Inari Medical, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Yonari Medical, Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. And now I'd like to introduce your host for today's program, Caroline Corner, Investor Relations. Please go ahead.

Thank you, Operator. Welcome to ANARI's fourth quarter and full year 2020 earnings call. Joining me on today's call are Bill Hoffman, 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 filings with SEC, particularly the risk factors described in ANARI's S-1 filing and in ANARI's annual report on Form 10-K for the year ended December 31, 2020, 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 and full year 2020 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 Bill for his comments on fourth quarter 2020 business highlights.

Thank you, Caroline, and thank you everyone for joining us today. As many of you know, based on our pre-announcement of revenue and procedure volume in January, we enjoyed a successful and productive fourth quarter. Most importantly, we treated a record number of patients. We are excited to share with you some of the detail about Inari's progress, including an update on all of our growth drivers. But first, as is now officially tradition in our third earnings call as a publicly traded company, I'd like to share with you a patient story that will remind you about the powerful impact our technology and our team have on the lives of our patients. Late in January, a 32-year-old mother of two young children presented at a hospital in Pennsylvania with a systemic blood infection, endocarditis, and an infected blood clot or vegetation in her right atrium and on the tricuspid valve in her heart. She was very sick. Surgery, in which the chest is cracked, The heart is incised and the infected clot is removed is sometimes considered for these patients. This young mom, however, like most patients with this condition, was far too sick for this sort of surgery. Still, her only chance for survival depended on removal of this infected clot. The physician team opted to utilize the brand new Inari T20 curve. The curve is a 20 French aspiration catheter with an angled or curved distal end that can be pointed directly at the clot. which is often stubbornly adhered to the valve. Two aspiration passes, or whooshes as we call them, through the curve, and 20 minutes later, the entire infected clot was extracted. This eliminated not only the mechanical issues caused by this clot, but also the source of the infection, enabling successful antibiotic treatment of the systemic infection. The physician who treated this young mom told me that without the curve, the only other remaining option was palliative care, in which the patient would have been kept comfortable but with no expectation for recovery. Instead, the patient recovered fully and was discharged to her home and to her children just a few days later. Ms. Mama is not alone. We believe that just in the United States, there are approximately 20,000 patients who present with clot in transit or clots in the right side of the heart, either with or without endocarditis and vegetation. The T20 curve represents a simple, safe, and highly effective solution to this complex problem in a very sick patient population with otherwise limited and poor treatment options. In January, we received an FDA clearance for the T20 curve, along with an indication specifically for clot in transit, the first such clearance for any thrombectomy system that does not require cardiopulmonary bypass. The FDA clearance of the T20 curve represents the first of several TAM-expanding products in a very robust pipeline of new products at Inari. We'll have more to say about this a bit later in the call. As a reminder, we are treating fewer than 5% of all the patients we believe can and probably should benefit from our devices in our core DVT and PE markets. We are still in the earliest phase of our mission, and we remain committed to this cause in ways that are far more important to us than business. I'd like now to turn our attention to our Q4 financial performance. Our revenue in Q4 was $48.6 million, up over 144% from the same quarter last year and up 26% from Q3. As you know, we pay close attention to procedure volume as this metric, more closely than any other, aligns with our mission to treat our patients. And over time, we believe it correlates strongly with revenue. During Q4, our physician customers performed approximately 4,600 procedures, up 156% from the same quarter last year and up 24% from Q3. While our sequential growth of approximately 25% in both revenue and procedures was strong, we experienced a number of important COVID-related headwinds, both anecdotal and measurable. For example, the COVID surge pushed many hospitals beyond bed capacity, resulting in diversion of patients to other hospitals. When this occurred in our top centers, we saw measurable declines in procedure volume. Many times, all of the hospitals in an entire city had more patients than capacity, resulting in medical management of patients who might otherwise have been treated with flow trigger or clot trigger. Similar to what we have observed earlier in the pandemic, during Q4 in at least some geographic regions, we also believe patients suffering from VTE were likely reluctant to even present for care. Finally, we saw important restrictions to access to hospitals. This limited our ability to in-service and educate non-interventional stakeholders including emergency physicians, pulmonologists, hospitalists, and intensivists, about our devices and the benefits to patients of the Inari procedures. Similarly, both physicians and administrators often had limited bandwidth to discuss the establishment of systematic processes for identification and triage of BTE patients that we believe will be important as we work to establish MI and stroke-like programs. Still, throughout Q4, we found the hospital environment mostly constructive. despite the important increase and even acceleration in COVID diagnoses and hospitalizations. As highlighted several times in the past, to date, the characteristics of our products and procedures have proven perhaps more resistant to the impact of the pandemic than others in the medtech space, and we have continued to find ways to execute effectively in the COVID environment. We believe this is reflected in our growth. For starters, our procedures are simple, require limited hospital resources, and no ICU stay. all of which are important, given the significant resources and ICU requirements for COVID-positive patients. Our patients most often present emergently, so our procedures, particularly pulmonary embolism, are not usually designated as electives. Our sales professionals, who typically cover approximately 90% of our procedures in person, are often deemed essential to the procedure by the hospital, which preserves valuable face-to-face time with our physician customers and cath lab staff. And we continue to use Clot Warrior Academy, our Zoom-based training platform accompanied by our online educational portal, to remotely communicate, train, and educate physicians, nurses, and techs in a highly effective manner. I'd like to turn now to our key growth drivers and to the progress we have made on each of them in the fourth quarter. First, we continue to expand our sales organization to target new hospitals and physicians. We estimate the size of our U.S. target addressable markets than 460,000 patients, recently expanded to include the 20,000 caught in transit patients, similar to the young mom whose story we shared earlier. This represents a $3.8 billion revenue potential. We remain very early in our efforts to penetrate our core markets, and the effort will require a lot more sales professionals. We continue to believe that when fully built out, our sales organization will rival in size the largest interventionally focused sales organizations in the market today. We began Q4, as you know, with 120 territories, and we began Q1 with 130 territories. This is consistent with our historical cadence, excluding earlier pandemic anomalies, of adding about 10 territories per quarter. Increasingly, this expansion has and will provide opportunity to split territories to focus on our second growth driver, which is building awareness and driving deeper adoption at existing hospital customers. We believe as many as 85 to 90% of PE patients who can benefit from our FlowTriever system are nonetheless treated with conservative medical management or anticoagulation alone. Similarly, over 60% of DVT patients who can benefit from our devices are managed conservatively. Our goal is to access this patient population by educating and communicating regularly about the benefits of large volume clot removal with the non-interventional physicians who manage these patients. again, such as the emergency physicians, pulmonologists, hospitalists, and intensivists. We're doing this in several ways. We continue to leverage Clot Warrior Academy, and we have recently expanded it to include live cases, local hospital Clot Warrior Academy unplugged sessions, and a leadership series for our key opinion leaders in both interventional and non-interventional specialties. Since its launch in March 2020, Clot Warrior Academy has engaged over 2,800 customers, 70% of whom are physicians, across 150 live streamed events featuring over 50 physician faculty members. In addition, our CWA online portal has received over 1,000 unique customer visits to more than 100 online courses. We are continuing to build our medical affairs team and capabilities. We recently hired Dr. Venkat Tamala, a world-class high-volume interventional radiologist as VP of Medical Affairs. This is a full-time position, and Dr. Tamala has exited his clinical practice. His broad clinical skills, deep technical expertise, and strong social media presence in the interventional radiology community help further our ability to communicate with a broad customer base. He was previously a frequent contributor to Clot Warrior Academy and is now serving as co-host of these events, in addition to providing clinical support to customers worldwide. As we've discussed in the past, we continue to see interest from customers to establish more systematic processes for identifying VTE patients who might benefit from intervention and triaging these patients to the hospital-designated VTE experts. Such systems and processes are standard for heart attack and stroke patients, but are virtually nonexistent for VTE patients. With the right resources and focus, we believe we can have a positive impact on these dynamics. Our third growth driver is to continue to build upon our base of clinical evidence. Last quarter, we shared with you the interim results on 230 patients enrolled into our real-world all-comer flash registry for PE. These acute data demonstrated excellent safety and dramatic on-table improvement in a battery of hemodynamic variables. The day after our last earnings call, a 30-day follow-up from the same patient population were presented at the American Heart Association's scientific sessions. We believe the 30-day data demonstrates the potential for flow trigger to both interrupt the natural progression of the disease and impact patient recovery in positive and significant ways. The results show just one death at 30 days and a 6.7% readmission rate over that same timeframe. By contrast, historical studies and registries on similar patient populations treated with anticoagulation alone or with thrombolytic drugs have reported mortality of 5% to 15% and hospital readmissions of at least 25%. More recently, we also reported exciting results from CLOUT, a real-world all-comer DVT registry. A sub-analysis of challenging chronic clot patients showed that clot shriever could achieve a 90% median clot removal. This was performed in a single 34-minute procedure on average with no thrombolytics. There were no device-related major adverse events, and the average blood loss was just 50 cc's. The results are even more remarkable given the chronic nature of the clot. Previous studies, like ATTRACT, for example, selected for patients with the most acute clot, focusing exclusively on patients whose symptoms were less than two weeks old. This cloud sub-analysis selected for patients whose clot was at least six weeks old. Older clot, as many of you know, is more firm and more adhered to the vessel wall and therefore more difficult to remove via other devices that rely on aspiration, and or thrombolytic drugs, the clot treever is purpose-built for this sort of clot. It is designed to get between the vessel wall and the clot and to core the clot from the vessel wall. This sub-analysis confirms that it does this really well in a safe and consistent way. Finally, we are excited to share that we recently saw publication of the first-ever study in which a histopathological analysis was conducted on clot percutaneously extracted via clot treever and flow treever from DVT and PE patients. The study showed, not surprisingly, that PE and DVT clots are subacute to chronic in nature containing limited fibrin. Because fibrin is the pharmacologic target of thrombolytic drugs like TPA, the limited fibrin content shown in this study suggests why these drugs have limited impact on PE and DVT clots. We believe this is an important study and the first of many in which increasingly interesting questions will be asked and answered about these clots. We will have a lot more to say about Chroniclot and the treatment of it in the coming quarters. Meantime, we continue to invest heavily in clinical studies and the production of data that is useful for expanding the market, driving adoption, and informing the design of randomized and controlled trials that we remain committed to executing. Our fourth growth driver is to continue to expand our product portfolio. On this front, we have enjoyed an exciting and highly productive few months. Earlier I shared with you that we recently received FDA clearance of our T20 curve, along with the clearance for clot in transit for the entire FlowTriever system. The ability of physicians to direct the large bore tip of the curve toward the clot has been useful not only for clot in transit, but also for treating clot in very large diameter vessels such as the inferior vena cava and the most proximal pulmonary arteries. We have included the curve in our per procedure pricing so that it, like all devices in the flow-to-reverse system, can be used for a single price. This ensures that physicians can make appropriate decisions about which tools to use interprocedurally based exclusively on clinical need without any concern for the impact on the hospital's procedural economics. We remain committed to the best possible patient outcomes above everything else. Next. We recently completed the limited market release of our flow stasis venous closure system. Flow stasis represents a simple and consistent method of tensioning the compression stitch often used to attain hemostasis after our procedures. We believe this device might have applications beyond Inari procedures, as there are many medium and large-bore catheter-based procedures in electrophysiology and structural heart that might benefit from a simple closure system that leaves nothing behind and does not involve suturing into the vein. Finally, we previously reported FDA clearance of our T24 Flex, which is a much more flexible version of our 24 French aspiration catheter. You might recall that this flexibility makes the device more trackable, more deliverable, and easier to use. This has accelerated migration to the larger 24 French system, and it is now used in more than half of our PE procedures. This is important. because the larger the diameter of the catheter, the stronger is the force on the clot, and the more clot can be removed. As you know, we believe that maximization of clot retrieval is important to optimal patient outcomes. Looking further into 2021, we're excited about the robust lineup of new products and innovation in our pipeline. Our fifth and final growth driver is expansion into adjacent and international markets. We've made important progress toward expansion into international markets, especially in Western Europe. We reported during our Q3 earnings call that we received an updated CE mark for clot-triever. We are pleased to report that we have now completed several successful clot-triever procedures in Germany. We are pleased also to report that we recently received an updated CE mark for flow-triever. We are seeing considerable enthusiasm for both devices as many European physicians have seen the positive readouts from our flash and cloud registries and investigator-initiated trials And they've heard positive anecdotal stories from their American counterparts over the past year or two. Lockdowns, limited access, and other challenges caused by the pandemic have certainly created challenges for our initial European launch. But at the same time, we are encouraged by the interest we're seeing and the progress we're making. We look forward to a much more constructive environment in Europe soon. Finally, in addition to our efforts in Europe, we have also begun work on the long path toward regulatory approval and reimbursement for our products in both Japan and China. Regarding opportunities in markets adjacent to our core DBT and PE markets, we have identified multiple unmet needs in the venous space and in the vascular space more broadly, and we continue to explore these ideas. We'll have more to say about these in upcoming calls. I'd like to conclude by reminding you that we are committed to our mission to save and transform the lives of our patients. This cause is bigger than ourselves and much more important to us than business. We believe that nothing is more important than taking care of our patients. Any business success and consequent value creation that we might enjoy are never the goals, but instead are merely byproducts of doing the right thing for our patients while taking care of our customers and our teammates. We believe we are in the earliest phase of our mission and that we can and will grow sustainably and aggressively for many years to come. With that, I'd like to turn it over to Mitch.