1.1 million for the same period of the prior year. The basic and fully diluted net loss per share for the fourth quarter of 2022 was $0.11, based on the weighted average basic and fully diluted share count of $53.6 million. These compare with a basic and fully diluted net income per share of $0.02, based on a weighted average basic and fully diluted share count of $50 million and $55.6 million, respectively, for the same period of the prior year. Shifting to full-year 2022 financial results, Inari's revenues for the full year were $383.5 million, up $106.5 million, or 38%, from $277 million for the full year 2021. 36% of this annual growth was driven by our U.S. business. while 2% of the growth was generated internationally, primarily in Europe. Compared to 2021, our revenue growth was due to our continued efforts to open new customer accounts, expand our sales force, introduce new products, and deepen our relationship with existing customers. The revenue split between product lines was substantially the same year over year, with 32% of our revenue derived from the sales of Platt Traver and other systems and 68% derived from the sale of FlowTriever systems. Gross margin was 88.4% for the full year 2022, compared with 91.1% for the full year 2021. The decline was primarily due to the addition of new products to our FlowTriever per procedure model, as well as a decrease in operating leverage due to the expanded footprint of our manufacturing operations. Operating expenses were $367.1 million for the full year 2022 compared with $241.4 million for the full year 2021. R&D expense was $74.2 million for the full year 2022 compared with $51 million for the full year 2021. The $23.2 million increase in R&D expense was primarily driven by an increase in headcount as well as product development and clinical evidence development costs These initiatives are consistent with our previously discussed growth drivers. SG&A expense was $292.8 million for the full year 2022, compared with $190.4 million for the full year 2021. The $102.4 million increase was primarily due to personnel-related expenses as we increased headcount across the organization, and secondarily due to higher travel expenses, marketing costs, and professional service costs. Net loss for the full year 2022 was $29.3 million compared to net income of $9.8 million for the full year 2021. The basic and fully diluted net loss per share for 2022 year was $0.55 based on the weighted average basic and fully diluted share count of 52.8 million shares. These compare with a basic income per share of $0.20 and fully diluted net income share of $0.18. based on a weighted average basic share count of 49.8 million shares and fully diluted share count of 55.6 million shares for the year 2021. Before I move on to the balance sheet updates, I'd like to comment briefly on the company's full year 2022 operating loss of 28.1 million. Consistent with our messaging during 2022, we invested aggressively in our growth drivers. We've leveraged these investments to deliver robust growth, build important capabilities, and ultimately better serve our patients. Earlier in the call, Drew shared the exciting progress we are making growing NRA's international business. Building this foundation has taken, and will continue to take, significant investment. In fact, the international business accounted for roughly half of our operating loss in 2022. As we look ahead to 2023, we are working to reduce the rate of operating expense growth while leveraging our previous investments. We expect to show sequential progress related to these efforts as we move through the year. Looking even further ahead to 2024, I'd like to repeat our commitment to achieve sustained operating profitability by the first half of the year. Moving to the balance sheet, our cash and investments at the end of Q4 totaled $326.4 million, consisting of $60.2 million of cash and $266.2 million of short-term investments. By way of reference, our cash and investments as of the end of Q3 of 2022 were $319.2 million. Our cash flows used in operating activities were $14 million for the full year 2022, compared to cash flows provided by operating activities of $25.5 million in the full year 2021. Lastly, I'd like to address Inari's financial guidance for the full year 2023 I'd like to reaffirm our revenue guidance of $470 to $480 million. With that, I'll turn the call back to the moderator for questions. For the Q&A segment, Drew and I will be joined by Dr. Tom Tu, NRA's Chief Medical Officer.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question is from Travis Steed with Bank of America. Please go ahead. Travis Steed Hey, everybody.

Thanks for taking the questions. I guess to start with maybe some comments on Q1. I heard you say January, February are the best months you've ever had, but curious if you could kind of break out some of the competitive trawling impact that you saw if you're comfortable with consensus at $104 million. And then on the 2023 guidance, Curious if you could help break out how you're thinking about the new product contribution versus share and market growth within the 2023 guidance. Sure.

Thanks for the question, Travis. I can handle some of the competitive dynamics and what we've seen here most recently, and then I think Mitch can probably take the guidance part of your question. Maybe I'll start just by reminding everybody that this is a $6 billion market that we are operating in, and we believe it's six, maybe 7% penetrated with our technologies. Our focus, as you know, historically, has largely been on market growth, on market expansion, on making the investments we need to make to really begin changing the standard of care for these patients. A point of market growth is worth 10x the point of market share at this rate of penetration. So our focus is historically and as we move forward, is largely on market expansion. To the extent we're having new high-quality rivals enter the market, they can help with that market development effort, and I think that has the potential to be quite valuable and impactful for patients. Having said all that, where we compete head-to-head, we continue to feel very confident in our ability to protect and even extend our existing leadership position. We've got A significant head start. We've got hands down the best field team in the market. We've got a highly differentiated approach to market development. We've got a mountain of clinical data that is growing larger by the day. We've got innovative purpose-built technology and a robust innovation pipeline. I think all of that gives us a lot of confidence. We're going to be able to continue to protect and extend our leadership position. Specific to Lightning Flash, we're six weeks into that product launch. We have seen competitive trialing. We are quite familiar with what a 16 French platform offers clinically. We've had that product in our own portfolio for a couple years now. And the feedback we're hearing from our team and from physicians is very consistent. 16 French platform we believe is underpowered in PE and is going to leave clot behind, and that's exactly what we're hearing consistently. On the DVT side, we believe an aspiration-only approach is going to leave clot behind for the vast majority of these patients that have chronic wall-adhered clot. And again, that's exactly what we anticipated and exactly the feedback we're hearing consistently. At the same time, as they've moved from a 12 French to a 16 French platform, we're they're going to increase exponentially the amount of aspirational flow and the amount of blood loss that goes along with that. And despite attempted mitigations, we are hearing consistently of significant blood loss. Tom can talk more about the clinical implications of that blood loss along the way here, but that's what we're hearing. And as a result, we have not had a single ANARI account that has trialed CAT16 and converted to Penumbra. So we believe, you know, bottom line, that the CAT-16 product, the impact will be limited to cannibalizing CAT-12 in existing Penumbra accounts. So maybe I'll pause there and hand things over to Mitch to address the guidance part of your questions.

Yeah, Travis, on the guidance question, when we put together our 2023 guidance, we really tried to contemplate all of these factors that are going into the business this year, such as the ability to grow our two sort of core VTE markets, the new TAMs that we're sort of focused on for the year, specifically that that's made available with Protreve and InThrill. We also thought about the U.S. and no U.S. business and the competitive landscape, as you just heard about from Drew. Finally, we considered all the pricing dynamics that are going on in the marketplace, and we tried to reflect all of those in the numbers that we've discussed, you know, the 470 to 480 number for the year. And we believe that's reflective of the sort of continued confidence in the growth of our business, the U.S. market, and internationally as well. The new TAMs, specifically to your question, I think the contribution there is going to be relatively modest. It's kind of early in both of those stories. They're still launching. They're doing well. But we're working through the VAC approval process with our hospital, you know, customers across the U.S., and it's going to be sort of a slow build, you know, for those. As we're able to share some more specific sort of anecdotal feedback on those, you know, we'll certainly do so.

All right, that's helpful. And a quick follow-up is, and it sounds like, I guess, six weeks into the full launch, there's always this worry that, you know, maybe you just haven't seen the full impact of the launch yet. Curious if you're seeing it in all of your accounts, if you've seen trialing kind of widespread or that's still more to come. And then curious what kind of feedback you got on Artix and the limited market release and all drop.

Great. Thanks, Travis. Yeah, so, you know, we are six weeks in. We've seen a pretty steady cadence of competitive trialing. This is not a new phenomenon. This is exactly the pattern that we observed with the CAT-12 launch, for instance. Some of the VAC approvals undoubtedly are going to take longer and some go faster. We see that in our own new product launches. So I would imagine they're likely in the middle innings, if you will, of the rollout. I think they've shared publicly they've entered full market release. you know, in early January and didn't have any supply constraints, and they certainly have talked about navigating their way through VAC approvals exactly as you'd expect. So, I think we're in the middle innings, and I think we've got a pretty good sense of how the product is performing, as you heard me describe. Tom, maybe you'd want to talk about ARDCs?

Sure, Travis. So, just as a reminder, arterial thrombosis is the smallest of our new TAMs, but Still a space that has significant unmet needs. It's different than our other markets in that it's mature. It's got established therapies and a high bar for entry. We completed the ARDEX LMR recently and we're very satisfied with some of the case results and the safety record was pristine. but it didn't quite meet our very high standards for commercialization. What we want to do is work to improve the ease of use and effectiveness of the device and expect to complete that work in early 2024. This is part of the process. It's similar to the journey that we undertook with early technologies like FlowTriever and ClotTriever. We're committed to doing this right, just like we did with our core products, and this is still a compelling unmet need. We're going to confidently bring a solution that our patients deserve.

All right, great. Thanks a lot, guys.

Thank you.

The next question is from Cecilia Furlong with Morgan Stanley. Please go ahead.

Great. Good afternoon, and thank you for taking the question. I wanted to start with ProTree. If you could comment really where you are at this point in the full market release, but then also what you're seeing to date in terms of use with competitive products, And then just second product-related question, if you could comment to just across your chronic venous disease toolkit, new products currently planned to launch this year.

Sure. Thanks for those, Cecilia. So, you know, relative to Protreve, we are, I don't know, four months into the full market release. So we're clearly still working to gain a VAC approval for that product. We've got that product still. stock at this point in less than 50% of our account base. But we're getting very good feedback and enthusiastic feedback from physicians. It does a very effective job at addressing a pretty significant unmet need for complex DBT procedures where they're at risk of embolizing clot and causing APE. So we like what we're seeing so far. The fact that we've priced it outside of The per procedure price model gives us some nice incremental revenue opportunity on top of the clinical impact that it's having. But again, we're still in the relative early phases of navigating our way through VAC approvals and getting the product fully stocked across our entire account base. Relative to CVD, you know that we're already helping some of those patients with clot-truver BOLD, although BOLD wasn't necessarily designed specifically for that group of patients. It has indeed provided some utility and some relief for those patients. And then we've got a series of additional tools that we'll be adding to the CBD toolkit as we move through the rest of this year and looking out further beyond that. We've talked in a fair amount of detail about RevCore, which is going to be the first of those new incremental tools. That was one of the products that we shared at the Investor Day, for instance, back in September. That product will be coming out here the first half of this year and will be kind of the second addition to that CBD toolkit alongside Bold. And then as you look out further into the end of this year and into next year, we'll have additional tools that we will be adding to that toolkit, just like you've seen us execute with FlowTriever and ClockTriever.

Great. And if I could follow up also just on gross margins, how we should think about 23 versus the long-term outlook for mid-80s factoring in, how you're thinking about OUS expansion, new product launches, and also just the per-procedure pricing impact on margins.

Yeah, thank you, Cecilia. I'll try to get started with that one. So the number you saw for Q4 of last year is something that we believe, something we planned for, essentially, as a result of the additions to the FlowShraver toolkit, and as well some of the operating leverage issues we've dealt with in our manufacturing facility. The longer-term view towards gross margins is still kind of in that low to mid-80s sort of zip code, I would call it, and I think it'll be a very gradual sort of migration towards that point. The factors that will contribute to that are the ones that you've mentioned there. Some of the products that we'll introduce in the future have a lower gross margin profile than the two products that primarily drive that today, the clot trover and the flow trover. The international side of the business is something that detracts from the current gross margin profile of the business, but we're committed to serve patients throughout the world, so it's something we really want to do. We do continue to evaluate opportunities to sort of work against that. We're consistently looking for opportunities to basically sell based on the value bundle, if you will, of our products. We look for opportunities to take price, and we also look for opportunities to change our gross margin through some of our manufacturing, purchasing, and other things that we can do to reduce the cost to get sold of the product as we go along.

Great, thanks for taking the questions.

Thank you. Thanks, Cecilia.

The next question is from Larry Beagleson with Wells Fargo. Please go ahead.

Good afternoon. Thanks for taking the question. I wanted to, I have two questions, one on RevCorp, one on competition, but I was hoping you could answer Travis's question on Q1. Last year, you were up 4% sequentially. Consensus has you down 3% sequentially. If I missed it, I apologize, but I did hear you kind of respond to that part of his question.

Yeah, so Larry, it's a little tricky here. As you obviously know, being six weeks into the quarter, we've not had a habit historically of commenting in a lot of specifics on intra-quarter trends. Given some of the competitive noise, you know, we did want to at least acknowledge that we had, you know, two of among our strongest months ever. So we did want to make sure people heard that. Beyond that, I'm not sure what additional color we're comfortable providing at this point in the quarter. The consensus number has not been updated, as you know, since we put out guidance at the beginning of the year at the conference in January. Mitch, would you want to add anything beyond that on guidance? And then I can follow up on the rev core and the competition. Sure.

I mean, Larry, the Q1, certainly we like what we're seeing. We're bullish about the quarters, as Drew mentioned. And, you know, that's all, I think, very positive. But we've yet to start the month of March. It's a big month. It has a lot of operating days in it. And so we don't want to get ahead of ourselves there. You know, and I think we're also sensitive, as you can expect, to this concept of kind of giving the inner quarter guidance for the business. I think we're just trying to help people understand that we're continuing to feel very confident in our plans for 2023, and 2023 is off to a great start.

Okay, that's helpful. Drew, so RevCorps and Competitions. So RevCore, I'm sorry, yeah. Can you talk about the market opportunity, the mechanism of action, and do you think it's going to work for acute and chronic venous clots and clots? And I did have one follow-up.

Yeah, I can get started. Tom may want to chime in clinically as well. So RevCore, you may recall, is a product that we designed specifically for instant thrombosis. So lots of venous stents being implanted. And many of those stents go down over time and have thrombosis and clot that forms inside the stent. Today, no good solutions or certainly no purpose-built solutions to address that clinical problem. And that's exactly what we have targeted RevCorps to address, a way to safely and effectively remove clot from an implanted venous stent. Tom, would you want to add anything? clinically beyond that?

Sure. So Larry, as you know, our customers are highly creative interventionalists that will use tools that have FDA approval in any manner that they think might help their patients. So although RevCor is purpose-built to address the instant thrombosis problem that currently has no good solutions, we think that potentially physicians will find additional uses for it in their VTE armamentarium. Okay.

I got it. All right. So on the competition, so, you know, obviously Penumbra is comparing Lightning Flash to your products and their promotional material. It sounds like, Drew, on this call, you're saying you believe you can remove more clot with less blood loss. And I heard that both for, I believe, DVT and PE. So I guess my question is, one, is there any way to quantify this? How do you quantify this, I guess? And two, the case you mentioned up front with the new 16 French device, I have to believe that was lightning flash. So my question is, how common do you think 1,000 milliliters of blood loss is? That sounds like an outlier. I'm just curious. So a little more quantification of why you believe, you know, the reasons that your products are better. Thank you.

Sure. So, you know, the first part of your question related to clot removal and blood loss. You know, thankfully, we can point to the two largest prospective registries ever conducted in venous thrombectomy. to use data to answer the question, how effective does clot trevor remove clot? You can look at the clout data and see very effectively the vast majority of patients, we removed the vast majority of clot regardless of chronicity. Blood loss in the clout registry was 40 milliliters. So you can see very objectively in the data the kind of performance that we have from a clot removal and blood loss perspective. You see the same thing when you look at flow trevor relative to the The flash registry blood loss there, for instance, you heard in the prepared remarks, 100 milliliters. We've had line of sight to a couple dozen CAT16 cases at this point, and the average blood loss that we're seeing cataloged in those cases is north of 500 milliliters. Certainly 1,000 milliliters is north of that even. Keep in mind that's a pretty significant part of the overall blood volume, 20% of the blood volume. So obviously a very significant clinical finding to have that amount of blood loss. And it's not insignificant. Tom can talk more specifically about some of the clinical implications, but blood loss is a known risk factor. for all interventional procedures, and venous thrombectomy is no different.

Okay. Thank you very much. Thanks, Larry.

The next question is from Adam Mader with Piper Sandler. Please go ahead.

Hi. Good afternoon, guys. Thank you for taking the questions. I wanted to start on guided construction, you know, and test my luck there. I guess as we look at the 23% to 25% year-over-year growth, is it reasonable to think that 20% plus of that growth is from the core business? And can you just elaborate a little bit how you're thinking about clot treatment and flow treatment growth this year? I guess that's the first one, and then I had a follow-up or two. Thanks.

Yeah, I can get started on that, Adam, and Mitch may want to chime in as well. You know, I think the way we constructed guidance, as you heard Mitch mention earlier, we were very deliberate about contemplating all the different dynamics across the business. The core business, the new TAMs, U.S., OUS, competitive dynamics, pricing, all of those factors were contemplated in the guidance. It was at the same time, I think, largely driven by or reflective of our confidence in in the continued growth of the core VTE franchise here in the U.S. That's obviously the largest part of the business still. The part of the business we have best line of sight and can forecast most confidently. So that 24% growth at the midpoint I think is clearly driven by and reflective of our confidence in the core franchise. And then as you add on You know, the new products and the new TAMs, I think it's additive to that core, and then clearly continued traction internationally is also additive to the core. You know, relative to the composition between clock driver and flow driver, you know, I think just like we saw in Q4, we would anticipate continued balanced growth across the franchise. That mix and the contribution of the two on a relative basis has been fairly consistent over time. We see some quarter-to-quarter fluctuations, but as we thought about guidance this year, I think by and large we contemplated a relatively consistent, balanced contribution from both FlowTriever and ClockTriever.

That's really helpful, Drew. I appreciate that. And I guess just one clarification, you know, as it relates to ARDX. So when you issued the guidance in January for the first time for 2023 revenue, was anything baked into that guidance range for ARDCs? I just wanted to clarify that. And then for the follow-up, you know, I was hoping you could just talk a little bit more about the flame study that you have at ACC in the coming days. You know, I think you've talked about potential to eventually change guidelines And I think you're hopeful that FlowTriever will see an outsized benefit there. So maybe just kind of walk through timelines there and how you think about potential impact to your business. Thanks for taking the question. Sure.

Yep. No, thanks for those, Adam. I can talk about ARDX and guidance, and then I'll invite Tom to talk about Flame from there. But to answer your question on ARDX, yes, there was a modest amount of ARDX revenue that was included in in guidance back in early January. At that point in time, the LMR was still underway, but keep in mind that was the smallest of the new TAMs, and as a result had an even more modest contribution or contemplation within the guidance. And despite us making the decision that we need to do more work before that product is ready for prime time, we feel as though we've got plenty of other levers and offsets to the modest contribution that was factored into the guides. So we still feel really confident in the 475, as you heard Mitch talk about, and that's despite the incremental news on ARDEX. So with that, maybe I'll turn things over to Tom, and he can tackle the flame questions.

Thanks, Drew. Yeah, so Adam, thank you for the question about flame. As you can tell, we're very excited to about this data release because it is the largest ever interventional study for high-risk PE. This is a group of patients with a predicted mortality anywhere from 25 to 50%, and frankly, the existing solutions, even guideline-directed solutions, are unsatisfactory for this patient population. These trial results are positive and are well accepted. I think there is a very good chance that Flotriever will make its debut in guidelines for the treatment of this patient subset. And I do think Flotriever will get the outsized benefit for two reasons. First of all, we're the ones who've invested the hard work in studying these patients and establishing our technologies through rigorous scientific methods. and I think the physicians making choices about patient care acknowledge that. Secondly, we have quite a bit of real-world data that suggests that our treatment effect is not a class effect. We have a unique mechanism of action. Our safety profile is pristine, and I think because of that, you're going to see further publications that distinguish our treatments, flowtriever and clotriever, from other similar mechanical thrombectomy treatments. approaches, which is why I believe NRE is going to get the nod in terms of specific mention in guidelines.

Very helpful. Thank you. Thanks, Adam.

The next question is from Marie Tybalt with BTIG. Please go ahead.

Hi, Mitch. Hi, Drew. Hi, Tom. Thanks for taking the questions this afternoon. Wanted to start here with international. Would love to hear a little bit more about that market in terms of how you're pricing the devices and where that could go over the next year. So you mentioned, obviously, some very nice percentage growth metrics here in the fourth quarter, but just wondering, should we expect to see a doubling in revenue? Can you give us kind of a sense of how you're thinking about the international growth expansion this year?

Yeah, thanks, Maria. I can get started on that. Mitch may want to pile on as well. But yeah, we're excited to break out international for the first time. You heard the $9 million in revenue for 2022. I think it continues to reflect the traction and the investment that we have made and the unmet need that exists internationally. Much of that growth being driven at this point still out of Europe. We've got a nice commercial footprint that has now been established. We're doing cases now across all of those markets. We've got incremental reimbursement established, as you've heard us talk about, in Germany. We recently got some incremental reimbursement established in France. Each month, each quarter that goes by, we continue to see nice traction coming out of Western Europe, but still lots of work to do. I mean, we're still very, very early in the rollout and the penetration rates in that market, even more modest at this stage. than what we see here in the U.S. It is clearly included in the guidance, as you first talked about. I don't think we'll break out specifically necessarily the dollar amount, but we would continue to anticipate robust growth internationally, driven by primarily at this point still Western Europe. Pricing has been candidly better than we had anticipated when we got started internationally a couple years ago. In Europe, we have a mix of primarily direct markets, and then we're indirect in some of the southern European markets, for instance. But by and large, the margin profile has come together much more strongly than even we had anticipated. It doesn't quite compare to the U.S. margin, so it does factor into the longer-term degradation in the margin that you've heard us talk about. But I think we've been pleased with the pricing landscape in Europe. And then on top of Europe, as you look, you know, more broadly internationally, we continue to do work from a regulatory standpoint to get on market in Japan and China. We're increasingly focused on exploring what the go-to-market strategy will be in those two respective markets. And then we're opportunistically continuing to do cases and add new markets Globally, I think we're north of 20-some markets now in total internationally. So, you know, we're doing cases now in Australia and New Zealand, Singapore, Chile, Colombia, you know, a fairly large list now, all still relatively early. But, again, this is a key growth driver for us, and I think over time we'll be an increasingly important contributor not only to our growth but also the kind of clinical impact we're having on patients. Okay.

That's really helpful. Thank you. Sorry, Marie, just to add, I made a brief comment there about the portion of our operating loss that's kind of related to the international business. We believe that this is a very worthwhile and significant and important investment for the company, and it's why we're willing to kind of deal with that. And as time goes on, we believe this will actually be a significant part of the company's overall revenue picture. And so I think that could be a few years hence, obviously. But we're very excited about the international prospects for the business, and we see some really positive developments for the business coming up in 2023.

Okay. Very helpful. Thank you for that. Maybe my follow-up here. If you could give us any details – it's hard for us to track, given we don't have a lot of real numbers from some of your competitors – What is your latest market research on market penetration of VTE and then your own market share within that penetrated portion at this point? Any detail there is helpful. Thank you.

Yeah, Marie. I'll do our best. As you point out, it's sometimes a difficult market to triangulate on. Most of the competitors have their results buried within much larger portfolios. We believe if you start at the highest level of the overall incidence of VTE, we believe that market is growing in the low single digits alongside population growth. If you look at the penetration within that broad group of patients of any interventional therapy today, both legacy lytic-based interventions as well as mechanical thrombectomy interventions like ANARI, we believe in both DBT and PE interventions The interventional penetration is still somewhere between 10% and 15%. Very, very modest. Vast majority of patients still getting treated with conservative medical management anticoagulation alone. If you look at just then the sliver of interventional treatment, we believe Lytics still today are being used in nearly half of those interventions, still today, despite all the traction of mechanical thrombectomy. And if you looked at mechanical thrombectomy as a subset of that interventional market, we believe that segment is growing easily at 20%. So those numbers are all estimates and come with a fair amount of art and science to arrive at those estimates, but hopefully that gives you some sense of how we view the market and some of the estimates that we're making across the board.

All right, thank you.

Thanks. Thank you, Marie.

Excuse me, the next question is from Bill Plovanek with Canaccord. Please go ahead.

Hey, great, thanks. Good evening, thanks for taking my questions. I'd like to get a little clarity on the flame data that's coming out in the commentary that, you know, this could really change guidelines. And just, Tom, help us understand If we see this data at ACC and it's super powerful, what is the process in terms of guidelines getting changed? Like how long would that take, in your opinion? And then how long do you think that takes to flow down to kind of everybody else? I'll have a follow-up, so let's start with that, please.

Well, thanks for the question, Bill. So, of course, the FLAME study design has been published already, so that is – public information, and certainly anything that affects a baseline mortality of 25 to 50%, I think could be paradigm shifting in this space. Now, we all talk about guidelines and standard of care, and I just want to be a little more particular because those two are not interchangeable. Standard of care is what doctors do. Guidelines are simply what's codified in some kind of expert consensus document. And I wouldn't necessarily portray it as behavior flows down from guidelines. I think it's a two-way street. It is quite likely that the compelling data that is presented at ACC next week is going to immediately shift behavior patterns of physicians that are already kind of on the cusp of change of practice patterns. I think guidelines are written by various physician organizations. They all have different schedules on when they meet, how often they meet, how often they update their guidelines, although it is not unheard of for out-of-sequence meetings to be held and guidelines to be updated when compelling data is presented. So certainly that could be the case. But we may certainly see behavioral changes well before you see any codification in printed guidelines.

Great.

And then just the clarification, I know there's been obviously a lot of questions around just the guidance, but I just wanted to confirm that, and I heard this right, that January and February were the two best months for the company in its history. Is that accurate?

Yeah, what we said in the prepared remarks, Bill, were that January and February were among the strongest months we've ever had. And obviously, February is not quite over yet. But that's the way we framed it.

Okay. And then just, again, I think Mitch's comment that March is a longer than typical month.

Yeah, certainly relative to February. And I think the way the calendar shapes up this year, I think there's even more working days, if you will, in the month of March.

Okay. That's all I have. Thanks for taking my questions. Thanks, Bill. Appreciate it.

The next question is from Mike Sarcone with Jefferies. Please go ahead. Hey, good afternoon, and thanks for taking my questions.

The first one, I think, for Mitch. Mitch, you had mentioned when you were talking about 23 guidance that you also incorporated pricing trends and dynamics. Do you think you can just walk us through how ASPs trended through 4Q and then what you're expecting in 2023?

Yeah, we've been very pleased with the pricing performance of the business really throughout the year 2022. And so it's been a stable market for us. And as we've added value to the FlowTriever toolkit and we're sort of heading in the direction of toolkits for PlotTriever and eventually for Chronic Venus as well, we're looking for ways to make sure we can sell based on value rather than sort of price-based competition. And I think we've been successful as our hospital contracts roll over to, you know, emphasize the value and the kind of, you know, the clinical outcomes that the treating physicians are able to, you know, gain with these products. And, you know, as well, we're in a nice position because, you know, as a lytic-free treatment, we're able to keep patients out of the ICU. So from a hospital point of view, you know, the concept of mechanical thrombectomy without lytics is something that, tends to be a positive, you know, margin contribution procedure for the hospitals. Whenever hospitals, you know, resort to the use of lytics for the treatment of ETE, it becomes a loser for them, you know, based on the reimbursement profile either for DVT or PE. So that helps us as well in these price discussions and negotiations with our hospital customers, you know, as these contracts roll over. So we're continuing to, you know, be optimistic about the, you know, the opportunities to selectively, you know, take price as these hospital contracts roll over, and we were able to basically bundle more value into our product offering.

Okay. Thanks, Mitch. And just one follow-up for Tom. Just on the flame data, Tom, you've mentioned a few times that, you know, if the data looks good, not only could this help change guidelines for high risk, but maybe it could also drive adoption in intermediate risk. Could you just talk about what the strategy and the messaging there looks like for the intermediate risk population and how long it might take before you can see some incremental impact from positive flame data?

Sure. Happy to answer that one pretty quickly. So the high-risk PE patient population, although very compelling and very high-risk, constitutes really only 5% to 10% of the overall PE patient population. So I think you might see some immediate messaging around that population. But I think it stands to reason, if you can get excellent outcomes and safe procedures in the sickest of the sick patients, why wouldn't you want to offer that kind of therapy for the patients who are a little more stable but much more numerous? And I think that kind of justification could be very compelling for the bulk of our customers out there. understand that we are simultaneously gathering randomized data in those patient populations, so more data will be forthcoming. But in the meantime, I think the FLAME data results could move even the middle of the pack there as far as intermediate-risk patients.

Okay. Thanks, Tom. The next question is from Richard Newiter with Truist. Please go ahead.

Hi. Thanks for taking the question. Maybe just to start, On, you know, the international contribution, could you give us a sense, do you think international as a percentage of fails is going to increase in 23?

Yeah, so, you know, I think we're relatively early still, obviously, in the international rollout. It's a very modest increase. percent of sales you saw someplace in the low single-digit percent of sales. I think as we continue to ramp internationally and gain traction in Europe, and then in particular as we start adding some of the larger markets in Asia Pacific, both Japan and China, I think over time clearly it will become a larger and larger percentage of the overall revenue mix. I think on a relative basis in 2023, I got to think, of course, it's going to be north of where it was in 22. Beyond that, I'm not sure we're going to put a specific number to it, but it is clearly growing faster than the broader business now, albeit a pretty modest base still.

Okay, that's helpful. Thanks. And then maybe just on the new products and the pricing strategy there, you know, it's still early. This is a little bit different than the way you've priced your portfolio historically. So I'm just curious on how you arrived at the price point, particularly ProTree 4000, how the pricing strategy is going so far for some of these newer products. What are you learning? Do you think there will need to be any fine-tuning? And then I'm just curious from a modeling standpoint, how we should be thinking about or modeling specifically pricing here. Is this just ASP lift for DVT on ProTree? I'm just trying to think from a modeling standpoint what you may or may not disclose going forward so we can parse out the contribution from core USVT. Thanks.

Yeah. So I think pricing is going to have multiple elements, right? I think most importantly, we're going to continue to try and take price relative to the established FlowTrieber and ClotTrieber franchises. You heard Mitch describe some of those dynamics. And I think leveraging the broader economic value proposition, leveraging some of the new introductions we brought under the PPP models, I think gives us some confidence we're going to be able to maintain, if not take price with the core part of the business. As we bring out some of these new products, we have priced some of them outside of those PPPs. Protreve and Enthril are the first two examples of those. Those price points were established based upon you know, understanding the hospital economics, understanding the clinical unmet need, understanding the physician economics, all of the traditional inputs are reflected in those two $4,000 price points. And I think as you look across the introductions that are coming in the pipeline, I think you'll see, again, a mix of us adding new products under the PPP as well as pricing products outside the PPP, as you saw us do with Protreve and Enthral. And I think those strategies will be specific to the products as they enter the market.

Okay, and so just one last one. On the taking price, are you starting to do that in the first half of this year, or is that more of a second half 23 opportunity for you? Thank you.

Yeah, I don't think we've ever stopped trying to take price. You know, most of our contracts are multi-year contracts, So most of that work takes place as contracts expire. But we've got, you know, nine products now in the FlowTriever toolkit. And I think as we built out that toolkit, for instance, and those contracts have come up for renewal, that's something that we're always focused on. That'll be true here in the first half of the year and looking out to the back half of the year as well.

Thank you very much. Thank you, Richard. Thanks, Richard.

This concludes our question and answer session, and the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.