Silk Road Medical, Inc.

Good day, ladies and gentlemen, and welcome to the Silk Road Medical's 2021 Fourth Quarter Earnings. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Marissa Bosh, Investor Relations. Thank you. Please go ahead.

Thank you, and thank you all for joining today's call. Joining me are Erica Rogers, Chief Executive Officer, and Lucas Buchanan, Chief Financial Officer and Chief Operating Officer of Silk Road Medical. Earlier today, Silk Road Medical released financial results for the three and 12 months ended December 31, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation those relating to our operating trends, and future financial performance, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, physician training and adoption, growth in our organization and reimbursement, market opportunity, commercial and international expansion, regulatory approvals, and product development are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factor section of our quarterly report on Form 10Q, or 10-K, filed with the Securities and Exchange Commission on November 9, 2021. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2022. Silk Road Medical disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Erica Rogers, Chief Executive Officer.

Thank you, Marissa. Good afternoon, and thank you all for joining us. I would like to start by acknowledging the meaningful impact our teams and physicians had in 2021. We treated nearly 14,000 patients and surpassed 100 million in total revenue. We drove measurable progress on regulatory and reimbursement fronts in anticipation and support of standard surgical risk label expansion in the U.S. and our planned entry into Japan and China while further developing our long-term pipeline. And we did all of this despite the significant headwinds faced by the U.S. healthcare system. Our end goal hasn't changed. to establish TCAR as the standard of care in what is now a $1.2 billion market in the United States alone. Highlighting our top-line growth, I am pleased to announce that we achieved $101.5 million in full-year 2021 revenue, representing 35% year-over-year growth. We continue to take meaningful share from carotid endarterectomy while becoming the number one company in the U.S. carotid stent market by a wide margin. We are encouraged by this success and believe we have many years of sustainable, strong growth ahead of us to reach full market penetration. Reviewing our regulatory and clinical achievements. Early in the year, we submitted a PMA supplement for standard surgical risk label expansion of our en route stent, laying the foundation to unlock a 50% expansion of our U.S. total addressable market. At the vascular annual meeting in August of 2021, an independent analysis was presented illustrating equivalent risk of perioperative stroke, death, or MI, plus ipsilateral stroke in a head-to-head comparison of CEA versus TCAR, with cranial nerve injury risk significantly reduced with TCAR. The study affirmed the benefits of TCAR in the standard surgical risk patient population, building on our longstanding clinical evidence base and generating significant positive enthusiasm in the physician community. We continue to expect the FDA to complete its review process within the first half of this year. On the international front, we filed our Shonin applications with PMDA in Japan for both the enroute neuroprotection system and the enroute stent last year. And we submitted NMPA in China for the stent with the NPS system already under review. Preliminary commercial steps are underway in both countries, and we look forward to providing more detail as these initiatives progress. Of course, this year was not without challenges. and I want to recognize the immense efforts of our team, our physicians, and their tireless staff for continuing to put patients first throughout the peaks and valleys of COVID-19. After a gradual improvement over the first half of the year, the third and fourth quarters were impacted by first Delta, then Omicron. Dynamics exiting the year were characterized by hospital staffing shortages, policies pausing elective procedures, and limited bed capacity. Challenges have persisted through mid-February, again with regional variability and nuance, pressuring hospital-based procedure volumes, including TCAR. That said, we have now begun to see early favorable signs of recovery through improving daily TCAR counts. In areas where procedures and restrictions have lifted, and the spread of COVID-19 has slowed. These dynamics in mind, we are initiating guidance of $126 to $132 million in full-year 2022 revenue. Our approach to guidance takes into account the scale of our U.S. sales territories and hospital accounts, the increasing experience of our trained physicians, and the power of our continuously growing clinical evidence base, all supporting the strength of TCAR's fundamental value proposition. At the same time, our approach considers the challenges, regional variability, and uncertainty associated with the current environment. Lucas will provide greater detail regarding our financials and forecasts shortly. I would now like to turn to our 2022 strategy. Our single most important objective this year is driving U.S. TCAR adoption. We are laser focused on continuing to increase our penetration into the large and still untapped pool of carotid procedure volume, which we estimate included 169,000 procedures in 2021, of which 13,900 were TCARs. representing approximately 8% of the market. We finished 2021 with a presence in nearly 1,000 hospital accounts, covering the majority of the carotid procedures in America. Within this concentrated hospital base, we have a critical mass of over 2,000 trained physicians, served by 58 active sales territories, setting us up to drive deeper penetration in the years ahead. We plan to continue adding to our commercial team in 2022 with the goal of increasing the amount of time our sales professionals spend with each trained physician to drive greater adoption. Our experience and our data show that the more experience a physician has with TCAR and the more touchpoints he or she has with our team, the greater the impact is on his or her adoption curve. By segmenting our physician data into quartiles and measuring physicians' adoption curves from the quarter during which they were initially trained, we see steady growing adoption in each quartile over time. Our goal is to continue to accelerate the adoption curve of each physician cohort. Let me take you through a few examples. Currently, we are working with our physicians to address the pipeline of carotid disease patients whose care has been deferred or delayed. Job one is preventing every possible stroke by driving patients back into the healthcare system. We have seen firsthand the devastating effects of rationing care in this critical disease, and the message of not waiting is one that our team has been actively sharing to a strong response among our physicians and their patients. Recently, a leading physician in New York worked with our team to disseminate referring physician and patient education materials after three patients in their health system had devastating strokes while awaiting their TCAR procedures, two of which had been deferred multiple times due to COVID procedure cancellations. In Louisiana, Our team is educating physicians in the emergency room, where patients often first present with a stroke from carotid origin, leading to direct referrals from the ER to TCAR physicians. These are just two examples of how we are turning over every stone to continue driving awareness. In addition, this year more than ever before, we are promoting the obvious patient benefits and satisfaction of this minimally invasive approach because we know that when given a balanced choice, patients choose TCAR over CEA nearly every time. For example, Delray Medical Center in Florida, where physicians have performed over 200 TCAR procedures, routinely offers TCAR and CEA to patients. With patients embracing TCAR most often, due to the option for a faster and easier recovery and a return to full and active lives. In 2022 and beyond, we will measure our success with the simple metric of TCAR's share of all carotid interventions. And we are excited to drive this therapy from 8% penetration to a future where the vast majority of patients are served with the minimally invasive standard in stroke prevention, TCAR. Key to this strategy, is leveling the playing field against carotid endarterectomy. And in 2022, we look forward to expanded TCAR labeling and reimbursement coverage to include standard surgical risk patients. This will allow all patients at risk for a devastating stroke from carotid artery stenosis to have the opportunity for a safe, less invasive procedure. As I mentioned earlier, we are on track for standard surgical risk label expansion within the first half of this year. Our dialogue with the FDA remains productive and we are keeping CMS and the Society of Vascular Surgery abreast of the progress. Our sales force is incredibly enthusiastic about this opportunity and we continue to prepare for commercial launch and the potential initiation of a post-approval study to collect prospective data in the standard surgical risk patient population. As a reminder, this indication would increase our total addressable market by roughly 50%. But as we've indicated in the past, we do not expect an expanded label to be an immediate revenue driver. Rather, we expect the indication to firmly establish TCAR on a level playing field with CEA for all patients, adding to the many powerful reasons for physicians to adopt and perform TCAR. We believe we are most likely to recognize a gradual layering effect to our growth profile beginning in 2023 and beyond. For this year, our focus will be on the Medicare coverage process, awareness and education in the referring and treating physician community, initiation of a post-approval study, and the continued support of physicians gaining their experience and confidence in TCAR across a variety of patient presentations. In addition to our label expansion efforts on the regulatory side, we remain hard at work developing new and improved products to extend our leadership in the TCAR category. Over the next 12 to 24 months, our pipeline of products includes new stent sizes and configurations, improvements to our neuroprotection system, and a dedicated balloon catheter purpose-built for TCAR. We look forward to providing more detail as these initiatives progress. Looking further ahead, we continue to see meaningful potential in additional growth drivers to expand our impact on the market. In 2021, we made progress on our Night 1 IDE feasibility study and invested in additional pipeline development initiatives. Core to these efforts We created an innovation team in Minnesota and augmented our capabilities substantially. Our new innovation center has simulated operating room environments, which enable us to have routine, robust physician involvement early in our product development processes, as well as shorten cycle time on product iterations. We firmly believe that trans-carotid technologies hold the potential for to solve difficult clinical problems in the treatment of complex neurovascular and cardiac disorders and will become an important part of the treatment paradigm in the future. To summarize, we are making meaningful progress on our many endeavors to drive near-term procedure growth and invest in long-term opportunities. I will now turn the call over to Lucas Buchanan, our Chief Financial Officer and Chief Operating Officer.