Inari Medical, Inc.

Good day, and thank you for standing by, and welcome to the Nari Medical Inc. Q1 2021 Earnings Conference Call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Caroline Corner of Investor Relations. Please go ahead.

Thank you, Operator. Welcome to ANARI's first quarter 2021 earnings call. Joining me on today's call are Bill Hoffman, President and Chief Executive Officer, and Mitch Hill, Chief Financial Officer. But the question and answer session will also be joined by Drew Hikes, Chief Operating Officer, and Dr. Tom Tu, Chief Medical Officer. This call will include forward-looking statements within the meaning of the Private Security 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 ANARI operates, trends and expectations for ANARI's products and technology, trends and demands for ANARI's products, Inari's expected financial performance, expenses, and position in the market, and the impact of the 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 statements. Please review Inari's most recent filings with the SEC particularly the risk factors described in Inari's S-1 filing and in Inari's quarterly report on Form 10-Q for the first quarter ended March 31, 2021, 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. Inari undertakes no obligation to update these statements except as required by applicable law. Inari's press release with the first quarter of 2021 results is available on Inari's website, www.inarimedical.com under the investors section and includes additional details about Inari's financial results. The 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 first quarter 2021 business highlights.

Thank you, Caroline, and thank you everyone for joining us today. Our first quarter was highly productive and successful, as many of you might have anticipated, based on the revenue range to which we guided during our last earnings call. We treated a record number of patients and reported revenue above our guidance. We are again excited to share some additional detail about our progress, including an update on all five of our growth drivers. But we would like to start first, as is now tradition, with a patient story that will remind you of the profound impact our devices have on the lives of our patients. On March 11, 2020, a woman in her late 50s, recently retired and a brand-new grandmother, was preparing her morning coffee and getting ready for her daily walk in her neighborhood in Florida. Without any shortness of breath or illness or any warning of any sort, she collapsed suddenly in her bedroom. When she awoke scared and confused, she called her boyfriend, who immediately called 911. She was diagnosed a short while later at the hospital with a saddle pulmonary embolism. in which a large blood clot straddles the left and right main pulmonary arteries. Her low systemic blood pressure, the volume and location of the clot, and the fact that she had suddenly collapsed all pointed to the high-risk nature of her diagnosis and the need to urgently address the PE. Fortunately, the cardiologist on call had recently begun using Flotriever for pulmonary embolism and rushed her to the cath lab for a thrombectomy procedure using Flotriever. Within a few minutes, he was able to extract a large volume of clot, which caused immediate and significant on-table improvement in the patient's hemodynamic condition. Her heart rate, pulmonary artery pressure, and systemic blood pressure all improved markedly while she was still on the table, and she was discharged from the hospital just a few days later. We consistently see results like this in our flow-triever cases, and we have recently validated the clinical impact with data from the FLASH trial. This patient story has one additional chapter. I received a personal email from this patient a couple of weeks ago, and it read in part, I'm 13 months post my event, and I have to tell you, a day doesn't go by that I don't stop and realize how grateful I am. I'm totally back in the game, feel absolutely no limitations to the things I enjoy, and the physical ability to do them. This is nothing short of a miracle. Massive pulmonary embolism. defined not by clot volume, but by the unstable nature of the patient presentation, as with this patient, thankfully represents just 5% to 10% of all PE diagnoses. But it's really important because it carries a mortality rate of up to 50%, even when treated aggressively with the current standard of care, which is a large bolus of thrombolytic drugs. We believe we can do much better. Last year, for example, Dr. Catalin Toma, at the University of Pittsburgh Medical Center and several peers reported retrospective data on 34 massive PE patients treated with flowtriever at four different centers. Remarkably, there was just one patient death, which is especially notable, again, given the 50% mortality rate that I just mentioned. Last month, we announced the first two patient enrollments into our FLAME trial for massive PE. FLAME is a prospective multi-center, two-arm trial designed to evaluate the effectiveness of FlowTriever to prevent death in massive PE patients compared to other alternative treatment. It is the largest and most significant trial of this patient population ever designed or even attempted. It further confirms our commitment to this patient population to the space more broadly and to producing evidence to prove that large volume clot removal via FlowTriever makes the important impact on patients' lives that we see consistently in real world experience. We are gathering evidence to answer the biggest and most important questions in the space. We remain committed to our mission of saving and transforming the lives of our patients in ways that are profoundly important to us. I'd like to turn our attention now to our Q1 financial performance. Our revenue in Q1 was $57.4 million, up $30.4 million, or 113%, from the same quarter last year, and up $8.8 million, or 18%, from Q4. During Q1, our position customers performed approximately 5,500 procedures, up about 130% from the same quarter last year, and up about 20% from Q4. As in the past, the vast majority of revenue in the quarter came from replenishment of inventory after procedures, while the balance came from stocking orders, which include inventory for new customers increases in inventory levels as customers grow, and new product introductions. Moving now to a few comments on the pandemic. The decline in COVID hospitalizations late in February and continuing today has resulted in the easing of some of the restrictions and challenges we saw in January and throughout 2020. While recent developments are encouraging, we continue to believe that some caution in the short and intermediate term is prudent. We have noticed, for example, some hospitals are full of non-COVID patients as they return for treatment that was deferred during the pandemic. This return to normalcy may lower the visibility of VTE and reduce availability of access to our procedures. At the same time, some hospitals have reported staff shortages, perhaps as a result of COVID burnout, on top of the return of much needed staff and physician vacations. It's difficult to know the net impact of these developments, but we will be monitoring all of it and will be transparent as always in sharing what we see. I'd like to turn now to our key growth drivers and to the progress we have recently made on each. First, we continue to expand our sales organization to target new hospitals and physicians. As a reminder, we estimate the size of our U.S. target addressable markets is more than 460,000 patients annually, representing a $3.8 billion market potential. Our performance in Q1, strong as it was, suggests that we treated fewer than 5% of all patients who we believe can benefit from treatment with our devices. We remain very early in our effort 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 Q1 with 130 territories, and we began Q2 with approximately 150 territories. We have historically stated our intent to add an average of 10 territories per quarter. However, based on our consistent success to date and our scalable approach to commercial expansion, we now believe we can be more aggressive with our hiring plan. We are currently targeting 180 to 200 total territories by the end of 2021. We believe that increased density of our sales organization and the resulting smaller and smaller territories provide opportunity to more effectively address our second growth driver, which is building awareness and driving deeper adoption at existing hospital customers. As we have discussed in the past, we believe the vast majority of our target PE and DVT patient populations are currently treated with anticoagulation alone. While changing this paradigm is a complex challenge, Our approach is simple and straightforward. First, we will continue to educate and train the non-interventional physicians, such as emergency department physicians, pulmonologists, intensivists, and hospitalists, who are often responsible for treatment decisions for these patients. Central to this effort, we'll be continuing to leverage our online training and education platform called Clot Warrior Academy, as we've described in the past. We will also communicate directly with these physicians at the local level as we do with our interventional physician customers. Smaller territories are especially useful for this effort. Second, we will work with our hospital customers to establish systematic processes to identify and triage our target patients to the physicians who are experts in these disease states. Our ultimate goal is to establish a scalable model for the development of VTE centers of excellence in which VTE patients are identified, triaged, treated, and followed up in a systematic and consistent manner, similar to the ways patients with other thrombotic diseases, like MI and stroke, are addressed. We are excited about our recently announced partnership with AidDoc. We believe their purpose-built PE software solution can be helpful in developing this scalable and repeatable VTE Center of Excellence model. We are committing heavily to these and other ideas and programs, and we've seen important progress. We will have more to share about these ideas in future calls. Our third growth driver is to continue to build upon our base of clinical evidence. We shared earlier in the call the initiation and first enrollments into our FLAME high-risk PE trial. We are planning to enroll up to 250 patients in this trial. Because the inclusion criteria are very strict, Designed to identify and treat exclusively the very sickest of PE patients, enrollment is likely to take some time, and we're not yet in a position to estimate a completion date. We have some important news on the FLASH registry as well. FLASH, as many of you know, is our 500-patient registry to study the impact of flow treatment on a battery of hemodynamic variables both immediately and over time in a real-world patient population. FLASH as we reported previously, has yielded pristine, best-in-class safety data and not just meaningful improvements in hemodynamics, but on-table normalization of these vital signs in many patients. We have enrolled our 500th patient into FLASH and are pleased to announce we have recently expanded the study to 1,000 patients, allowing us to add several additional sites here in the U.S. in addition to several European sites as well. We have also added a non-treatment or anticoagulation-only arm so that we can understand more clearly the immediate and longer-term differences between flow-treater-treated patients and anticoagulation-only patients. Finally, we have introduced a monitoring component utilizing a smartwatch to the follow-up of a subpopulation of patients. The watch will allow us to measure over the longer term several important variables that will help us understand how these patients do over time. such as heart rate, blood oxygen levels, and the frequency and intensity of physical activity. It will also allow us to conduct exercise tests, such as the six-minute walk test, more often and more simply than traditional approaches to clinical surveillance. We are not just producing excellent data about the impact of our devices on our patients. Our studies are asking increasingly interesting and useful questions that we believe will move the understanding of the entire disease state forward We believe that these studies, the questions we are asking, and the more sophisticated and valuable metrics we are collecting will set the bar by which all devices and therapies in the VTE space will be measured. Finally, we believe the data we are generating and the insights we are gaining will be critical inputs into the design of future definitive clinical studies. Our fourth growth driver is to continue to expand our product portfolio. During our last earnings call, We announced a limited market release of our T20 Curve, which has been FDA cleared for caught in transit, as well as our FlowSpaces Venus closure system. Both devices are now in full market release and enjoying brisk adoption. Looking ahead, we remain very 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 continue to make progress early in our European launch. During our last earnings call, we shared that we had completed our first clot-triever cases in Germany and had just obtained CE mark for flow-triever. We are now pleased to share that we have completed multiple clot-triever and flow-triever cases in three additional countries. While enthusiasm remains strong, as many physicians in Europe have heard about clot-triever and flow-triever from their American colleagues and counterparts, and have seen various presentations and publications of clinical results, the operating environment for new product introductions remains challenging. The most recent pandemic surge has caused new lockdowns, limiting travel and hospital access. But even with these headwinds, we are seeing case volumes steadily increase, and we remain optimistic about our European opportunity as we look forward to an improved COVID environment. We're excited about several opportunities beyond our core DVT and PE markets. We are actively working on multiple ideas to address significant unmet needs in these adjacent markets, and we're looking forward to discussing them in upcoming calls. As always, I'd like to close by reminding you that we have committed to a cause and to a mission, to doing our very best to impact the lives of our patients in important and highly positive ways. Inari represents our life's work. We're honored to do this work, and we are so thankful for your support. We believe we are in the earliest phase of our mission and that we can and will grow sustainably for many years to come. With that, I'd like to turn things over to Mitch.