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spk04: Good afternoon and welcome to Silk Road Medical's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of the call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Beitsch from the Gil Martin Group for a few introductory comments. Please go ahead.
spk00: 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 months ended March 31, 2022. 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 but include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation and 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, position training and adoption, growth in our organization and reimbursement, market opportunity, commercial and international expansion, regulatory approvals, and product development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events 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 Risks Factors section of our annual report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 4, 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. Now I will turn the call over to Erica Rogers, Chief Executive Officer.
spk01: Thank you, Marissa. Good afternoon, and thank you all for joining us. At Silk Road, we have set out to compete and win against invasive surgery by establishing minimally invasive TCAR as the standard of care in stroke prevention. We achieved clear progress in the first quarter of the year, treating over 4,000 patients, a record quarterly performance for our company. and recognizing $28 million in revenue, reflecting year-over-year growth of 27%. As we noted on our fourth quarter earnings call, we experienced a challenging operating environment in January, which persisted into February. However, we saw a marked improvement in daily TCAR procedures as we progressed into March and beyond. Alongside TCAR procedure improvement, we have seen very strong clinician engagement returns. as pandemic-related constraints have eased, including fewer COVID-19 hospitalizations. While we remain cautious, we are optimistic toward a continuously improving commercial environment. Commensurate with this outlook, we now expect full-year 2022 revenue to be in the range of $127 to $132 million, reflecting year-over-year growth of approximately 28% at the midpoint of the range. Lucas will provide greater detail on our performance and revenue outlook shortly. Beyond our first quarter performance, we are tremendously excited to highlight that just in the past few days, we received FDA approval for the expanded indication of our on-route trans-carotid stent system to include patients at standard risk for adverse events from carotid endarterectomy. This expansion marks a major milestone for our company, our physician partners, and most importantly, patients with carotid artery disease. The FDA's decision was based on compelling real-world outcomes data on over 20,000 standard surgical risk patients showing that TCAR had statistically equivalent stroke and death outcomes compared to CEA, while showing a nine-fold reduction in cranial nerve injury CNI. These yet-to-be-published results, alongside data on over 18,000 TCAR patients in published peer-reviewed journals, confirm the value proposition of our less invasive approach and its associated benefits, including shorter procedure times and length of stay, routine use of local anesthesia, and other important perioperative outcomes. Our on-route stent was previously approved for use only in patients with anatomic or physiologic criteria that put them at higher risk for complications from invasive surgery, which is a sizable standalone market. As a reminder, current data show that there are roughly 170,000 annual procedures to treat carotid artery disease in the United States, with roughly 110,000 or about two-thirds of those procedures performed in high surgical risk patients. Converting those high-risk procedures from CEA to TCAR has been our core focus since coming to market, and we have made strides in treating this large segment of the patient population. With the expanded indication, we now have access to an even greater immediately addressable opportunity of an additional roughly 60,000 patients per year within our total conversion opportunity of approximately $1.2 billion in the United States. Moreover, we expect label expansion to allow physicians to make clinical decisions in the best interest of all patients, truly leveling the playing field between CEA and TCAR, and further reducing the barriers to procedural adoption. That said, adoption will also rely on our efforts to educate and build awareness in the referring and treating physician community. As such, we will be investing substantial time and resources in marketing efforts specific to standard surgical risk label expansion. We have already educated our sales team and we have updated our messaging, marketing, and education tools. Our direct print and digital communication strategies will highlight physician empowerment to choose what is best for each and every patient. We also intend to initiate more tools aimed at patient education through stories and testimonies of the benefits of a less invasive approach. And as an immediate next step, we are working to expand Medicare coverage for TCAR to include standard surgical risk patients through the national coverage determination. Now, turning back to our primary objective for this year, continuing to drive U.S. TCAR adoption. We remain laser-focused on increasing penetration of the large and still untapped pool of carotid procedure volume. As a reminder, we finished 2021 with a presence in nearly 1,000 hospital accounts that performed the majority of carotid procedures in the United States. with a critical mass of over 2,000 trained physicians served by 58 active sales territories. As we stated prior, we intend to continue building towards 70 to 75 territories and another 200 to 300 physicians trained in 2022. As the impacts of the pandemic recede, this critical mass is bearing fruit, approaching nearly 10% penetration of the U.S. carotid procedure volume. Given the large untapped procedure market opportunity in the US and our new FDA label expansion, our priority is US commercial execution relative to certain international efforts. We continue to pursue regulatory approvals in China and Japan, however, now intend to reduce the significant resources associated with compliance with the European Union Medical Device Directive and the European Union Medical Device Regulation, resulting in a likely lapse of our CE mark. As a reminder, we do not currently assume any contribution from sales in Europe in our financial outlook. And with our enhanced opportunity to drive domestic adoption through standard surgical risk patient access, we are confident that efforts toward sustainable, Double-digit U.S. growth offer the strongest return on investment. Finally, turning to our development pipeline. Additional trans-carotid technologies hold the potential to solve difficult clinical problems in the treatment of complex neurovascular and cardiac disorders. We recently received FDA approval to expand inclusion criteria for our night one IDE feasibility trial related to stroke treatment, effectively increasing our ability to enroll and learn from this study. In addition to our neurovascular efforts, over the next 12 to 24 months, we expect to add new stent sizes and configurations, improvements to our neuroprotection system, and a dedicated balloon catheter purpose-built for TCAR. In summary, we are making strides against our 2022 goals while building upon the foundation for strong, sustainable growth into the years ahead. I will now turn the call over to Lucas Buchanan, our Chief Financial Officer and Chief Operating Officer.
spk09: Thank you, Erica. Revenue for the three months ended March 31, 2022, was $28.0 million, a 27% increase from $22.1 million in the same period of the prior year. Growth was driven primarily by growing TCAR adoption. The number of TCAR procedures in the quarter was approximately 4,025, representing a 35% increase from the same period of the prior year and outpacing year-over-year revenue growth. As Erica mentioned, daily TCAR procedures and physician engagement levels improved over the course of the first quarter. In fact, physician productivity measured by procedures per trained physician per month increased significantly when comparing March to January. We are also pleased to share that the regional variability we've experienced in our business over the last two years has diminished measurably. Our progress signals not only improvement in the operating environment, but that our efforts to drive utilization are working. We continue to expand our sales force in order to increase touch points with our concentrated group of trained physicians, particularly as our opportunity set expands as a result of label expansion. Gross margin for the first quarter of 2022 was 69% compared to 75% in the first quarter of the prior year. Gross margin was primarily impacted by unfavorable variances due to COVID-19 production-related issues. As we mentioned on the Q4 call, we are now also incurring overhead associated with the startup of our manufacturing footprint in Minnesota, which should begin producing commercial units in the second half of 2022 upon completion of the manufacturing validation. We continue to expect slightly lower full-year 2022 gross margin as compared to 2021 though we expect a sequential improvement into the second quarter. Total operating expenses for the first quarter of 2022 were $35.4 million, a 33% increase from $26.7 million in the first quarter of 2021. R&D expenses for the first quarter of 2022 were $8.1 million, compared to $5.5 million in the first quarter of 2021. The increase in R&D expenses was driven primarily by growth in personnel and investment in new and ongoing R&D programs. Sales, general, and administrative expenses for the first quarter of 2022 were $27.3 million compared to $21.2 million in the first quarter of 2021. The increase in SG&A costs was primarily due to the continued expansion of our sales team and commercial efforts. We expect operating expenses to increase sequentially by approximately 10 percent in the second quarter, primarily due to an increase in non-cash stock-based compensation expectations, and as we continue to balance pipeline and infrastructure investments to drive U.S. TCAR adoption with other investments geared towards the international and new disease state market opportunities. We expect more modest sequential increases into Q3 and Q4, with our primary focus remaining on U.S. commercial execution. Net loss for the first quarter was $16.7 million, or a loss of 48 cents per share, as compared to a net loss of 10.7 million, or a loss of 31 cents per share, for the same period of the prior year. We ended the quarter with $93.6 million of cash and cash equivalents. Turning to our commercial strategies, as Erica discussed earlier, we continue to focus on driving procedural adoption through increased engagement with our trained physician base. We are on track toward our goal of training two to 300 new physicians in 2022, and the improvement we have seen in operating conditions is serving as a tailwind of productivity for newly trained physicians, as well as those trained throughout the pandemic. We are also on track towards our goal to end the year with 70 to 75 active sales territories. Our efforts are broadly aimed at driving the US TCAR adoption curve, including laying the foundation for more meaningful penetration into the standard surgical risk population in 2023 and beyond. As we have indicated in the past, we believe utilization of the standard surgical risk patient population will be gradual once Medicare coverage is in place as we build traction through awareness and education efforts. Lastly, we are updating our 2022 revenue guidance. As Erica mentioned, we now anticipate revenue to be in the range of $127 to $132 million representing year-over-year growth of 28% at the midpoint of the range. We are also increasingly confident that our physician base will perform over 17,500 procedures this year, which would imply just 10% penetration of TCAR into the total U.S. carotid procedure market, using 169,000 U.S. carotid procedures in 2021 as the denominator, and just 4% of TCAR into the annual U.S. carotid artery disease diagnosis pool. We are excited by our recent label expansion and our significant investments in infrastructure and the commercial engine to date, and we see durable growth for many years to come in our wide open, untapped market opportunity.
spk01: Thank you, Lucas. Reflecting on our label expansion, we believe the time is now to do what we set out to do from the start. Established TCAR is the standard of care in the treatment of carotid artery disease, particularly as we enter the month of May, Stroke Awareness Month. We believe all eligible patients deserve access to the minimally invasive option, as highlighted by the story of Donna, a recent TCAR patient. Donna experienced several transient neurological symptoms, and after evaluation, it was determined she needed carotid revascularization. But Donna was nervous because years prior, she'd undergone a CEA on the opposite side, a surgery which left her with an extended stay in the hospital, a week off of work, and both visible facial nerve damage and scarring. This time, for her carotid revascularization on the second side, she and her surgeon chose TCAR. The procedure was a success. and she walked out of the hospital the next day feeling great, ready to return to work, no nerve damage, and a tiny scar. As Donna's husband put it, quote, the two procedures were night and day. That's why this year, more than ever before, we are promoting the clear benefits of TCAR to providers and, as importantly, to patients from this minimally invasive approach. We know that when given a balanced choice, Patients choose TCAR over CEA nearly every time. We will now open the line up to questions. Operator?
spk04: Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. To withdraw your questions, please press the pound key. Please stand by while we compile the Q&A roster. And our first question comes from Robbie Marcus with RCU JPMorgan. Your line is open.
spk06: Hi, everyone. This is Rohan on for Robbie. Thanks so much for taking the question and congrats on the approval and a good quarter. Looking at the guidance, I guess you increased the low end of the range slightly. And would you be able to walk us through the puts and takes behind the new guidance range? Are you assuming any further COVID headwinds or supply chain issues? And could you see some standard risk revenue contribution this year at the top end? Thanks.
spk01: Yeah. Hi, Rowan. First of all, thanks so much for joining us. Yeah, we're really pleased with the approval, as you can imagine. So on 2022, look, I think it's safe to say that the approval for standard surgical risk label expansion came in you know, in line with our expectations. And therefore, we kind of already thought through the impacts for the year. First step there is, of course, to obtain coverage. So, you know, the real marketing and commercial efforts will begin once coverage is in place. And I'll let Lucas sort of take the rest of that guidance range.
spk09: Yeah, Rohan, thanks for the question. You're correct. We've essentially raised the bottom end of the prior guidance range. We do expect overall conditions to continue to improve. We've kind of factored in normal seasonality. There still is ongoing kind of friction related to labor and staffing and hospital resources that all companies are still working through and all hospitals are still working through. Some of that is factored in. And it's early in the year, and we're optimistic, but all those variables are at play.
spk06: Great. Thank you.
spk04: Thank you. Our next question comes from Rick Weiss with Stifel. Your line is open.
spk03: Hi, Erica. Hi, Lucas. This is John on for Rick. Once again, congrats on the standard risk label expansion. I guess that's the first thing I'll hit on here. I'm just kind of curious. You've talked about integrating all these marketing materials already, but Erica, just from you, I'm kind of curious, how does this change the doctor-patient conversation? How does this change the salesperson-to-doctor conversation? That would be great. Thanks.
spk01: Yeah, sure, John, and thanks for joining us. Look, we couldn't be more excited about all of the things that you're just talking about. I think it changes the conversation substantially. First and foremost, we've spent a lot of time since our launch in late 16 and early 17 educating physicians on what high surgical risk criteria are. Because as you might remember, vascular surgeons don't typically divide their universe into high surgical risk and standard surgical risk. Every patient is at risk of a stroke, and every patient is at risk from a complication from surgery in their view. And so these are constructs that are in place around FDA approvals and around reimbursement. So we've had to do kind of the heavy lifting of talking about each and every one of these criteria. So now the conversation changes substantially, John. We no longer have to differentiate. It's simply what is best for this patient standing right in front of you today. And that's really what we're reflecting in our marketing and messaging is that this puts the power to choose back in the hands of the clinician and the patient as opposed to a decision that is based on a label and coverage. And then in terms of the doctor-patient relationship, just adding one more thing there, John. You know, same thing on the doctor-patient relationship. In fact, I can tell you that I've had surgeons tell me firsthand, gee, I'd love to do this, I'd love to do TCAR on this patient, but I don't have a high surgical risk criteria. So now imagine that physician can simply talk about, first and foremost, the body of evidence around TCAR. The real-world evidence that supported the label expansion, that's super important when you're talking to patients, and the over 18,000 patients' worth of published data that supports this decision by the physician and their patient.
spk03: Great. That's super helpful, Erica. And then just one more. I guess I have to ask about gross margin here. Obviously, a sharp decline from the prior quarter. Could you just kind of walk me through what we could be looking at for sequential improvement throughout the year, and if integration and creation of this plan will actually help drive meaningful gross margin expansion in the future beyond prior levels? Thanks for taking the questions.
spk09: Sure, John, no problem. So short answer to the latter part of your question is yes, right? We're putting capacity in place in anticipation of our future growth and having the risk mitigation of two facilities. But as we increase the units per facility, we'll get those gross margin gains over time. Right now, we're not producing any commercial units, but we're carrying the overhead of the employees we've hired and the indirect labor in the space itself in Minnesota and going through training and ultimately manufacturing validation. So that will likely come online in the second half of the year. The other factor at play in Q1 was really the fact that a large percentage of our production workforce was out sick with COVID-19 in Q1, and that produced some variances that we essentially had to expense versus capitalize. I think absent that effect, which hopefully is transient, we're not dealing with that in the future, we probably would have been in the 72% to 73% range without that effect, if that's helpful.
spk04: Thank you. Our next question comes from Danielle Antelfi with VB Securities. Go ahead.
spk02: Thank you so much. Good afternoon, guys. Thanks for taking the question. Just, Erica, if I could, since you did just get standard risk approval, could I pick your brain a little bit about what that means for the untreated, if anything, the untreated patient population today? Obviously, the low-hanging fruit here is 170,000 or so patients, severe carotid stenosis patients that are getting an intervention, but there's a very large number of these patients sitting out there just being managed medically. Curious now that you have the full slate of approvals here from a risk perspective, if this will allow you to go after that untreated patient population in any way, shape, or form in the near to even medium term.
spk01: Hi, Danielle. I'm glad you asked that question. So, you know, the first thing that you highlighted was really the main point, which is there are 170,000 patients treated today. And we are going after those, right? It's sitting here at roughly 10% penetrated based on our guidance for the year. And so that's really the low, low hanging fruit is get after those patients who are already treated. But as we've seen in lots of other medically managed disease states, as we lower the morbidity and mortality associated with the treatment of that disease, we do see the aperture expand around patients who could be treated. And the medically managed patient population, we know, looks roughly the same, honestly, as the patients who are treated. And so I think this is just one more tailwind to ultimately get at driving expansion into the medically managed patient population. But our focus today is on converting the already treated.
spk02: Okay. Got it. And just, Lucas, a quick follow-up question for you on gross margins. And, you know, just a question around a lot of inflationary pressures here in Curious if you guys are exposed there in any way, shape, or form that could impact your ability to see gross margin improve in Q2 and then as we move through the year. Thanks so much.
spk09: Thanks for the question, Danielle. Obviously a hot topic in the sector and internally here at Silk Road. You know, our team's done a fantastic job of working with our vendors and suppliers, and we've always been – kind of aggressive and buying forward in anticipation of our growth, but more recently in context of the inflationary and supply chain pressures. So, you know, so far so good, but we're managing it very closely. We see more impact near term really around some of our R&D components and materials where we've had some some pressures there, but on the manufacturing side, you know, we've done a good job managing it, but, you know, it's a core focus of the folks in the supply chain team to continue to manage it.
spk02: Thank you.
spk04: Thank you. Our next question comes from Adam Needler with Piper Sandler. Your line is open.
spk07: Great. Hi, Erica. Hi, Lucas. Thanks for taking the questions, and congrats on the approval and start to the year. Maybe we can just start on reimbursement for standard surgical risk. I'm not sure if I heard this in the prepared remarks, but how are you guys thinking about Medicare reimbursement timing? What's your base case assumption there in terms of when that will be in place? And then on the post-market approval study, I think you're calling that Roadster 3. My understanding is 400 patients. maybe just talk about trial design and any associated costs that we should expect with that study. And then I had a couple follow-ups. Thanks.
spk01: Sure, Adam. Thanks for joining us. I'll take the part on reimbursement and our work with CMS. So as we've talked about before, we've brought all the constituents along, really from day one, but certainly in this conversation around standard surgical risk. And that is FDA, the Society of Vascular Surgery, and CMS. And we have sought all along to make sure that we are answering their questions and meeting their needs. So the conversation has been ongoing. As a reminder and sort of for context, high surgical risk coverage through the TCAR Surveillance Project took a few months. And so we don't have any reason to think that standard surgical risk will take any longer than that. And so we believe, Adam, it's a matter of months. And the next step here really will be the announcement of that coverage. So we'll be working on it behind the scenes. Now, in terms of Roadster 3, it's an important question also in the context of coverage because Roadster 3 will be a covered trial under the current national coverage determination paradigms. And that study will be a prospective single-arm open-label trial post-approval study looking at up to 400 patients in up to 60 sites. The primary endpoint is stroke, death, and MI at 30 days, and we'll look at ipsilateral stroke, same-side stroke, at one year.
spk09: And Adam, I'll add some kind of expense detail to that side of your question, but first on reimbursement, Erica talked about coverage. I just want to make clear that the coding and the payment levels already exist, so there's no incremental work to do there. It's really all about coverage. And standard surgical risk patients are generally speaking in trials that study that patient population, the average age is 69 to 70 versus high surgical risk trials where it's 72 to 73, so still squarely in the Medicare age population. Back to my prepared remarks on OPEX, we expect roughly 10% step up in Q2. Some of that's driven by non-cash stock comp expense, as I explained, but some of it for grants that were made in March, the full quarter effect. Some of it was R&D timing, and some of it is the full quarter effect of a front half and first quarter biased hiring schedule. But as we get to more modest increases in Q3, Q4, that part of my comments, that's inclusive of our expectations around the costs of executing the Roadster 3 trial and the kind of per patient enrollment costs. And we've obviously got a team built to execute that trial as well as the vendors involved in that trial. Okay.
spk07: Okay, that's very clear and appreciate the fulsome response. And I actually have two follow-ups, if that's okay. The first is just on the top line, and I apologize for kind of the near-term question here. You obviously have full-year guidance in place, but curious, you know, how we should be thinking about Q2 in our models. I show the street at $31 million for Q2. I don't know if you have any reaction to that. I think it's 10% to 11% quarter-per-quarter growth. And then just broad strokes, you know, how do we think about kind of quarterly cadence throughout the duration of the year? And then I had one quick follow-up. Thanks.
spk09: Yeah, you know, quite simply, at the end of the day, growth comes from driving, you know, penetration of TCAR into the market, right, which we do kind of at a single rep at single doctor adoption curve level that all rolls up. Obviously, we're all hopeful that Q2 is not Omicron impacted as much as January and February were in Q4 of last year. So that's great. And so we're looking forward to leveraging that critical mass we've built. And obviously, we continue to have new territories and new trained physicians come online, you know, spread over the year.
spk07: Okay, great. And maybe just one last one for me, and it's on international, so it's a two-parter, right? So I guess it's not that brief, so apologies. But, you know, just any update on your progress in China and Japan? And then the second part of the question is really on the decision to let the CE mark lapse. You know, maybe just give us kind of a little bit more insight into that decision, a snapshot of the market opportunity or TAM for Europe. And then I just think that would be helpful to kind of frame that against, you know, why you're deciding to push Japan and China forward. Thanks so much for taking the questions.
spk01: Sure, Adam. So on Japan and China, we continue to make steady progress on those regulatory approvals. And, of course, there's regulatory and there's reimbursement. in both of those countries. But we are making steady progress. We feel good about where we stand there. On Europe, we have put substantial time and thought behind this decision to let the MDR sort of lapse. As you probably heard from others, the lift is heavy. And we prefer to put our focus and our energy and our efforts into things that drive our bias toward Asia Pacific and certainly toward U.S. TCAR adoption. You know, on the TAM question, the reason for the bias around China and other Asia Pacific reasons is really just that. I mean, it's a much more substantial opportunity for us, not only in the way that patients are treated and the importance on the prevention of stroke, but also in the pricing paradigms. And so these markets are just substantially more important across the board.
spk09: And I'll just quickly add, Adam, that countries in Europe and other parts of the world will definitely get to over time, right? This is a something that is kind of a near to intermediate term decision. But when we're at scale, we'll have the capability to go after some of those other markets in a much better fashion.
spk01: Yeah.
spk07: Okay, great. Thanks again for taking the questions.
spk01: Thanks, Adam.
spk04: Thank you. Our next question comes from Michael Polarik with Wolf Research. Your line is open.
spk05: Hi, good afternoon. Thank you for taking the question. I understand you don't have 23 guidance, and I'm not asking for it. What I'd love a little help on is how to dream the dream here of how the standard risk approval layers into utilization, say, next year as it all comes together. Reimbursement gets established. You're stepping on the accelerator on marketing. You're expanding the sales force. You know, it really does sound like there could be a hockey stick-like movement in utilization, say, sometime in calendar 23. I'm not going to hold feet to the fire, but how would you frame, you know, mathematically for us in our seat, you know, that potential? Is there another product in MedTech you've studied that said, hey, look, this development in TCAR looks like that, and we could go study that and then watch how it kind of evolved over time? Or is there some, you know... on-the-ground tidbits from, you know, physicians on feedback like, hey, I could be doing so much more if you had this label and how that might look quantitatively. I'd love a little bit of help in thinking about, you know, what could happen to revenue in 23 and 24. Thank you.
spk01: Sure, Mike. Thanks for joining us. I'll give you a few qualitative observations, really, which is, first of all, I've been out talking to our customers a lot lately. Thank goodness, right? The restrictions have lifted, and I've been out facing our customers quite regularly. And I can tell you that the excitement is palpable. The physician community has been ready and waiting for standard surgical risks so that they can do the things we talked about, which is what is right for each of these patients. So there's great enthusiasm. The other thing, the other observation is we've looked at our own data and what we know is that physicians gain their comfort with TCAR over time. So there are kind of two things that work in our favor. One is youth. Younger physicians lean in earlier and faster because they come out of their fellowships, you know, TCAR trained and endovascular trained. And the other thing is experience. And we know from our own data that experience leads to greater adoption. We've talked about this a lot, right? There's that early part of the learning curve, those first 10 to 15 cases, where physicians are frankly gaining their comfort level and gaining their ability to predict how TCAR performs in their hands versus CEA. And we know that the ability to predict an outcome is really important to these physicians. So this is sort of a long-winded way of saying, Mike, that time is our friend. And as our big cohorts of physicians, the ones trained in the back half of 2019, throughout the pandemic, 2020, 2021, where their hands were tied behind their backs because of the pandemic, all of these physicians coming into their own on TCAR over time and as we approach 2023.
spk05: Good color. If I may, one or two follow-ups perhaps for Lucas, at least this next one. Just as I do, the revenue in the quarter and the volume, which you disclosed, is just over 4,025 cases, and then I can impute revenue per, which isn't necessarily your ASP, but a number that I can back into. It looks like that revenue per steps down sequentially year on year, and I was hoping just for a bit of commentary as to why that might be, why I'm seeing what I'm seeing. If I'm running the math wrong, then... I'm happy to receive that comment as well.
spk09: No, thank you, Mike. It's a very insightful question, and we did see a dip. Let me assure you first that ASPs continue to be very strong. So the dip was not in ASPs. It was in revenue in the period divided by procedures in the period. And I think it's a couple things kind of on the margin. Obviously, you know, finishing the year strong and making sure hospitals were at their par levels was Heading into Q1, where it was still significantly Omicron affected in January and February, that means they're probably not utilizing as many units on the shelf as they otherwise could have been. And we've seen in the past kind of slightly more conservative ordering patterns. And then we get into March, which was a strong utilization month, and some of that's just a timing effect. Those replenishment orders will come in Q2. So, at the end of the day, it's probably mostly timing-related, and I would expect it to kind of normalize in Q2 and beyond.
spk05: If I can do one last one on just financing and balance sheet and during a period of kind of, again, pedal to the metal on growth and executing against the standard risk expansion, do you feel comfortable with $95 million on the balance sheet that you have plenty of flexibility to operate the next year, two, three here?
spk09: Yeah, look, I mean, obviously, we're very focused on creating shareholder value, which starts first and foremost by driving top-line growth. We are well-funded to drive that growth, and we're committed to maintaining our well-funded There's no immediate financing needs. We've got, again, a critical mass of docs and hospitals and reps to really drive operating leverage here forward. But we're always keeping an eye open for options to bolster our balance sheet so that we're prepared if and when the opportunity is right.
spk05: Thanks for taking the questions.
spk04: Thank you. And our last question comes from Javier Fonseca with Spartan Capital. Your line is open.
spk08: Hello, everyone, and hi, Erica, and hi, Lucas. Thanks for having me on. In light of the good news this week with the NRAO expansion to standard risk patients, how does this affect SCNA going forward? In other words, should investors expect a higher expenditure to reach a greater portion of patients, or Is it better to understand this as, you know, the commercial build-out has already considered the possibility of addressing a larger market?
spk09: Hi, Javier. Thanks for the question. Yes, very good question. So, you know, we've been planning for success all along, and the high surgical risk patient population is significant, as Erica talked about, right? And so building a coverage model for that patient population is pencils out really nicely. And then essentially we've layered on the last one third of the market. Um, but we don't need, it's the same referral channel. It's the same physicians, it's the same rep coverage. And so there's a lot of leverage there of investments we've already made and plan to make this year and beyond. We just have a larger addressable market opportunity to go after.
spk08: Excellent. And, um, Just another question. I know you said it earlier, but as far as now with the standard risk patients being eligible for TCAR, how does that change the total digital market as far as the market size?
spk09: Yeah, so great question. So there are roughly 170,000 carotid procedures. That pencils out to a $1.2 billion market. and it's really split roughly two-thirds, one-third, two-thirds high surgical risk, one-third standard surgical risk. That's kind of a black-and-white answer, but, you know, patients sitting in front of physicians, that's really a spectrum of risk, right? As Erica mentioned, they don't really delineate that clearly. But quite simply, we now have access to the full $1.2 billion opportunity If we zoom back, we know that the practice of medicine is conservative because for 70 years, the gold standard treatment has been an invasive surgery that carries a complication rate, including stroke, death, and MI, and permanent nerve injury, and all the rest. So it's conservatively applied. But the full market opportunity as measured by the diagnoses annually of critical carotid artery stenosis is about $3.1 billion. So 1.2 billion of that is treated, and 1.9 billion represents patients that look similarly to the patients that are treated or could be treated in the years ahead. And we've now got a less insulting, lower complication, minimally invasive procedure where we think we can tap into some portion of that market over time. And then I'll just finish by saying The demographics are also in our favor here. This is a disease of the elderly. We know the US population has a pipeline of more and more elderly patients coming into their Medicare age. And sadly, the drivers of cardiovascular disease are still there. And certainly, COVID has brought that to light. And there are a lot of increased efforts around screening and diagnosis of all sorts of cardiovascular problems.
spk08: Okay. Thanks for taking my question, and congrats again on the great quarter.
spk01: Thanks, Javier.
spk08: Thank you, Javier.
spk04: Thank you. At this time, I would like to turn the call back to Erica Rogers, Chief Executive Officer, for any closing comments.
spk01: Thank you all for joining us for this very exciting quarter.
spk04: This concludes today's conference. Thank you for participating. You may now disconnect.
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