Inari Medical Inc (NARI) 2022 Q3 法說會逐字稿

Good day, and welcome to the Inari Medical, Inc. Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note today's 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 Inari's Third Quarter 2021 Earnings Call. Joining me on today's call are Bill Hoffman, President, and Chief Executive Officer; Andrew Hikes, Chief Operating Officer; and Mitchell 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 NRE products; and Inari's expected financial performance, expenses and position in the market; and the impact of TOPIX 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 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, 2021, 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 any statements, except as required by applicable law. In our press release, the third quarter 2020 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 5:00 p.m. Pacific Time today. Now I'd like to turn the call over to Bill for his comments on third quarter 2022 business highlights.

Thank you, Caroline, and thank you, everyone, for joining us today. Our third quarter was perhaps the most productive in our history as a public company. Revenue growth was again strong, and we executed crisply across all of our growth drivers. In fact, since our last earnings call, we obtained FDA clearance on 3 new products, 2 of which are already in full market release, and we reported 3 new important data readouts in late-breaking clinical trial presentation at major medical conferences, TCT and Veeva. Drew will share some detail about all of this shortly, but we'd like to start now as we always do with a patient story. In fact, we're going to share 3 short patient stories, one for each of our new products.

A couple of months ago, a 58-year-old man in otherwise good health presented to a hospital in Florida with severely solenlegs and in horrible pain. He was diagnosed with a critical limb-threatening condition called critical limb ischemia caused by blood slots in the arteries of his leg. It had been treated for the same condition a few months earlier via an open surgical resection and in fact, just endured 2 days in the ICU on a thrombolytic trip, followed by an endovascular thrombectomy procedure in which a competitive product failed to remove his blood class. He was treated with the new AariArctic system, and in less than 60 minutes, is pain was gone and is lagged return to normal size and is discharged from the hospital the very next day. 

In September, a new mom, just 26 years old and 2 months postpartum presented to an emergency department in Arkansas with severely stolen lags and insignificant pain. Because she had a history of blood filing disorders, physicians had placed several years earlier, abemacva-filter to prevent a pulmonary embolus. That filter was now full of clot, which extended from just below her chest to her knees on both legs. The new (inaudible) sheet was delivered from her neck to just below her heart to ensure no clot embolized for loans, while multiple NRE devices were used for all of the massive amount of plodderabomin, pelvis, and legs. She was home the very next day with Renew baby. Finally, also in September, a man in his 80s, with a history of tonic knee pain and a history of surgeries reported aggressive and significantly worsening symptoms of pain and swelling in both legs. It's been treated only with anticoagulation for multiple diagnoses of GDP over many years and was now suffering from chronic clot, extending from his pelvis to his ankle. The physician uses Clothier bold to remove all of the cloud on both his needs and the new NRA in thrill device to remove the clot below the Total INR device time on this complex procedure was just 31 minutes, the discharge from the hospital a couple of days later with greatly diminished pain and no remaining swelling in this lag. None of these procedures were possible just a few months ago. And in fact, 2 of these patients had already failed multiple treatment attempts with other therapies. 

These patients matter to us very much. Every patient has a history, a story, a life, people who care about them. We are committed above all the changing lives in the most beautiful way. We are just getting started. I'd like now to turn the call over to Drew Hikes, will, by the time you hear formally from him again, be our next Chief Executive Officer.

Thanks, Bill. I'd like to start with a brief summary of our financial performance. Our revenue in Q3 was $96.2 million, up $23.3 million or 32% from the same quarter last year. Results in our core business were driven by strong procedural growth across both Plot river and FlowTriever product line. On a sequential basis, procedure growth during the quarter was more than enough to offset the revenue contributions we saw in Q2 from the introduction of Bold and Entry 24. We are pleased with how our business performed in Q3 and enthusiastic about how we are positioned for both the remainder of this year as well as 2023. With that, I'll now turn to our growth drivers. Our first growth driver is the expansion of our sales organization. You will recall that we committed to at least 275 territories by the end of 2022. 

In Q2, we hired our largest sales class ever, nearly achieving this goal by midyear. We accelerated our hiring in anticipation of introducing several new products in the second half of the year. In Q3, we intentionally hired a smaller group and exited the quarter with just over 275 territories. We continue to believe when fully built out. Our sales organization will rival the largest in the interventional space. We still have a long way to go. Continued expansion of our sales organization results in smaller and smaller territories. This positions us well to execute on our second growth driver, which is increasing penetration in existing accounts. Despite our commercial success, the vast majority of BT patients continue to be treated with anticoagulation alone and never even see a position with the skills and expertise to make the most informed clinical decisions. Our goal is to establish systems and processes similar to stroke and MI that ensure patients are consistently identified, screened, and evaluated by a VT expert. Our VT X1 program is a comprehensive and repeatable approach to connecting VTE patients to VT experts. We have invested heavily in this effort, and we believe it is paying off. We are systematically moving customers to the most advanced stage of VT X1, and TAM penetration rates at these centers are several times greater than our median customer. 

Our third growth driver is to build upon our base of clinical evidence. The past several months have been the most productive in our history in terms of both the quantity and quality of data produced. First, outcomes from the full U.S. cohort of the FLASH registry were presented as a late-breaking clinical trial at TCT in September. Flash is the largest device study ever conducted in the field of PE, enrolling 800 patients across 50 centers. The study evaluated real-world patient outcomes after treatment of PE with FlowTriever, -- once again, the safety profile was pristine. The major adverse event rate was just 1.8% and had a single device-related major adverse event was reported. Efficacy was also unmatched. Many patients showed meaningful hemodynamic improvements while still on the cath lab table. This again confirms what patients consistently report. They feel better immediately. Most importantly, all-cause mortality at 30 days was only 0.8%, which is extraordinary given the 10% mortality consistently seen an update to the PERT all-comer registry of almost 6,000 patients. These results are unprecedented in PE thrombectomy. -- rapid thrombus extraction with FlowTriever is not only safer than conservative medical management, it fundamentally alters the natural course of the disease. 

Next, 30-day outcomes from the fully enrolled 500-patient all-comer cloud registry were presented as a late-breaking clinical trial earlier this week at Veeva Vein. Cloud is the largest mechanical thrombectomy study ever conducted on DVT patients. Potruver again demonstrated an excellent safety profile, with just one patient experiencing a device-related serious adverse event. Efficacy was unparalleled. Independent core lab adjudication showed complete or near complete thrombus extraction in 90% of patients. In fact, nearly 2/3 of patients showed 100% clot removal, which has never been demonstrated in any DBT trial ever. Not surprisingly, patients experienced immediate symptom relief. More than 90% were free of moderate and severe post-thrombotic syndrome at 30 days, removing all of the clot matters. Also presented as a late-breaker at Veeva vein was a propensity match comparison of patients treated in the cloud registry versus patients treated with pharmacomechanical thrombectomy in the Landmark NIA sponsored a TRT trial. Nearly twice as many cloud patients showed complete clot removal compared to attract patients who are treated with competitive technology. Complete cloud clearance improves patient outcomes. Not surprisingly then, cloud patients showed significantly lower rates of PTS compared to ATTRACT patients. 

The 3 key takeaways from these EBT studies are first, ClotTriever is safe; second, ClotTriever removes more clots than any device ever studied. And third, Cotriver achieved best-in-class patient outcomes. This gives us great confidence that Defiance, our randomized controlled trial will establish ClotTriever as standard of care for DVT treatment. Enrollment begins in Q1 2023. Finally, we are excited to update you on Perles. Carless, you will recall, is our 550-patient RCT, comparing FlowTriever to catheter-directed lytic therapy for the treatment of PE patients. Study sites continue to activate, and enrollment is well ahead of our expectations. We will update you periodically on both Perles and Defiance. We remain committed to the production of high-quality data and a lot of it. This commitment is based on a sense of responsibility to physicians and patients, and we believe the implications will be increasingly clear not only for adoption and growth, but also for differentiation from current and future competitors. 

Our fourth growth driver is to expand our product portfolio. We have several exciting developments to share here as well. First, Protiva has now transitioned to a full market release. The device is a sheet that provides protection to the heart and lungs during complex DVT and IDC procedures. This is important not only in at least 15% of our own procedures, but useful in a large percentage of DVT interventions completed with other devices. Physician feedback has been highly positive. Pro tree will be sold outside of our per-procedure pricing and carries an average selling price of $4,000. It represents a significant potential revenue opportunity. Intel is also now in full market release. In thrill is a thrombectomy system designed for small vessels, including AV fistulas and veins in the upper extremity and below the knee. We believe the combined total addressable market is 250,000 to 300,000 procedures per year in the U.S. alone at an ASP of $4,000, intro represents an additional $1 billion market opportunity. Arctic continues to perform well in limited market release.

The system combines both aspiration and mechanical thrombectomy to treat peripheral arterial thrombosis. The system was designed to achieve complete clot removal while minimizing the risk of distembolization. We estimate the annual incidence of peripheral arterial thrombosis in the U.S. is approximately 80,000 cases. With a target ASP of $7,500, Arctic represents an incremental market opportunity of $600 million. We will share additional updates on Arctic as we progress through the remainder of the LMR. 

In summary, during 2021, we launched 5 major new products. To date, in 2022, we have launched 6 new products, including solutions to address 3 new TAMs. As a result, our total TAM has increased from $5.8 billion to over $8 billion in the U.S. and over $20 billion globally. Our pipeline is full, and we look forward to sharing additional new product releases soon. Our last growth driver is expansion into international markets. Q3 marked another quarter of record case and revenue growth for our U.S. business, driven by continued adoption in Europe. We have an established and initial commercial footprint across the entire European market and are largely following the same playbook in commercial systems as our U.S. business. Beyond Europe, we also saw strong case growth during the quarter in our existing markets in Latin America, Canada, and Asia Pacific.

We are continuing to work towards additional market launches across these regions during the remainder of this year and into 2023. Despite this progress, as we've noted previously, international will not be a material component of our overall revenue mix for the near term. Taken together, we believe we are making excellent progress across all our growth drivers. Our strategy is working, and we believe we can and will grow consistently for many quarters and years to come. Despite all our progress, make no mistake, we are just getting started. With that, I'd like to turn things over to Mitch.

Thank you, Drew, and good afternoon, everyone. NI revenues for the third quarter of 2022 were $96.2 million, up $23.3 million or 32% from $72.9 million for the same period of prior year. Compared to Q3 of 2021, our revenue growth was due to continued efforts to open new customer accounts, expand our sales force and deepen our relationship with existing customers. We've also been successful introducing multiple new products to expand both the FlowTriever and ClotTriever product lines. The revenue split between product lines was substantially the same year-over-year, with 31% of our revenue derived from the sale of spot Trever products during the third quarter of 2022 versus 30% in 2021 and 69% derived from the sale of FlowTriever compared to 70% in 2021.

Gross margin was 88.5% for the third quarter of 2022 compared with 9.3% for the third quarter of 2021. The decline was primarily due to the addition of new products to our FlowTriever toolkit, which add additional cost of goods sold due to our per-procedure pricing approach. Operating expenses were $94.9 million in the third quarter of 2022 compared with $68.6 million for the same period of the prior year. R&D expense was $19.1 million in the third quarter compared with $12.5 million for the same period of 2021. 

The $6.6 million increase in R&D expense was primarily driven by an increase in headcount as well as product development and clinical evidence development costs. These initiatives are consistent with the company's previously discussed growth drivers. -- expense was $75.8 million in the third quarter of 2022 compared with $56.1 million for the same period of the prior year. The $19.7 million increase was primarily due to personnel-related expenses as we increased headcount across the organization and secondarily due to higher marketing costs, travel expenses, and facility-related costs. Net loss for the third quarter of 2022 was $10.2 million compared to net loss of $2.8 million for the same period of the prior year.

The basic and fully diluted net loss per share for the third quarter of 2022 was $0.19 based on the weighted average basic and fully diluted share count of 53.5 million. These compare with a basic and fully diluted net loss per share of $0.06 based on a weighted average basic and fully diluted share count of $50 million for the same period of the prior year. Before I move on to the balance sheet updates, I'd like to comment briefly on the company's Q3 operating loss of $9.8 million. As you know, we continue to invest aggressively in our growth drivers. This has served our patients and company well and contributed to our significant growth. I'd like to reiterate that we intend to be consistently profitable commencing in the first half of 2024. 

Moving to the balance sheet. Our cash and investments at the end of Q3 totaled $319.2 million, consisting of $83.5 million of cash and $235.7 million of short-term investments. By way of reference, our cash and investments as of the end of Q2 2022 were $330.5 million. Our cash flows used in operating activities were $13.1 million for the third quarter of 2022 compared to cash flows used in operating activities of $5.6 million in the third quarter of 2021. Next, I'd like to address Inari's financial guidance for the full year 2022. We are raising our revenue guidance to $373 million to $375 million, up from the existing range of $360 million to $370 million. Consistent with prior years, we will provide 2023 guidance early next year. However, if it's not apparent from our prior remarks, we remain extremely bullish in our business and our ability to grow next year and beyond. With that, I'd like to turn the call back to the moderator for questions. For the Q&A segment, Bill, Drew, and I will be joined by Dr. Tom Tu, Inari's Chief Medical Officer.

We will now begin the question-and-answer session. (Operator Instructions) Today's first question comes from Travis Steed at Bank of America.

Just to follow-up on some of the 2023 comments committed to strong growth, but the Street has a 20% growth right now. Just kind of curious if that's a good place to be for now. And when you think about that number, it seems like the base business along could continue doing 20% growth kind of longer term. I don't know if you're willing to say that on the base. And then any color on how to think about the new products?

Yes. Thanks for that, Travis. This is Drew. I can get started on that, and then Mitch may want to follow up with some of the more specifics on the financials. But Charles, I think in general, as you heard, we feel really good about how we're positioned here looking ahead to the end of this year, and that carries through, through 2023 as well. We've got the mega class that is ramping and kind of hitting the sweet spot of their productivity. We've got not 1, but 2 new products now out in full market release, representing incremental revenue opportunity -- we've got our VT Excellence program that is really starting to click on all cylinders and gain meaningful traction. We've got new data that we're able to leverage both with flash as well as just this week with the cloud data set as well. So taken together, we feel very confident here looking ahead to the end of this year and out into 2023 as well. We're going to stop short of providing any specific guidance on 2023 today that will come early next year, but I did want to reiterate how confident we're feeling when we look across all of our growth drivers. With that, I don't know, Mitch, if you have anything you want to add?

A couple of comments to add to that, Travis. One, our year-over-year growth, I believe, is about 32% just quarter-to-quarter. So I think we feel like we continue to have a business with a tremendous amount of growth potential. And because of the current penetration rate in the addressable market. We think this business has very attractive growth opportunities for many quarters and years to come. I think you also asked about the new product contribution. And maybe I can just comment that as we're kind of working through Q4. We have the 2 new products, as Drew announced in the full market release. We're working through the VAC approval process and other things with our hospital customers to kind of getting stuff out into the field. And we're excited about the potential we see for these senior products. As you know, both of them actually are incremental to the flow treater and the clutter products, which we've been selling for some time. And I think as we get into the first part of next year, we'll continue to find ways to update you on the progress that we're making with those tune products and their acceptance in the marketplace.

I guess the follow-up would be on OpEx growth. I was kind of curious what -- how you're thinking about that given your commitment to somewhat profitable profitability moving forward if it's going to require something around like 10% OpEx growth or going to be closer to 40% that you did this quarter. Just any kind of help on how you're thinking about managing expenses and the operating expenses moving forward?

Yes. So I can start on that one, Travis. I think you've seen us invest aggressively across all 5 of those growth drivers, and that's been intentional and deliberate. I think the result has served us really well, served patients really well. It's allowed us to build some impressive capabilities and competencies that we're going to be able to leverage going forward. Relative to the profitability, I think you're going to see us begin to make meaningful progress on our operating income as we move through next year and look ahead 2024. We've got some advantages in that effort, starting with gross margins in the mid-to-high 80%. We've got a really efficient commercial system on top of that. And I think we're going to be able to make progress towards that longer-term profitability goal simply by easing off the gas in some of these areas that we've been investing in. We've got an infrastructure now that we've established in clinical that I do think gives us a base to build on some operating leverage opportunities in the same regard, and the R&D organization, I think we've established and built an engine and infrastructure that we can and will leverage from an operating perspective going forward. So I think you'll see us make progress along those lines as we move through 2023, and you heard Mitch reiterate our intention to be consistently profitable as we enter the first half of 2024, and that continues to be how we're thinking about operating income and OpEx investment from here forward.

Sorry, Travis, just comparing the Q3 figures, for example, for R&D and SG&A. So Q3 of 2022, and you compare back to Q3 of 2021. So we've had significant growth for the reasons that Dow explained, but we would expect as we move into the 2023 time frame that you'll see much more moderate growth in the R&D line. The SG&A line, I think, would primarily be growing due to the S part of that as opposed to the G&A part of that. And we feel like we're actually in a really terrific position to leverage and reap the benefits of these investments we've been making across all 5 growth drivers.

And our next question today comes from Cecilia Furlong with Morgan Stanley.

I wanted to start with some of the new product launches. But if you could just talk about both for Pro trees and thrill really where you are at this point from an account introduction standpoint. And if you could talk about Entry242, how that's ramped from an account penetration? And then kind of tied in with that, too, any way you could frame or quantify just the sequential net headwinds from new product introductions in 2Q?

Sure. So I can get started on some of those. So for both Protriven and Intro heard us talk about now moving into full market release. So during Q3, we completed the limited market release with both of those platforms. And in that process, we collected not only clinical and technical feedback from how the products were performing, but also some important commercial feedback as well. And all of that informed the decision in both cases to move into full market release with Pro treatment in there. And that's the phase we're in now, you're sitting in Q4. That means we've got the products broadly released. The entire field organization has access to those products, and we are in the process of bringing both of those platforms to the broader account base. Keep in mind that requires us to navigate through the VAC approval process and gain approval and get those products established in the hospital and purchase inventory on the shelf, initial in-servicing, and training completed with the staff. So there's some work obviously required here as we move through that SMR, and we're still in the early phases with both Protran intro of that FMR work. 

As a result, we would anticipate pretty modest revenue contributions at least in Q4 from those 2 products given the work we need to do that I described in the early phase of the SMR. Looking out to 2023, I think we'll anticipate obviously more meaningful revenue contribution from those 2 specifically. IN324, which is another product you mentioned on that has been in full market release now for some time. You heard us talk about the initial revenue that we are generated by placing Intr4andBold back in Q2. And at this point, Entry24 is being used north of 90% of our FlowTriever procedures here in the U.S. are using Entry24. So it's been broadly adopted at this point. Maybe just to touch on the last new product that you did mention, but just to touch on Arctic, we are moving through the LMR still with that product. We're getting good feedback. -- like what we're seeing, but we have more work to do to get through the remainder of that LMR, and we'll keep everyone posted as we finish up that LMR on Arctic.

I think you also asked about the headwinds from Q2. And as Drew just mentioned, we had a really terrific acceptance as we launched the bold and the 324 products in Q2. And those 2 products, obviously, that was some revenue in Q2 that doesn't appear in Q3, but we are pleased with the performance of the ClotTriever franchise in Q3 and the procedure growth and the other things that we normally be looking at to sort of make sure we have a healthy and growing business there.

Great. And if I could just follow up around your recent classes sales force hires. What you're seeing from a productivity standpoint at this point? And then recognizing it's early in some of these product launches. But just your initial take on how you're thinking about either a single sales force going forward or thoughts around potentially a second source to really drive penetration of your full product portfolio.

Sure. So from a productivity standpoint, the biggest dynamic was us bringing on board that mega class that you've heard us reference back 1 quarter ago now. That was the largest class that we had ever brought on. We did that intentionally looking ahead to the second half of the year when we knew we'd have these new product launches to focus on. But as a result of bringing on that big bolus of new sales professionals, obviously, the productivity took a hit. As a result, any time you bring on a large class like that. We have been digesting that class over the last 90 days now, and we're starting to see the productivity recover just what we would anticipate and what we've seen with every other class. So we like what we're seeing so far.

We did hire a much more modest class year exiting the quarter. So we're continuing to kind of rest and digest and allow that mega class to ramp up their productivity curve, while also focusing on some of the new product launches. We have decided for now to bring Protran in-thrill out in the bag of the existing sales organization. That was a decision that was informed by the information we collected during the LMR -- we think, given the overlap and the site of service and the overlap in the interventional call point as well, that it makes good sense to start those 2 products in the large sales organization. 

We'll keep a close eye on anything that would signal that we're distracting from the VT business. But right now, we think it makes the most sense to put all that in the existing channel. If we do decide at any point that we'd be better served to have a separate sales organization, we believe, given the characteristics of all of these new markets that we've targeted, we would largely, nonetheless, be able to follow the same commercial system and the same commercial playbook that we've developed for VTE even if we were going to stand up a separate organization. So we'll continue to keep an eye on all of those considerations as we move through the initial FMR and get a better sense of how the products are performing in a broad release.

And our next question today comes from Larry Biegelsen with Wells Fargo.

Just wanted to start with the implied Q4 guidance, Matt, it's about 18% year-over-year at the midpoint, it's only up about 2% quarter-over-quarter. Last year, you're up 14% quarter-over-quarter. How -- is there something -- was there something onetime in Q3? Or is this something you're seeing in the environment that makes you cautious? And given that, call it, 18% at the midpoint, how should we think about that in the context of next year?

Opportunities that you've heard us describe, including the new products in the field, which are sort of getting out there into the hospital, we're not necessarily seeing a lot of contribution from those products yet in Q4, but excited about the potential that they represent for 2023. We are still wrestling with some of the staffing shortages, which I think you've kind of heard about from everybody. And Q4 is sort of a challenging quarter sometimes with some of the holidays that go on during the quarter. So I think as we were thinking through the quarter and thinking about how we would likely finish the year, we just wanted to be very confident about that and make sure we did not get ahead of ourselves from a guidance point of view. We are very excited, obviously, as we've expressed about 2023, and we're bullish about the prospects for the business next year.

I wanted to ask on Pro tree. The feedback has been very good. Drew, where do you see this going in terms of percent of your DVT cases today? And do you see an opportunity for Protea outside with competitor devices? And how much pull-through do you think this could drive for your devices? In other words, people switching from competitor devices to Pro tree?

Yes, sure. Thanks for that, Larry. So if we go back a year, even 1.5 years for the early days of the development work with Protea, as we shared that product with some of our KOLs and gathered feedback on the pipeline, that one product, Croatia always stood out immediately with many of the docs as addressing a significant unmet need and being a very novel solution. And so we were encouraged by all that. And I think everything we saw during the LMR has, I think, underscored the value that, that product has the potential to address a significant unmet need. We believe at a minimum, Protea can be used in about 15% of our existing DVT procedures. And those are the more complex DVT cases where they've got not only involvement in the iliofemoral segment, but also up in the intervene cabin, they've got a significant clot burden that they may be concerned about embolizing as they work to address the clot. That's exactly what we saw play out in the LMR. And I think going forward, we're encouraged that, that's what we're going to see in broad commercial release as well. Certainly, that utility is present not only in our own ClotTriever cases, our own DBT cases, but we also believe ProTrev can provide value and clinical utility even in DVT interventions that are being done with competitive platforms. And I think it's a way for us to add value in those procedures. And obviously, in the process have some real commercial advantages in that as well. So we're encouraged by what we saw in the LMR. And I think as we move through the FMR, hopefully, those same advantages will come through as well.

Our next question comes from Sean Lavin of BTIG.

It looks like they have my predecessor still on. This is Marie Thibault from BTIG. I think so will be surprised to know he's asking questions. Congrats on a very nice quarter. Wanted to ask one here, my first question here on the procedure environment. You mentioned just in response to the prior question, so wrestling with some staffing shortages. I know in the prior quarter, you talked about reduced interventional capacity. Would love to get an update on how things are going, it certainly didn't seem to impact this quarter's results.

Yes. So Marie, I think in general, our sense is those staffing shortages are certainly still present in the vast majority of our accounts, and that's true across the country. So they haven't been magically addressed. We do believe, and I think you've heard this from others as well that they've stabilized. And I think in some cases or in many cases, hospitals have become more adept at navigating their way around those staffing shortages. But they're still present. We are able to execute through them. We've got a nice story we're able to tell around a modest footprint, a positive economic value proposition, a single-center intervention. So in a lot of ways, those staffing shortages, we're able to navigate our way through them. And I think that's exactly what you saw us do in Q3. So they're still out there, they're stable, and we're finding a way to help patients despite some of those headwinds.

Maybe I'll ask my second question a little away from results. In the conversations I have with investors, we still hear a lot of questions and competitive chatter. I wanted to hear from -- in your own words, I guess, your thoughts on some of this competitive chatter, what you hear out in the marketplace and what we should be taking away from all of that.

Yes. So over the last 12 months, we have been asked pretty consistently about JEDI and Wolf and AngioVac and Alpha vac, Clock Hunter, QuickClear, washer and the list goes on and on. At the same time, over the last year, to be candid, I don't think any of those platforms have had a meaningful impact in the market. And I think there's a couple of reasons for that. The first reason is you've heard us share this in the past, this is harder than it looks. -- the idea of simply getting a quick 510(k) for a catheter platform and bring it to market and experiencing explosive growth or a big impact. I think it's simply harder than it looks, and there is much more work to do from a development standpoint, certainly from a clinical standpoint, to get some of these new platforms on label for PE.

From a regulatory and commercial standpoint, all of it is harder than it looks. Secondly, I think being able to compete these new platforms based upon a widget alone, I think, is also increasingly difficult. And I think it stands in contrast to how we have approached the market. Even if you look just over the last year at what we've been able to accomplish in that same time frame, we're at 275 -- north of 275 sales professionals closing in on 350 people in our field organization if you include our sales leadership team, our national accounts team, our health economic and market access team on our Solutions Group team, closing in on 350 people across that organization. Our VT Excellence program built out now in a very comprehensive way and a way that we think is going to be repeatable and scalable and helping develop these VT programs.

An innovation engine with 2 dozen programs in developing new markets, new patient populations, fourth generation product now, FlowTriever and ClotTriever 9 separate tools in the FlowTriever toolkit, 5 in the ClotTriever toolkit. I think all of that speaks to how comprehensively we are approaching this market, the kind of investments that we've been making consistently across those growth drivers. And I think it stands in contrast to some of these emerging competitors. Clinical is another area that I think we have approached, and I think, in a very differentiated kind of approach. Tom, do you want to talk about clinical and how...

Yes, I'd love to. Marie, just to add one more point to that. As these markets grow and as our customers become more sophisticated, you see an ever-increasing value placed on high-quality data. And, of course, we have a very large -- the largest ever prospective registries and flash and cloud. You see sophisticated statistical analysis comparing our results to former landmark studies like Entra. There's just no other competitor out there that's leading the way in this -- both quantity as well as quality. Not to mention 2 simultaneously run RCTs and possibly more to come. So we're really excited that not only are the devices working, the commercial engine is humming along, but clinical is also contributing just as much.

And our next question today comes from Bill Plovanic with Canaccord.

I was wondering, just first, a couple of things. One, with the guidance, and I know it's already been asked, but I mean the guidance really doesn't seem like it contemplates any benefit from the new products or the new reps really kind of ramping up. And I think other people have kind of asked around the fringes on this, but help us understand why they wouldn't because, I mean, a $3 million to $4 million sequential uptick is one of the slowest quarters you would have. And I'm just trying to understand kind of where this is coming from.

Yes. So Bill, I can get start on that. Mitch may want to jump in as well. From a new product standpoint and the contributions of Protea and intro, you heard me describe earlier, we do need to navigate our way through the VAC approval process for each of those 2 new products as we enter the initial phases of this full market release. So as a result, we would anticipate pretty modest revenue contributions here in Q4 from Pro Trev and intro. On the rep productivity side, yes, those mega-class reps are ramping through their productivity curve and hitting the sweet spot of their productivity. At the same time, as you heard Mitch describe, as we've always said, when we put a number out there, we want to be highly confident in our ability to hit that commitment. We do have the staffing shortages that are still out there that you heard us talk about. We've got seasonality with the holidays here at the end of Q4. I think all of that is included in the guidance that you heard Mitch put out. Anything you'd add?

And then just I was wondering if you could give us some qualitative -- just on -- I think historically, you've talked about accounts, and new account adds. Kind of where are you in that transition of bringing on new accounts versus going in deeper. And if you could quantify maybe the new account growth on a percentage basis year-over-year? And then, just lastly for me, any commentary on ASP trends.

Yes. So from an account standpoint, Bill, we're closing in probably north of 1,500 accounts at this point, active accounts across the country. So we continue to add each and every quarter. That new ad rate is slowing, as you would anticipate. We've talked about some place in the neighborhood of 2,000 target accounts. So we're approaching the later innings of that account build-out, which is exactly what you'd expect. As a result, -- the vast majority of our cases and incremental case growth in the quarter is already coming from established accounts. In fact, in Q3, 98% of our cases came from existing accounts from accounts that we had already established a presence in, and we're driving deeper adoption, particularly by leveraging our VT Excellence program.

So I think that will continue to be the story as we look ahead to 2023, clearly, penetration adoption will continue to drive the vast majority of our growth, and already candidly are doing so already. Relative to ASP, the second part of your question, stability across the board, Q3, no big changes from that standpoint. -- we're still able as contracts come up for renewal, to take price or attempt to take price, and we succeed more often than we fail. We're able to point to some of the new products that we have brought forward underneath that per procedure price model as rationale for those price uplifts or at least price stability if we're not able to get the uplift. So no big changes there. And I think all that continues to reflect the strong underlying economic value proposition that both products enjoy. 

And our next question comes from Adam Maeder with Piper Sandler.

Congrats on the progress. Maybe to start, I wanted to ask about ClotTriever Bold and see if there's any update there in terms of uptake. Where do volumes stand with that product? Are clinicians using bold predominantly for chronic clot or you're also seeing a mix of chronic and acute plot use? And just how do we think about that application over time? And then I have a follow-up.

Yes. Thanks, Adam. So just to remind everybody on bold, so that is the same ClotTriever platform with one key improvement, and that is a stronger radio force and the leading edge of the coring element. We did that really to design it to do a better job on tenacious chronic clot. Gold is in about 50% of our accounts at this point. And we're seeing it used kind of as a frontline go-to product for all DVT interventions, both acute and chronic. We're clearly getting good feedback on how it performs in all of those settings. I think in many cases, it can result in fewer passes just because it's doing a better job of removing the clot. So it's being used as a workhorse in what would be historically our core DBT products. 

At the same time, Bold is also, I think, giving us access for the first time to that new chronic venous disease patient population, patients that have truly chronic clot that is months or even years old, and that bold is strong enough to try and address the underlying cause of their disease. Bold in that sense is the first of what will be a toolbox that we will build out over time, a purpose-built toolbox, specifically for chronic venous disease. You heard us talk about some of the new tools that we're going to add to that toolbox -- we have a stent cleaner product that's now branded as REVCOR, which will come out next year. We've got a second recanalization tool that will be added to that toolbox. All of those designed specifically for this chronic venous disease, patient population, this massive group of patients with spectacular unmet needs where we believe we can help make a difference by addressing the underlying cause of their disease. So we're in the early stages of focusing on that patient population, but bold is front and center today for that effort as well.

That's really helpful, Drew. And the follow-up, I wanted to ask about Defiance, your randomized controlled trial with attrite versus anticoagulants. I think I heard that's going to start enrolling in Q1. How quickly do you think that trial can enroll? Are you able to share any details at this point in time? And I think I heard you mention that you think Class River could become standard of care if successful. So maybe just flesh that out a little bit as well.

Adam, this is Tom. I'll tackle that question. So firstly, Defiance, which is an RCT in the DVT space is comparing ClotTriever to anticoagulation for treatment of iliofemoral DVT. The design of Defiance was based on our vast experience using the Cloud 500 data, which you saw presented Monday morning. And I think really serves as the next phase of our understanding of interventional treatment for DVT to update on the rather long in the tooth now attract data. So we have some comparisons of cloud to attract, which offers very good commentary as to the progress we've made in our technology, but Defiance is an RCT that, as Drew stated previously, may very well change the standard of care for this disease state. As far as the specifics, DBT trials historically do take a little bit of time to enroll. The excitement level amongst our customers is high, and we are going to kick off Q1. Once we complete the site selection process, I think there's going to be a lot more to say about the specific trial design as well as some of the outcomes.

And our next question today comes from Richard Newitter with Tru Securities.

Just a couple here. On the data that you had at Venn, the cloud registry, I'm just curious the data sets there. What was the feedback? And do you expect any material impact to the market adoption curve here from these? Or are you really kind of looking more for defined Perales to set the tone for standard of care type potential?

This is Tom here. I was in the room when the 2 cloud 500 data sets were presented. And I'll tell you, there were 2 different reactions that I detected. The first was one of kind of nodding confirmation that, yes, of course, cloud is safe. ClotTriever is the best-in-class device for thrombus removal, not much of a surprise for many people in the room who've had Clorever experience. On the other hand, I would say the overarching take-home message from the audience was that the level of sophistication of this data, as well as the quantity of the patients studied and the abstract after abstract publication after publication, podium presentation, one after the other is something that is just unparalleled compared to some of the more early entrants that our competitors had to offer at this late-breaking clinical trial presentation.

As far as commercial adoption is concerned, I think that really is dependent on our commercial team's ability to communicate the value of this clinical data. Certainly, not all of our users have the opportunity to attend these meetings or even read the updates online. And I think there's always the boots on the ground hand-to-hand combat, but we've armed our commercial team with the best possible information with which they can use to influence their customers.

And then just 2 quick ones, additionally. How should we think about new products impacting your gross margin, especially with separate ASPs and moving through 2023? And then just on your rep hiring, it's one of the more impressive and faster, bigger cadences I've seen of hiring reps so quickly. What's your confidence in being able to bring everyone kind of up the productivity curve in a predictable fashion? We've seen territory splitting in the past when it happened as aggressively come with some pain. So I just would love to hear how you guys are ensuring the onboarding goes smoothly. There's no hiccups.

Richard, thanks for those. So first, on the margin on the new products, Protea is priced as a stand-alone SKU at 4,000. Intral also priced separately from FlowTriever and Cloud Trever as a separate system-based price also of 4,000. The margin profile of each of those is fairly similar in the same neighborhood as FlowTriever and Clotiver. And I think as Mitch talked about mid- to high 80s is a pretty good range for our gross margin, that includes the impact of those new products. In terms of the productivity and the new folks we brought on board, yes, it's been a very fast ramp. We've done that intentionally as part of our overall commercial system. Many of those ads, and certainly all of the recent ones, are in the nature of a territory split. And that positions then both the legacy rep and the new rep to look after smaller territories and, as a result, have the bandwidth to do the kind of work we need to do for BT excellence. -- and driving adoption and penetration. So that's been a key part of our overall commercial system.

We've got a very deliberate compensation program that aligns the sales professional incentives towards territory splits. Usually for a device company, a split's good for the company and not so advantageous for the sales professional. We've been really deliberate about designing a compensation program that actually aligns the rep's incentives and has them welcoming territory splits as a result, and that's been a key part of why we've been able to add as quickly as we have up until now and will continue to be a key part of our system going forward as well.

And our next question comes from Michael Sarcone with Jefferies.

So my first question, just a follow-up on Arctic. You talked about having some more work to do being in the LMR. Can you just talk about or elaborate on what's next? What do you have to do that's remaining? And maybe the timing left before you can transition to FMR.

Sure, Michael. So Art, just to remind everybody that is a product design for peripheral arterial thrombosis. Two-part system today, we've got a balloon guide sheet with -- that provides proximal flow arrest and prevents distal embolization and then a second component of that system that's a mechanical thrombectomy component as well. We've gotten good feedback on how that system has performed in the LMR, and we're about where we thought we'd be at this point. Keep in mind that is a smaller market than some of these other new markets we're getting into. And as a result, we knew that the LMR would likely take a little longer. We don't have a specific timing or timeline associated with LMR. What we're really most focused on is gathering the clinical and technical, and commercial information that we're seeking in the LMR. And so that will be what governs the timing from here. Certainly, it will likely last through the rest of this quarter and into next year before we're in a position to decide whether or not that product and system is ready for prime time and for full market release. But so far, so good. We like what we're seeing and hearing from the docs, and we'll keep executing on the LMR and keeping you appraised as we move forward.

Great. And my follow-up is just on the VTE excellence program. You've talked about some hospital staffing shortages and impacting procedures, but you're working around those. I was just curious what type of impact does that have on progress you're making in the BTE Excellence program? Just with the thought that once we do get to a point where hospital staffing does resolve, and there are less capacity constraints, do you expect to see an acceleration in progress in what your BTEExcellence program is driving?

Yes. To do that work associated with VT Excellence, to do the work to develop these programs and systematically identify, risk stratify and bring these patients forward to caregivers that really understand the disease. To do that kind of work, you need folks to have the bandwidth at the hospital. And so certainly, for instance, during the pandemic, the height of the pandemic, that was a challenge. If your hospital is inundated with COVID patients, you understandably don't have a lot of time or bandwidth to focus on program development for VTE. I think in some ways, a similar theme has played out with some of these staffing shortages at the height of those challenges. In some accounts, they simply didn't have the bandwidth and time to be able to focus on program development and do the kind of work and partnership with us to develop these programs. I think in both cases, both with COVID as well as with the staffing shortages, the environment is more conducive today. There is more bandwidth today, more receptivity for us to do that work and to partner with accounts in those ways. So I think certainly in Q3, we began to see a more conducive operating environment, and I think we're seeing good traction and increasing impact from that VTE excellence effort and program.

And Michael, if I can just add. I -- if you think about the -- I think Drew mentioned during his comments, we're just getting started, sometimes here say that BT Excellence is a great example of that. And we're making great progress, getting good traction in many hospitals and some of the academic medical centers though, no surprise to anybody. They're looking for more data. And so I think as you think forward over the next year or 2, 3, and you see us completing the enrollment in our randomized clinical trials and reported in those results, ultimately, you can kind of see multiple ships kind of coming into Harbor at the same time. And that's something that I think will ultimately kind of cause a change not only in standard of care, but hopefully a change in the interventional rates and the products that are being used in the marketplace. And so we're really playing a long game here, and we appreciate the support of all of our investors who have that kind of share that vision for where we want to go with this business.

Our next question comes from Doug Werra with Berenberg Coral Markets.

I want to focus a little bit on the OUS expansion. Any major improvements in reimbursement across any of the geographies? And just a little bit of color on the expansion of the commercial presence across geographies that you currently are already in, specifically Germany. Would love to know kind of how the sales team is growing on that front. And lastly, just from an OUS revenue standpoint, we'd love to know the cadence of growth quarter-over-quarter. I know sequentially grew, but has that growth rate been similar over the last quarters? Or would love to get a gauge of that.

Sure. Thanks for those, Seth. So we saw a record growth in Q3 across the OUS franchise, and that was driven primarily through our efforts in Europe. We do have that initial commercial footprint established. And I think on a go-forward basis, more of the growth will come from productivity gains from that existing initial investment in infrastructure that we built as opposed to probably adding as aggressively as we've added over the last year. So I think you will see us begin to grow into that investment. And I think additional going forward, will be more governed by productivity gains and gated to growth. In terms of the reimbursement, no big changes in Q3. We've got the NUB in Germany. We're still doing work to get reimbursement established broadly in France. We're doing some work in the U.K. So no big announcements or changes, just continued execution and continued growth and candidly continued record revenue and case growth, albeit still at a scale, as you heard us talk about that's still not material to the broader overall commercial franchise.

Maybe if I could just follow up and just compare the OUS expansion opportunity versus new products here. I guess from a materiality standpoint for revenue, would you expect kind of Potrerics, anti in combination to here in the U.S. be more material than OUS over the next year?

I'll try to get started on that one, Deb. So we're -- as you've heard us talk about the OUS revenue, we've said that it's -- it was a record quarter. We're really pleased with the growth of the business outside the U.S. Having said that, it's not material from the point of view of breaking it out on our financial statements. I think we'd sort of be following a similar approach with the new products. Again, very excited. The 2 new products that are in full market release and working through the hospital back processes, those are going to begin to get some traction in Q4 but more significant progress in 2023. And as those become more significant contributors to the business from a revenue point of view, then we'll ultimately break those out in our financials. I think for the immediate term, we don't expect that they're going to sort of achieve that kind of magnitude relative to the revenue, which is being produced by the Clotrever and by the FlowTriever franchises.

Ladies and gentlemen, this concludes today's question-and-answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful evening.

Thanks, everybody.

Thank you.