Inari Medical, 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 ANARI'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 on 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 statements. Please review ANARI's most recent filings 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 a principal law. Inari's press release with 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 under-penetrated. 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 partner 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-triever and flow-triever 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 tuber 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.