Inari Medical, Inc.

Good day and welcome to the Inari Medical, Inc. first quarter 2023 earnings 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 a touch-tone phone. 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 first quarter 2023 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, funds and expectations for Inari's products and technology, funds 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 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. Inari undertakes no obligation to update these statements except as required by applicable law. Inari's press release with first quarter 2023 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 on first quarter 2023 business highlights.

Thank you, Caroline, and thank you, everyone, for joining us today. Our first quarter was successful and highly productive. Revenue growth was strong, and we executed crisply across all our growth drivers. We presented what we expect to be guideline-changing new data from the largest prospective thrombectomy study ever conducted in high-risk PE. We received FDA approval for two new products, and important FDA label expansions for two additional products, all while continuing our work to drive market expansion and uptake of our devices. I will share additional detail about all this shortly, but we'd like to start now, as we always do, with a patient story. This quarter, we highlight a story which underscores the impact of Inari's commitment to generating high-quality clinical evidence. Last month, a 78-year-old grandmother in New England developed back pain and difficulty breathing. She was seen in an emergency room and diagnosed with a high-risk pulmonary embolism. This is the most serious manifestation of PE with a predicted mortality of 25% to 50% despite existing treatments. Thankfully, due to the impact of Inari's VT Excellence Program, the hospital network where she presented had developed a system for rapid triage, and she was transferred to a sister institution with the expertise to use FlowTriever. Her physician had recently been informed of the FLAME study results, would show that intervention with flowtriever in high-risk PE patients dramatically reduces in-hospital mortality. Based upon the FLAME data, her physician had the confidence to perform thrombectomy as opposed to treating her with systemic thrombolysis, which is associated with a significant risk of life-threatening bleeding, long ICU and hospital stays, and poor outcomes. At the start of the procedure, her skin was ashen and sweaty. She was near death with a blood pressure of 60 and her heart beating 130 times a minute. In a short 45-minute procedure, her doctor was able to remove all of the thrombus, and thanks to FlowSaver, was able to do so with minimal blood loss. While still on the table, her vital signs returned to normal, and she remarked to the team about how much better she felt. Most importantly, after a short hospital stay, the patient was able to return home to see her grandchildren. This case shows how high-quality clinical evidence can change the standard of care in VTE. We have never been more committed to generating this evidence. It also shows how our systemic approach to market development is driving a paradigm change in the treatment of VTE. Now I'd like to provide a brief summary of our Q1 financial performance. Our revenue in Q1 was $116.2 million, up 34% year-over-year and 8% sequentially from Q4 2022. The performance was driven by strong underlying procedure growth across both the Klottriever and Flowtriever product lines. Net operating loss in Q1 2023 was 5.3 million. As a management team, we're committed to our journey to not only invest strategically in the business, but also drive operating leverage. Our Q1 operating loss was a positive step forward. Throughout 2023, we'll continue to see some fluctuation quarter to quarter, but as we move into 2024, we remain committed to achieving sustained operating profitability in the first half of the year. We are pleased with how our business performed in Q1, and we are encouraged by the steady progress we are making across all five of our growth drivers. Our end markets are large and remain highly underpenetrated, and we continue to see strong momentum in underlying core VTE market dynamics. Despite some ongoing competitive trialing, we remain confident in our ability to protect and extend our position as the clear market leader in VTE for years to come. Most importantly, we remain laser focused on the work of developing the VTE market for the benefit of patients and continue to view competition as potentially additive to those efforts. With that, I'll now turn to our growth drivers. Our first growth driver is the expansion of our sales organization. Similar to our most recent quarters, In Q1, we deliberately moderated the pace of our new sales territory additions, exiting the quarter with just over 290 territories. We are pleased with the resulting Salesforce operating leverage and productivity gains we're beginning to recognize. Consistent with this approach, for the remainder of 2023, we expect to continue adding sales professionals each quarter at this more measured cadence 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 successfully introduce new products to the market and to execute on our second growth driver, which is increasing penetration in existing accounts. Despite our commercial success and rapid procedural growth, our markets remain highly under-penetrated. Still today, the vast majority of VTE patients continue to be treated with anticoagulation alone and never even see a physician who specializes in the treatment of VTE. Our VT Excellence program is a highly differentiated, comprehensive, and repeatable approach to help hospitals establish systems and processes, similar to stroke and MI, that ensure patients are consistently identified, screened, and evaluated by a VT expert. Although we continue to refine and iterate the program, we're making solid progress moving customers through to the most advanced phases of VT Excellence, where TAM penetration is three to four times higher than in the earlier phases. To date, most of our efforts with VT Excellence have been focused at the local account level. However, building on success we've seen across individual hospitals, recently we have also begun to work with several large IDNs and GPOs at their invitation to replicate VT Excellence on a system-wide basis. This is another encouraging sign our strategy is working. We believe VT Excellence is an important initiative for us for at least two reasons. First and foremost, VT Excellence is focused on developing the VT market and changing the standard of care. Secondarily, we believe it also clearly differentiates us from both existing and future competition. Our third growth driver is to build upon our base of clinical evidence. The past several months have been highly productive on this front. The FLAME study was presented as a late-breaking trial at the American College of Cardiology conference in early March. FLAME is the largest-ever prospective device study in high-risk PE. These are the sickest 10% of PE patients who are in active hemodynamic collapse and historically experience mortality rate of 25% to 50%. The composite primary endpoint in the flow trigger arm of FLAME was met and was driven predominantly by an exceedingly low mortality rate of 1.9%. This represents a 90% reduction compared to the 29.5% mortality rate seen in patients treated with other therapies in the context arm. The magnitude of this spectacular mortality reduction with FlowTriever in a very sick patient population cannot be emphasized enough. We believe FLAME will change the standard of care in high-risk PE and, over time, help usher in a new era in PE treatment guidelines. We are pleased to see physicians taking notice of the FLAME data and already beginning to change practice patterns, as reflected in our patient story. We envision a day when mechanical intervention with flow trigger on high-risk patients is the first-line therapy. Importantly, we also believe the highly positive results of FLAME in the extremely sick patients will be powerful enough to also increase physician confidence in intervening on less sick, intermediate-risk patients. Keep in mind, the intermediate-risk PE patient population is five times larger than the high-risk PE patient population. Turning to our randomized control trials, we are pleased to report enrollment in our peerless RCT, comparing flow trigger to catheter-directed lytic therapy, has surpassed the halfway mark, and enrollment trajectory remains strong. If successful, we believe peerless will end the use of lytic-based interventions in intermediate-risk PE. In DVT, We continue to work through site activations for our defiance RCT, comparing clot trevor to anticoagulation alone. The study is designed to establish clot trevor as the standard of care for DVT treatment. Given its importance, we are committed to the hard work ahead to enroll this study. As impactful as we believe the peerless and defined studies will be to the treatment of VTE, we also envision a third potential RCT over the immediate horizon. We will have more to share on this topic soon. In summary, we continue to commit significant resources to the production of high-quality clinical data. Although our efforts are designed to change the standard of care in VTE, while not the goal, they also serve to further differentiate and distance Inari from both current and future competition. Our fourth stroke driver is to expand our product portfolio. We have several updates to share here as well. First, Revcor received the first-ever FDA clearance for the treatment of in-stent thrombosis in the venous anatomy. As is our standard practice, we've recently initiated a limited market release. Revcor has been designed to mechanically clear chronic, wall-adherent clot from inside an occluded venous stent. We estimate there are approximately 90,000 venous stents implanted annually in the U.S., and as many as 10% to 20% occlude within the first two years. Previously, there have been no dedicated tools to address this unmet patient need, and although still early, physician enthusiasm and feedback for RevCorps have been high. We anticipate RevCorps will be priced both within our per-procedure pricing model as well as separately. It also gives us access to a new patient population. Taken together, RevCorps represents an important incremental revenue opportunity. We'll have more to share on the pricing and positioning of RevCor upon full market release. Patients with instant thrombosis represent a subset of the broader chronic venous disease patient population, the largest of our new target addressable markets. RevCor is the most recent addition to a purpose-built toolkit we are developing for the treatment of CBD. Turning to Protreve, we continue to be pleased with how the launch is progressing. ProTrieb is a device designed to provide protection to the heart and lungs during complex DVT procedures involving extensive clot, which we estimate is approximately 10% to 15% of all DVT procedures. Physician feedback has been positive, and we believe there is still a significant runway ahead of us to continue to access new accounts. The recent indication expansion for ProTrieb as a sheath for IVC filter removal will add additional momentum to our launch efforts. As a reminder, Protreve is generally sold outside of our per procedure pricing at an ASP of $4,000. Enthril is also progressing well in full market release. Enthril is a thrombectomy system designed for small vessels, including AV fistulas and veins in the upper extremities and below the knee. The combined total addressable market is 250,000 to 300,000 procedures per year in the U.S. alone. We are encouraged by the positive early clinical results with Enthril and the unmet needs it addresses. The recent indication expansion for Enthril to include the specific treatment of AV fistula and AV graft thrombosis will add additional momentum to our launch efforts. At an ASP of $4,000, Enthril represents an incremental $1 billion market opportunity. In summary, our innovation pipeline is as robust as it has ever been, and we anticipate several additional products initiating LMRs during Q2 alone. Our last growth driver is expansion into international markets. Q1 marked another quarter of record case in revenue production for our international business. Our international business generated revenue of 4.3 million in Q1 2023, up 154% over Q1 of 2022, and 30% sequentially from Q4 2022. Our performance was primarily driven by continued adoption in Europe, where we were pleased to have received MDR approval for Klottriever and Flowsaver during the quarter. Beyond Europe, during the quarter we also saw solid case growth in our existing markets in Latin America, Canada, and Asia Pacific. In China and Japan, we are making progress on our pursuit of regulatory approvals while also developing our go-to-market strategies. We have invested heavily in the build-out of our international operations. Given the spectacular unmet need internationally, We believe it's reasonable for this business to represent greater than 20% of total company revenue over time. In closing, the year is off to a strong start. We believe we're making solid progress across all of our growth drivers. We've made deliberate investments which are designed to help us treat more patients. These investments will continue to differentiate us from competition now and into the future. Our markets are large and highly underpenetrated, and the unmet needs are significant. Most importantly, our commitment to patients, our people, and solving big problems is unwavering. I could not be more enthusiastic about the health of our business and believe we can and will grow sustainably for many years to come. With that, I'd like to turn things over to Mitch.