Shockwave Medical, Inc.

Good afternoon and welcome to Shockwave's third quarter 2023 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 today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Debbie Castor, Vice President of Investor Relations at Shockwave, for a few introductory comments.

Thank you all for participating in today's call. Joining me today from Shockwave Medical are Doug Gottschall, President and Chief Executive Officer, Isaac Zacharias, President and Chief Commercial Officer, and Dan Puckett, Chief Financial Officer. Earlier today, Shockwave released financial results for the quarter ended September 30th, 2023. A copy of the press release is available on Shockwave's website. Before we begin, I would 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 other than statements of historical fact are forward-looking statements. All forward-looking statements, including without limitation statements related to our sales and operating trends, business and hiring prospects, financial and revenue expectations, reimbursement proposals, future product development and approval, and the integration of Neovask and its technologies into our business are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of macroeconomic conditions and global events, such as the COVID-19 pandemic, 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. The list and description of the risks and uncertainties associated with our business is referred to the risk factors section in our annual report on Form 10-K on file with the SEC and available on EDGAR, and in our other reports filed periodically with the SEC. Shockwave 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. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 6, 2023. And with that, I'll turn the call over to Doug.

Thanks, Debbie. Good afternoon, everyone, and thank you for taking the time to join us to review Shockwave's results for the third quarter of 2023. Our comments will be fairly brief today since we just had our Innovation Day a couple of weeks ago. Third quarter revenue of $186 million represented a 42% increase from the third quarter of 2022. We had a strong quarter led by our global coronary franchise. Revenue from our coronary products grew almost 50% from a year ago, while revenue from our peripheral products grew roughly 30% from the third quarter of 2022. Our global coronary results in the quarter exceeded our expectations. Isaac will be covering details regarding the U.S. launch of the new coronary device C2+, but we are increasingly enthusiastic about the impact that device will have in the U.S. We had very strong coronary results in our international markets, and that is partially attributable to the momentum that C2 has created. We think this is a harbinger of what to expect in the U.S. We have seen an encouraging response to this product during the limited launch phase, and we are consistently hearing about the benefits of being able to treat long, diffuse, and eccentric lesions that C2 would have been too limited to treat. A really solid new product. Revenue from our U.S. peripheral business in the third quarter was up 31% from a year ago. Solid growth, though lower than we had expected as we didn't witness the usual procedure rebound that we have seen historically in September. One recent phenomenon that coincidentally started in September is an increased level of preauthorization pressure from private payers, particularly Aetna, which delays procedures. This is particularly the case for patients being treated for claudication or leg pain. We've been seeing this in the field and heard it often at TCT and VIVA. Fortunately, our launches of E8 and Javelin are on the near-term horizon, and the below-the-knee segment is primarily comprised of critical limb ischemia patients who have a more acute clinical need, so they should be less subject to prioritization pressure if payers continue their policies that long. As we said at the Innovation Day, we are confident in the long-term growth of our U.S. peripheral business, driven by meaningful new product launches every year and access to an expanded number of procedures that are performed in the OBL once a new CPT code is established. Regarding international business, it should be evident from our results that the team has done a great job identifying areas where Shockwave is underutilized. Our strategy of going direct is paying off well and complements the strong momentum we are seeing in Japan and Germany, as we have discussed previously. We've reviewed the reducer at some length recently, and the interest level and response at TCT once again reinforced how sizable this opportunity is going to be for us. We had over 100 physicians attend a reducer symposium, which is a great sign for a product that is only in clinical trials in the U.S. We have continued our efforts to enhance the performance of the reducer program And after talent and fusion into the clinical team, we are now working to upgrade performance in the European commercial operation. The team in the UK is executing very well, and we are restructuring the French and German teams to ensure we can deliver shockwave-like support of our customers in those countries. We have a new leader in Germany who will rebuild the sales team, and we will do the same in France. Touching quickly on some of our clinical trial activity... Our Shock India trial has enrolled over 1,000 patients in 18 months across over 50 sites in India. This represents the largest real-world coronary IVL evidence to date. 30-day data was just presented at TCT last month and again demonstrated consistent safety and effectiveness in the real world, as we have seen in our pre-market studies, despite being more complex patients and lesions. Our BTK2 trial is enrolling briskly, and we anticipate completing our 250-patient enrollment this quarter. And lastly, Empower, which is examining the impact of PCI outcomes and the use of IVL in female patients with calcified coronary artery disease, is enrolling ahead of schedule. As a reminder, we are targeting total enrollment of 400 subjects across 50 global sites by mid-2025. And finally, on reimbursement. Just last week, as part of the calendar year 2024 physician fee schedule final rule, CMS confirmed a Category 1 CPT add-on code for procedures involving coronary intravascular lithotripsy, which will become effective January 1, 2024. This means that physicians will now be paid approximately $140 when they perform IVL in addition to the remuneration they receive for performing PCIs. This represents a 20% to 30% increase in position reimbursement. Isaac will cover China in more detail, but we did see an impact to our business in the third quarter due to the anti-corruption campaign, and we expect that to continue over the next few quarters. Overall, we are pleased with the performance of our business, and despite a reduced forecast for China, which assumes roughly $10 million less revenue in the second half of this year compared to our prior forecast, And a slightly more cautious view of near-term peripheral growth in the U.S., we still anticipate top-line revenue in the range of $725 to $730 million for the full year of 2023, representing growth of 48% to 49% from 2022. Regarding 2024, we will provide formal guidance on our fourth quarter call, but we remain comfortable with the current consensus of $920 million. With that, I will turn the call over to Isaac to provide more color on the commercial front. Isaac?