Inari Medical, Inc.

Ladies and gentlemen, and welcome to Inari Medical's second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. At the end of the company's prepared remarks, we will conduct a question and answer session. As a reminder, this call is being recorded and will be available on the company's website for replay shortly. If you require operator assistance, please press star then zero. And now I will turn the call over to John Chu, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Welcome to Inari's second 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, trends and expectations for Inari's products and technology, trends and demand for Inari's products, Inari's expected financial performance, expenses, and positions in the market, the impact of COVID-19 on Inari's operations and Inari's customer 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 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 second quarter 2023 results is available on Inari's website, inarimedical.com, under the investor 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 second quarter 2023 business highlights.

Thank you, John, and thank you, everyone, for joining us today. Our second quarter was successful and highly productive. We generated record revenue driven by crisp commercial execution with meaningful contributions from new products and our international business. From a profitability perspective, we continue to make steady progress towards our goals, recording essentially neutral operating income and positive net income during the quarter. We announced our commitment to Peerless 2, a study enrolling up to 1,200 patients and our third randomized controlled trial. Underlying market growth remains healthy, and there is a growing awareness of and interest in our therapies as frontline treatment for VTE patients. 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. I will share more details about these developments shortly, but we'd like to start with a patient story that highlights how one of our new products is addressing a large unmet need in a new patient population. In addition, the breadth of Inari tools used in the procedure showcases our ability to effectively treat a broad spectrum of patient presentations. Indeed, we have worked hard to build a VT portfolio that positions us as the first choice in routine cases and the only choice in complex ones. A 60-year-old man in Connecticut suffered his first deep venous thrombosis in 2009 and was treated with conservative therapy, including anticoagulation. Over the ensuing 14 years, he continued to have bouts of recurrent DVT causing progressive debility. Despite multiple failed treatments, including thrombolysis and stenting of his iliac veins through to his IBC, he progressed to post-thrombotic syndrome as his stents became occluded over time. This patient developed chronic swelling with open, weeping ulcers and was mostly confined to a wheelchair. As an intervention, his condition would have resulted in continued suffering and could have eventually led to limb amputation. Encouraged by the release of our revolutionary RevCore system, the first mechanical thrombectomy device for venous stent thrombosis, his referring physician sent him for interventional therapy. In the ensuing procedure, multiple elements of the Inari DVT toolkit were used in concert. RevCore successfully removed the venous stent thrombosis, while Trever aspiration catheters were used to effectively aspirate the liberated thrombus. Protreve kept the procedure safe by preventing embolization, and FlowSaver allowed minimal blood loss. The procedure was a resounding success. The patient lost 25 pounds of fluid from his legs, and his chronic leg ulcers were completely healed within a month. The quote from the referring physician summarized the incredible outcome. I want to send every DBT patient for intervention from now on. The result was a miracle. The patient and I are thrilled with the outcome, particularly in light of many failed interventions in the past. This profound clinical outcome reflects the power of a purpose-built toolkit to address unmet patient needs. Across our 1300 person team, this is what fuels our work and drives our mission forward. Shifting gears, I'd like to provide a summary of our Q2 financial performance. Revenue in Q2 was 119 million, up 28% year over year. Our international business generated revenue of 5.2 million in Q2, up 187% year-over-year, and 20% sequentially. In addition to our top-line performance, we also made steady progress during the quarter on our bottom line. Our operating loss narrowed to just $1.5 million, and we recorded positive net income for the first time since 2021. As a management team, we remain committed to our journey to not only invest strategically in the business, but also drive operating leverage. As we continue to grow Inari over time, we believe the business has significant profit potential. We are pleased with how our business performed in Q2, 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 VT market dynamics. Despite some ongoing trialing, we remain confident in our ability to protect and extend our position as the clear market leader in VTE, while also broadening our capability to address significant new market opportunities. Most importantly, we remain laser-focused on the work of developing the VT market for the benefit of patients and continue to view other entrants as potentially additive to those efforts. With that, I'll turn now to our growth drivers. Our first growth driver is expanding our U.S. commercial footprint. We continue to add headcount in Q2 and remain on track to meeting our year-end goal. We're pleased with the operating leverage and productivity gains we are starting to recognize from a more measured pace of territory development. Continued expansion of our sales organization also results in more focused areas of coverage, positioning us well to introduce new products to the market and to execute on our second growth driver, increasing penetration of existing accounts. VT excellence is a highly differentiated, comprehensive, and repeatable approach to help hospitals establish VT programs and drive deeper penetration of our therapies. The goal of these programs, similar to ones in stroke and MI, is a systematic approach that ensures patients are consistently identified, screened, and evaluated by a VT expert. We continue to make progress with VT Excellence. Importantly, we are successfully moving customers along the VT Excellence continuum to more advanced phases of program development, where TAM penetration is three to four times higher than in earlier phases. Our initiatives are building momentum with increasing top-down traction across several IDN and GPOs, which is quite encouraging. We believe VT Excellence is a critical initiative for us to further develop the VT market and change the standard of care. We also view our approach as a clear differentiator in the market. Our third growth driver is to increase adoption by building on our base of clinical evidence. In the second quarter, we continue to advance both the quality and quantity of our clinical data. furthering our leadership position in this regard. Over recent months, we've continued to communicate the results of the FLAME study. As a reminder, this study of high-risk PE patients demonstrated a 90% reduction in mortality when FlowTruver was used compared to historical controls. We are pleased to see physicians taking notice of the FLAME data, which is already beginning to change practice patterns. We envision a day when mechanical intervention with FlowTruver on high-risk patients is first-line therapy. Importantly, we also believe the highly positive results of FLAME in extremely sick patients will be powerful enough to build physician confidence for intervening on less sick, intermediate-risk patients, a patient population that is five times larger. Turning to an update on our RCTs, enrollment in our Peerless I RCT, comparing flow-triever to catheter-directed lytic therapy, remains strong. Last quarter, we passed the halfway mark. We believe that Peerless 1 will end the use of lytics in intermediate-risk PE. We continue to ramp up enrollment in the Defiance RCT comparing clot-triever to anticoagulation alone. It will take some time to fully enroll this cohort of patients, but we are pleased with the progress to date. Defiance is designed to establish clot-triever as the gold standard for DBT treatment. We've also recently launched Peerless 2, an RCT for intermediate-risk PE patients randomizing treatment with flow-triever, to anticoagulation alone. This trial will enroll up to 1,200 patients, easily more than double the enrollment of the next largest PE study. In fact, with over 1,700 patients across Peerless 1 and Peerless 2, we are set to enroll more PE patients than all other industry and non-industry RCTs combined. Conducting three simultaneous RCTs reflects our commitment to generate high-quality clinical data. Each trial aims to study meaningful, patient-centric clinical endpoints. Although our efforts are designed to change the standard of care in VTE, while not the goal, they also serve to reinforce Inari's leadership. We're doing the hard work, and we believe each of these studies will succeed. Our fourth growth driver is to expand our product portfolio. We have several exciting updates to share here as well, starting with RevCorps. As you heard in the patient story, This new product is addressing an important unmet need for a large pool of patients. Revcor is the first mechanical thrombectomy device to treat venous stent thrombosis. Patients with this condition represent a subset of the broader chronic venous disease patient population, which is the largest of our new markets. We are thrilled with the initial success and enthusiastic clinical feedback for Revcor. It is the latest example of our commitment to addressing unmet needs within the CBD patient population. The RevCore launch is supported by several pilots we have underway designed to inform our longer-term CBD market development strategy. In terms of the market opportunity for RevCore, in addition to a significant annual incidence, there's also a large prevalence pool of patients with venous stent thrombosis. Taken together, we believe the addressable market totals nearly 50,000 patients. RevCore is used in tandem with Protreve and other Inari tools, garnering a procedural revenue of approximately $10,000. We recently also entered full market release with the T16 Curve. This product is an enhancement to our existing 16 French aspiration platform, featuring a pre-shaped curve and improved trackability that allows for targeted clot removal in both PE and DBT cases. T16 Curve generates a significantly greater flow rate than similar-sized catheters in conjunction with continuous aspiration. Next, Protreve continues to perform well in full market release. As a reminder, Protreve is a sheath designed to trap clot during complex DBT or IVC thrombectomy procedures. In these cases, there's clot extending all the way up into the IVC, creating a much higher risk of clot embolization. Protreve is used in conjunction with other elements of our product toolkit. It represents an incremental revenue stream at a $4,000 ASP and is generally sold outside of our per procedure pricing. InThrill is also progressing well in full market release. It is a thrombectomy system designed for small vessels, including AV fistulas and veins in the upper extremities and below the knee. A recent indication expansion to include the specific treatment of AV fistula and AV graft thrombosis has helped build momentum. At an ASP of $4,000, InThrill also offers a significant opportunity to generate additional revenue. Finally, we have two products in the Klottriever family that have initiated limited market release in Q2. Both address unmet needs, and we will share more about each as we move into FMR. Taken together, we expect to have six new products fully launched in the second half of 2023, which is a testament to our robust pipeline and commitment to addressing unmet needs with purpose-built tools. Our last growth driver is expansion into international markets. Q2 marked another quarter of record case and revenue production outside of the U.S. Our international business generated revenue of $5.2 million in Q2, up nearly 200% year-on-year and 20% sequentially. Our performance was primarily driven by continued adoption in Europe. Beyond Europe, during the quarter we also saw solid case growth in our existing markets in Latin America, Canada, and Asia-Pacific. We also conducted our first cases in Brazil during Q2. In China and Japan, we're making continued progress in our pursuit of regulatory approvals, while also refining our go-to-market strategies. We continue to make outsized investments to build out our international operations. Given the spectacular unmet need internationally, we expect this business could represent greater than 20% of total revenue over time. And now, I'll turn it over to Mitch to discuss our Q2 financial performance in greater detail.