Inari Medical Inc (NARI) 2024 Q3 法說會逐字稿

Good day and welcome to the Inari Medical third quarter of 2024 earnings call.

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I would now like to turn the call over to Marissa Vic Vice President, Investor Relations. Please go ahead.

Thank you operator and welcome to Inari conference call to discuss our third quarter 2024 financial performance. Joining me on today's call are Drew Hes President and Chief Executive Officer and Kevin Strange, Chief Financial Officer.

This call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements including statements related to Inari's estimated full year 2024 revenue operating loss or profitability expectations and the expected operating performance and potential strategic benefits of lim flow.

These statements are based on Anna's current expectations, forecasts and assumptions which are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Actual outcomes and results could differ materially from any results, performance or achievements expressed or implied by the forward-looking statements. Due to several factors.

Please review and R E's most recent filings with the SEC particularly the risk factors described in our latest form 10-K. 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.

And RRI undertakes no obligation to update these statements except as required by applicable law. On today's call, we will refer to both GAAP and Non-GAAP financial measures in announcing our Q3 2024 results.

Please refer to today's press release for a reconciliation of the non-GAAP measure discussed on this call and referred to in the release.

The press releases and slides accompanying this call are available on our website at Inari medical.Com.

A recording of today's call will be available on our website by 5 P.M. pacific time today.

And with that, I'll turn the call over to Drew hikes, President and Chief Executive Officer.

Thank you all for joining our call today in Q3. We continue to drive strong adoption of our therapies resulting in record revenue of $ 153.4 million and 21% year over year growth based on our year-to-date progress. We're pleased to raise our full year revenue guidance and reaffirm our expectations to reach sustained operating profitability in the first half of 2025.

Before proceeding. I'd like to formally welcome Kevin Strange, our new Chief Financial Officer for today's call. With over 15 years of experience, including over four years here at Ena Kevin brings tremendous expertise, judgement and leadership to our C SUITE. He has also shown a steadfast commitment to our mission and patience.

Additionally, I'd like to thank Mitch Hill for his contributions. As a reminder, Mitch will remain with Inari through early January as we continue the transition. Turning back to our quarterly results, we drove strong performance across the entire Inari portfolio including in our market, leading P/E and DBT therapies and in our emerging therapies portfolio. We also delivered robust growth in our international business.

As we advance into the fourth quarter, we are as excited as ever about our leading position in large and underserved vascular markets. This is especially true as we await the presentation of peerless data at the TCT symposium tomorrow. We believe this presentation marks the beginning of a golden era of randomized controlled data focused on thrombectomy for patients suffering from VTE. In Q3 our global BT revenue was $ 145.3 million. Up 19.7% versus the prior year underpinned by our commercial expansion and market development efforts.

During the quarter, we saw stable underlying market and share dynamics. The market for US VT procedures remain significantly under penetrated. And as the market leader, we continue to expect to drive robust growth and adoption of mechanical thrombectomy for years to come.

Our VT focused sales force, the largest in the industry continues to mature as we hire reps and split territories at a measured pace.

The team is making progress in helping their hospital customers build VT excellence programs to help ensure that each patient diagnosed with DBT or P/E is given consideration for interventional therapy.

We are excited that a substantial opportunity remains ahead and we look forward to continuing to drive higher adoption and penetration across our account base.

Turning to our clinical work, we're proud to usher in the golden era of randomized control trial data and VTE through the presentation of our peerless data tomorrow.

As a reminder, peerless is the first of our three major RCTS to complete enrollment.

CLIS was designed to evaluate patient outcomes using flowtriever as compared to catheter directed thrombolysis.

As a reminder of the patient population, addressed by this study, we believe the annual incidence of intermediate high risk P/E is approximately 280,000 patients, all of whom are eligible for mechanical thrombectomy with flowtriever. Of these patients today, we believe only 15% to 20% or about 50,000 patients annually receive any type of catheter based intervention.

We estimate that of those 50,000, about one third or 15,000 patients are still being treated with catheter directed thrombolytics based on our ASPS. We therefore see roughly $150 million opportunity to convert the remaining catheter directed thrombolytic procedures to mechanical thrombectomy with flowtriever. Of course, this is alongside the opportunity to continue to convert to 80% of patients still being treated by conservative medical management with any coagulation alone.

Should tomorrow's data be positive over time, we would expect many more patients to receive mechanical thrombectomy treatment with our flowtriever device due to its unique large bore aspiration technology and blood return capability.

Data from the trial will be presented at TCT by Doctor Wium Jabber, Professor of Medicine at Emory University School of Medicine during the late breaking clinical trial session at 11:44 a.m. Eastern Time. tomorrow, I look forward to talking with many of you on site and hope many of you will also join us for our peerless discussion happening at 2 p.m. Eastern time tomorrow. Following the late breaking clinical trial session.

Beyond pure list, we're making progress on enrollment and our two other currently active RCTS. Both of which compare our products to conservative medical management.

Peerless two comparing flowtriever to anti coagulation alone in P/E and defiance comparing clottriever to anti coagulation alone in DVT. We believe our investment in these studies will further advance the field change guidelines, extend our leadership position and ultimately change the standard of care in VTE away from conservative medical management to front line treatment with flowtriever and clottriever.

Turning to our global emerging therapies business in Q3, we delivered over $ 8 million in emerging therapies revenue up 64% versus the prior year.

We expect emerging therapies to deliver a strong finish to the year with several Q4 catalysts already in place and still others coming soon.

Years of purposeful investment in this segment has led to the addition of four distinct patient populations outside of VTE together comprising a $4 billion TAM in the US alone. In our chronic venous disease portfolio, we continue to advance the adoption of Venor following our full market release earlier this year. As a reminder, physicians are using VICOR as both a tool to treat CBD and in certain cases to augment treatment in DVT.

The addressable market in CBD includes an annual incidence of approximately 100,000 patients representing a $1 billion US tan in a substantial prevalence pool of over 1 million patients.

CLTI also remains an exciting opportunity for us.

Lilo offers new hope for the 55,000 patients per year suffering from no option CLTI translating into a $1.5 billion US TAM.

I am pleased to report that our US launch is progressing. Well as we formally anniversary the addition of Lim Flow Toa, we're making great progress. As of the end of Q3, we received VAC approvals and over 50 of the approximately 200 high volume limb salvage centres of excellence that comprise our early launch target.

We look forward to supporting initial procedures and growth over time across these and more centres.

In addition, we've been hard at work to iterate on the first generation LY flow system. As is the inari way earlier in the quarter, we received PMA approval from the FDA for a next gen stent delivery system and I'm happy to share that we're now in limited market release. We look forward to beginning the broad commercialization of this key component in 2025.

Continuing with our work on lym flow. I'm pleased to highlight that the NTAP proposed earlier this year for lym flow procedures performed in the inpatient setting when tuned into effect as planned at the beginning of October.

Thanks to the NTAP reimbursement for inpatient procedures has now increased by as much as $16,250. Regarding outpatient procedures. As noted on our last call in Q3 CMS proposed to increase hospital outpatient reimbursement for the limb pro procedure from $ 27,500 to $35,000. A meaningful increase.

This enhanced reimbursement is relevant to the roughly 20% of lymph flow cases currently performed in a hospital outpatient setting.

We expect to see the final ruling from CMS for outpatient reimbursement in the next two months. In acute limo ischemia, I'm pleased to share that. We recently received 5 10-K clearance for our Nextgen Arctic system and have commenced a limited market release. This product serves a $600 million US TAM characterized by tremendous unmet needs and a lack of purpose built tools, artics will not only address patients who would have been treated surgically, but we believe this second generation device improves upon other repurposed endovascular platforms. We plan to commence a full market release later in Q4. Our final emerging therapies market addresses the treatment of a V fistula clots using our intro device based on physician feedback. We're working on a second generation intro platform and we look forward to bringing it to market next year. As evidenced by the great progress made, year-to-date. We're confident our emerging therapies business can one day account for at least 20% of revenue.

Finally, I would like to discuss another record quarter in our international business revenue of $ 11.5 million was up 76.4% versus the prior year. Strength was primarily driven by adoption of our solutions in Europe in Latam. We recently received regulatory approval for flowtriever in Brazil and are in the early stages of our launch in that market.

We are also making continued progress on our expansion efforts into both China and Japan. In China we've been hard at work for two years to gain regulatory clearance for clottriever and flowtriever of late. In conjunction with the National Medical Products Administration, we ran a 25 patient study for clottriever in China.

We're excited that we've recently completed that study and have submitted the data to the NMPA.

We're now finalizing our go to market strategy and we'll have more to share about that by year end.

Turning to Japan, we're pleased to announce we've obtained PMD a regulatory approval for our plot trigger device and are seeking reimbursement approval later in Q4.

Looking ahead, our next step in Japan will be in the form of a post market study of approximately 100 patients supported by our recently established distribution agreement in Japan.

In conclusion, we're excited about the progress we're making internationally and expect total international sales to one day account for at least 20% of anna revenue.

Before turning things over to Kevin. I'd like to highlight as we always do a patient story that demonstrates the impact of our technology and highlights the kind of patient that makes the peerless study so relevant. A 58 year old woman in Louisiana was admitted to her local hospital where she was determined to have an intermediate risk, pulmonary embolism with large clot burden.

Her physicians were familiar only with the eco thrombolytic procedure despite 11 hours of a lytic confusion in the ICU. Her improvement was only marginal given that she had completed the recommended treatment. She was discharged home with the hope that she would recover on oral anticoagulation.

Unfortunately, that same evening, she was taken to a different hospital with persistent symptoms of trouble breathing. And passing out. Her CT scan showed no change in her class from before. This hospital with the assistance of an our medical had developed a comprehensive P/E thrombectomy program and had several physicians well versed in using the flowtriever system.

In a short 45 minute procedure, the patient had all of the acute and chronic thrombus removed from her lungs. The Flowsaver device was successfully used to safely return 600 CCS of the patient's own blood back to her.

She was discharged home the following day and has since recovered completely.

This case highlights the limitations of catheter directed thrombolytic therapy, primarily incomplete trauma resolution and ICU length of stay.

The case also points to the need to educate more physicians about the benefits of flowtriever which include immediate symptom relief, rapid heart recovery and short length of stay.

These benefits are directly attributable to the flowtriever system's unique mechanism of action which offers both best in class thrombectomy and the safety of blood return.

Our peerless study will directly address the thousands of patients like this one.

With that, I'll now turn the call over to Kevin.

Thanks Drew, turning to our third quarter, 2024 results Inari's revenue for the third quarter. Of 2024 was $ 153.4 million. Up 21.4% over the same period of the prior year. This represents sequential growth of over $ 7.6 million global. VTE revenue in the third quarter was $ 145.3 million. Up 19.7% over the same period of the prior year. Global emerging therapies revenue in the third quarter was 8 million. Up 64% over the same period of the prior year.

International revenue of $ 11.5 million was up 76.4% compared to the prior year.

Our best in class gross margin was 87.1% for the third quarter of 2024. Compared to 88.5% in the prior year period.

The year over year change was due to product mix, the ramp up costs associated with new products and increasing internationalization of the business.

Sequential gross margins improved by 80 basis points over Q2, 2024.Operating expenses were $ 147.1 million in the third quarter of 2024 compared with $ 109.8 million for the same period in the prior year.

R&D expense was $ 29.4 million in the third quarter of 2024 compared with $ 21.5 million for the same period of 2023.

The increase in R&D expenses was primarily due to a one time non cash impairment charge associated with previously capitalized software development costs increases in personnel related expenses, clinical and regulatory expenses.

We anticipate R&D expense as a percentage of revenue to decrease sequentially in the final quarter of 2024 to a level similar to that of Q2. SGA expense was $ 108.3 million in the third quarter of 2024 compared with $ 85.6 million for the same period of the prior year.

The increase in SG&A expense was primarily due to increases in personnel related expenses. As a result of increased head count and increased commissions share based compensation, legal marketing and other admin expenses. As anticipated SG&A is a percent of revenue moderated closer to the level we saw in Q1, we anticipate SG&A expense as a percentage of revenue will further decrease in the final quarter of 2024. In the third quarter of 2024, the change in our fair value adjustment of our contingent consideration liability was $ 6.6 million as our lim flow business continues its exciting progress.

Amortization expense related to the acquired and tangible asset was $ 2.5 million and acquisition related expenses were $ 0.3 million.

In the third quarter of 2023 we had acquisition related expenses of $ 2.7 million.

Inari reported a GAAP operating loss of $ 13.6 million in the third quarter of 2024 compared with a GAAP operating income of $ 2.1 million for the same period in the prior year. On a non-GAAP basis, which excludes acquisition related expenses acquired intangible asset amortization changes in the fair value of our contingent consideration and impairment of capitalized software and related costs. The third quarter operating loss was $ 0.4 million.

The non-GAAP adjustment included $ 2.7 million related to acquisition related expenses in the third quarter of 2023. Net loss was $ 18.4 million for the third quarter of 2024 compared to a net income of $ 3.2 million for the same period of the prior year.

The basic and fully diluted net loss per share for the third quarter of 2024 was 31¢ on a weighted average basic and diluted share count of $ 58.4 million. This compares with a basic and fully diluted net income per share of 6¢ and 5¢ on a weighted average basic and diluted share count of $57.4 million and $ 58.6 million respectively in the same period of the prior year. As we execute against our goals of driving trong growth and leverage within the business. We are also maintaining a thoughtful approach to managing our balance sheet.

In the third quarter of 2024 our cash flows provided by operating activities were $ 1.9 million. We look forward to driving improvement in this area going forward.

At the end of the third quarter, we held a healthy balance of cash and investments totalling $ 111.6 million.

We remain confident in our ability to self-fund our business and strategic objectives with our current cash and access to liquidity.

We anticipate our cash balance will remain above 100 million for the duration of the year.

Turning to our 2024 outlook, we are raising our full year 2024 revenue guidance to $ 601.5 million to $ 604.5 million.

An increase of $ 3.5 million at the midpoint of our prior guidance range, reflecting growth of 22% to 22.5% over 2023.

Our guidance reflects contributions from all three of our growth pillars. BTE emerging therapies and international.

Lastly, I would like to comment on ana's progress towards profitability. We are continuing to invest in our strategic objectives to drive growth while remaining fully committed to achieving sustained operating profitability. Looking ahead, we will continue to strengthen our profitability profile and feel very confident in delivering on our commitment to sustained GAAP operating profitability in the first half of 2025. We also anticipate roughly break even GAAP operating income in Q4 of this year.

With that, I'll turn the call back to the moderator for questions for the Q&A segment. We will be joined by Doctor Tom Tu and a Chief Medical Officer.

We will now begin the question and answer session to ask a question. (Operator Instructions)

At this time, we will take our first question, which will come from Kallum Titchmarsh with Morgan Stanley. Please go ahead.

Yeah, thanks for taking the question guys. Just wanted to get your views on core VT market health as we push into 2025 right now. I think the street's modeling US VT revenue growth in the low to mid 10s, which kind of lags that 18% to 22% you've called out previously. So, we just appreciate any sense of how you're thinking about the core market next year and the moving parts we should keep in mind as we refine our models. Thanks.

Yeah, thanks for the question Kallum I can get started on that and Kevin and Tom may want to join in as well. But I think you heard in the prepared remarks, our view in Q3 was that the market was stable with what we've seen earlier in the year. A stable underlying market dynamics, stable share dynamics as well. Our VTE business globally grew 20% in a quarter, you know, a little faster than that O USA little slower than that here in the US, but suffice it to say we see a long runway for continued robust growth within BTE. And we're going to keep investing in the areas. They're going to drive that growth and purpose built technology and high quality data, you know, including RCT data starting tomorrow morning with pure list with continuing to invest in our commercial footprint. And our market development efforts under VT excellence. All of that gives us confidence that there's a long runway here. Given how early we are in inflecting this market away from conservative medical management, mechanical thrombectomy with flowtriever and clottriever front line.

Great. And then just on Lim flow, obviously, you mentioned you've got the NTAP in play now. So, what kind of uptick in procedure demand are you anticipating here or just any colour of what you've seen so far in October would be really helpful because I think emerging therapies maybe missed our estimates slightly in Q3. So, we just appreciate any kind of sense of the growth algorithm for this part of the business as we exit the year and push 2025. Thanks a lot.

Yeah, thanks Kallum can get you on that one as well. You know, so Lim flow was an important part of the growth we saw in emerging therapies in Q3, it grew 60% year on year. We did see some roughly flat sequential growth in emerging therapies. But limb flow within emerging therapies did grow sequentially, Q2 to Q3. We're coming up on a year anniversary with Lim Flow and we are very pleased with the early commercial ramp. We had always viewed 2023 as you 2024 rather as you know, as a foundation building year with Ly Flow. And I think that's largely the work we've accomplished. We've strengthened the supply chain. We've gotten the team aligned and organized. We of course, have gotten NTAP and New tech APC both in place for enhanced reimbursement. NTAP, as you mentioned, went online October 1 and that will further enhance what was already a pretty attractive economic value proposition. So, we're seeing nice growth with lim flow month after month, quarter, after quarter and we anticipate that growth. Certainly to continue next year with the foundation that we've established here in 2024. We're going to be able to leverage that foundation to really have a strong really first commercial year in 2025 with Lim Flow. And clearly the end T is going to provide a nice tailwind for those efforts.

And our next question will come from Marie Thibault with BTIG. Please go ahead.

Good evening. Thanks for taking the questions and congrats on a nice quarter. Wanted to ask you a little bit about what's assumed in your Q4 implied guidance, this year. Certainly your remarks to calum on 2025 growth drivers, but want to understand, you know, could peer list have an impact or any of these kind of new LMR devices built in what, what's kind of a thing that you for guys?

Yeah, thanks. Thanks Marie. This is Kevin. I can jump in on the, on that one. Look. I think overall we feel good about the performance of the business in Q3 growing 21.4% and the overall strength of the business here heading into the end of the year, growing 22% year-to-date. We feel like the raise that we've afforded here throughout the year of 15 million at the midpoint really drives where we want to be towards the end of the year. And that's really reflective of the confidence that we have in the business overall. We obviously some moving pieces here that we've got heading into the end of the year with the Arctics just coming online. Now, we've got peerless that's going to be rolling out here shortly and we've got lim flow, of course, it's going to be coming online with the INAP. But overall, I think the confidence here is reflected in the $3.5 million raise at the midpoint and we feel good about the guidance raise here to 22% for the, for the year.

Sure, absolutely. That's really helpful, Kevin. Maybe my follow up here on sort of the international market development. You have China and Japan coming online, hopefully. Certainly it sounds like you've been doing well in several other countries. Can you talk to us a little bit about some of the catalysts we should watch for internationally in 2025? Thanks so much for taking the question.

Yeah, thanks for that, Marie. I think as you look out in 2025 with international, I think, first and foremost, we're anticipating continued robust growth out of Western Europe, that region has been leading the way internationally. I would anticipate they will continue to do so. In 25 we've got a nice footprint established in Europe. We've got enhanced reimbursement established in a number of European markets, Germany, for instance, I think all that is going to continue to drive robust growth out of Europe in 25. Alongside that, I think in 2025 you're going to see more meaningful contributions from growth from the other international markets. And there's maybe 12 or 15 other markets across Asia Pacific and Latin America where we've gotten regulatory clearance, we've gotten a commercial presence established and we're now in a position to drive more meaningful growth. So I think you're going to see those markets contribute alongside the European markets. And then finally, as we first talk about, you know, we've been hard at work to get onto the market in both China and Japan. We're very close. In both of those, you heard some of the recent progress in China, we have completed the 25 patient study in market which we've submitted to the NMPA in Japan. We do have regulatory clearance now for clock tr and are finalizing reimbursement in Japan. So we made some nice progress and I think looking ahead to 25 I think both China and Japan will help contribute, you know, we're going to have to ramp in those markets just like you've seen us undertake in other markets. But I think clearly getting into those large Asian markets and beginning to do the work we need to do will be another part of the growth in international next year.

And our next question will come from David Rescott with Baird. Please go ahead.

Oh, great. Thanks for taking the questions and congrats on the quarter here. I, wanted to ask a little bit about you know, maybe just your high level thoughts on what you're thinking about pure less. I know we'll, we'll get some you know, better details on that pretty soon, but just wanted to think, you know, should the results there bear out to be positive in the way that you're expecting, you know, what level of investment do you think you could put behind this to either, you know, sustain the growth, you have maybe try to pull some levers for, for some accelerating growth. How should we just start to think about that and again, appreciate we'll have more details once the results are out.

Yeah, thanks for the question, David. As you can tell, we're very excited to bring the peerless data to light. This is the first RCT in the pulmonary embolism space in about 10 years. So, I think we're also excited to really raised the bar in terms of meaningful end points that patients and physicians and hospitals care about. As far as sourcing this. We anticipate a lot of marketing activity. Not just int 10 around the time of the announcement but also sustained because I think as you heard in the prepared remarks, there's still a lot of unmet need. We think a third of patients in the US who get intervention for P/E are getting CDT and I think that is a large opportunity to improve patient care and also drive revenue.

Okay, thanks. And maybe on Lim flow, I heard some of the comments already. You know, there, I'm curious for the accounts that you're in. Maybe if you could give us a sense for, I guess one relative to the goals you made earlier this year, around the number of accounts you get into maybe where you stand today. And then for those accounts that you were already in, you know, any, colour on what those accounts look like as it relates to, you know, monthly procedures, the reorder rates, anything there would be helpful. Thank you.

Sure, David. But I can try and answer those. So you heard in the prepared remarks that we've now gained access to over 50 initial accounts and that is part of that initial group of 200 high volume sell centres of excellence. So we've made some nice progress here out of the gate in 2024. We're probably a little ahead even of where we had expected to be at this point in terms of account opening. So we feel pretty good about the commercial ramp to date. We've got work to do from a market development standpoint that is work we knew we were going to have to undertake and that's work we're actively chipping away at as we speak. These are patients that are not being cared for in most cases by interventionalists. These are patients that are being cared for in wound care and podiatry and in some cases even out in the community with GPS. So we've got work to do to help identify those patients and get them in front of a physician that can really assess whether or not lim flow is a new option for those patients. So that's work that we knew we would be focused on. And sure enough that is exactly where our team is spending time understanding what that work looks like, what we need to do, what barriers we need to knock down. But suffice it to say we like the products we made today tons more work ahead of us, but so far so good in what we've seen to date from a commercial standpoint.

And our next question will come from Chris Pasquale with Nephron research. Please go ahead.

Thanks a couple questions on artics. It's exciting to see that product back in the market. Just curious how you're going to position it in that segment relative to its strength versus competitive systems. And is there a particular subset of patients for whom that product is going to be a much better option than what's already available?

Yeah, thanks, Chris. I can maybe talk about some of the commercial aspects of it and then maybe Tom can chime in on the, the clinical part of your question. So we are a week or two into the LMR. We got 5, 10-K clearance maybe it's just a week ago now. So still pretty early. But so far so good. We've got some really good feedback from the initial set of cases as you recall, this has been a almost a two year journey to get back into the market with artics. This next gen platforms are so we're really excited to be back in the market. We were very intentional, deliberate about the refinements we made to the platform and are hopeful that the second gen platform will help address what is a pretty significant unmet need for these patients. Over half of them are still being treated with open surgical approaches. And we believe that a purpose built tool like AR is going to be a better option for the patients that are currently being treated with other endovascular platforms. So still early, we need to you know, get through the LMR as we always do, but so far so good. And it's exciting to be back in the market. With ar maybe with that Tom can back clean up on some of the clinical parts of your question.

Yeah, Chris. So you asked about how we might position the strength of artists in the market. You know, if you recall the acutely ischemia market is a mature market. These patients get treated. Unfortunately, the treatments that exist currently have significant limitations either because of open surgery or need for multiple interventions. The use of lytics and you know, frankly, the aspiration thrombectomy system that is used in a lot of procedures is inadequate for removing clot and results in just a libation. We believe in ar we have a tool kit. That's the all in one solution that you have the best in class mechanical thrombectomy that's in class aspiration. And the results that we've seen as drew alluded to early on, but still fantastical results that just haven't been able to be achieved with the technology today. So we can't wait to get more experience. And then once we get through the early phases and release it broadly across our customer base.

Thanks that, that's really helpful. And then just on the core VT business, curious any differences in trends you're seeing between the two segments there, DVT versus P/E our sense has been that the PS continuing to grow a bit faster. Just curious if you're seeing the same.

Yeah, I think that's right, Chris, you know, you heard in the prepared remarks, pretty stable trends we saw as we move through Q3. I think that's true within P/E, I think that's true within DVT. And I think our view is exactly what you shared. I think at the margin, the P/E segment of the market has been growing faster on a marginal basis than DVT. And I think that was a pretty consistent trend that we saw unfold in Q3.

Thanks.

And our next question will come from Stephanie Piazzolla with Bank of America. Please go ahead.

Hi. Thanks for taking the question. I just wanted to follow up on peer list. You called out the 150 million opportunity that the data could help open up. Maybe if you can elaborate a little bit more on how quickly this revenue opportunity could come through or how quickly you expect doctors to change practice from the data if it's positive.

Great. Thanks for the question, Stephanie, and like you said, we're very excited to bring this data to light tomorrow at the TCT meeting. Mind you even with the highly successful trial, I think it takes time for physicians to really read and comprehend the results and then put those conclusions into practice. So I suspect what we'll see is the continued erosion of CDC market share and probably relegating that therapy to very niche uses. But I think the bulk of that transition is going to be a 2025 progress.

Thank you. And maybe just to follow up, I just wanted to clarify on the US versus O US performance in VTE. We estimate that the US VTE market grew in the mid 10s, consistent with prior quarters. Is that a fair assumption? And is it still fair to assume that most of the O US revenue is from VTE versus emerging therapies? Thank you.

Yeah. Thanks for that, Stephanie. So the overall growth globally for VTE in Q3 was 20% a little bit faster than that O USA little bit slower than that. Here in the US, we don't break out specifically the US versus O US, but that at least gives you some context around the two. And again, relatively stable trends in Q3 compared to what we've seen historically. And then finally, the last part of your question Yes, the vast majority of our revenue O US is indeed from VTE that will likely change over time as we work to bring some of our emerging therapies to the international markets. But today, at least the vast majority of O US is directly attributable to BTE.

And our next question will come from Larry Biegelsen with Wells Fargo. Please go ahead.

Hi, it's lee calling in for Larry. Thanks for taking the question. Nice quarter. My first question drew at our healthcare conference. Last month when you were asked about 2025 you talked about aspiring to be a 20% grower and you're confident that will continue to be the company's target going forward. So the question there is, you know, how are you confident in that you can grow 20% in 2025. Current consensus is closer to 18% growth and I have a follow up.

Yeah, thanks Blade. So looking ahead to 25 we are very excited about the runway that we see for continued robust growth across all three parts of the business within VTE. Of course, we're going to be able to continue to leverage pure list. As you heard, Tom, we've got new products coming in VTE next year. Continued traction work with VT Excellence. Emerging therapies will be a big year for us next year with art in full market release with the first full year of limb flow commercially. We got a nextgen product coming in. Intro continued traction with CBD. You heard me describe earlier the catalyst and international across Europe and last time and Asia Pacific and some of the new markets coming online as well. So, you know, over the next 60 days, we will take all of that into account. We'll have a chance to look at art in the first 60 days and Pless in the first 60 days, all of that will inform our guidance that will roll out early next year. But to be clear, what remains unchanged is our commitment to continued premium, robust growth that will remain our top priority in 2025. Alongside that a second clear priority is going to be the work we're going to continue to do in path to profitability. And you heard Kevin describe some of the recent progress here, even this year and our confidence looking ahead for that progress to continue. Last thing I point to relative to guidance next year is that philosophically, we will continue our historical approach and we put a number out from a guidance perspective. We want to be highly confident in delivering on that number. And I think that's another part of our guidance that won't change. Looking ahead to next year.

That's helpful. Thank you. And just for my follow up on China and Japan, I didn't know if your comments were related to claw reever is there an update on flowtriever in those markets and any additional colour you can provide on the post market study in Japan and the Distribution Agreement. Thank you for the questions again.

Sure, thanks Clay. So we've been working the last couple of years to gain regulatory and reimbursement approval in both China and Japan for both flowtriever and clover in both of those markets. For different reasons, clottriever has led the charge and is a step ahead of where we are at with flowtriever. So as we enter those markets initially, we'll be doing so with clottriever initially and then following that commercial effort will follow with flowtriever to get a regulatory reimbursement and commercial traction with the second product. The 25 patient study that I described to be clear was in China. That was a study that we conducted with Clover in market in China.

With acute end points we submitted that data set to the NMPA and that data will be part of their final regulatory assessment for China approval in Japan as you heard us describe the prepared remarks. We do have PMDA regulatory approval. We anticipate finalizing reimbursement approval here in Q4. And that will set the stage for us to do our initial work in Japan, which should be in the context of 100 patient post market study, which is a requirement from a regulatory perspective. So that'll be the initial commercial effort will be in the context of that 100 patient post market study.

And maybe last thing I just to answer the question on the distribution agreement, we did enter into a third party distribution agreement in Japan for a partner to help us commercialize core as it comes to market here. So that's another new update that we provided in the prepared remarks. Thanks.

And our next question will come from Bill Plovanic with Canaccord genuity. Please go ahead.

Hey, it's Zachary on the line for Bill. Thanks for taking the question. So it sounds like Lim flow is progressing really well in terms of both the reimbursement and back approvals as we adjust our models tonight, what should we expect in terms of 2025?

So you heard us describe 2024 as a foundation building year for Lim flow. That's really going to set the stage for us to drive a meaningful growth out of Lim flow in 2025. And that is going to be building off the foundation of supply chain work that we've done this year, the NTAP the team being aligned new tech APC coming online. All those things contributing to the growth within emerging therapies in 25. Clearly lym flow is going to be an important part of the growth story with emerging therapies. I think moving into FMR will be another key driver for us within emerging therapies. And then of course, later in the year, we'll have a nextgen platform launching with intro and along the way as a backdrop, we'll continue to do the work with Venor and rev core in chronic venous disease. So lots of nice catalysts shaping up in emerging therapies next year. And I think the top of that list is going to be the growth we're anticipating out of ly flow.

Thank you.

And our next question will come from Michael Sarcone with Jeffrey. Please go ahead.

Good afternoon and thanks for taking my questions, I guess just a follow up on pr list. Assuming tomorrow we see where it shows what you're expecting it to show, you know, good outcome. Do you expect and ari will, you know benefit entirely from that study or is there a potential for a class effect that could, you know, just lift mechanical from bre from back to me more broadly?

Thanks for the question, Mike. I don't think there's going to be a class effect attributable to peerless because I think flowtriever is in a class of its own. Remember, the peerless study randomizes flowtriever to catheter directed thrombolysis. And when we're talking about the flowtriever procedure, there's only one device that has the kind of efficacy for thrombectomy as well as the safety of blood return, that is the flowtriever system. So I think that the results if positive are going to be directly assigned to the flowtriever treatment arm and frankly, if other companies want to try to gain benefits, they should do their own studies.

Got it. Thanks. And then just one quick, one last quick one. Can you just comment on any trends in pricing in the core US VT market?

So Michael, I think the trends in pricing again were stable in the year we've described in the past that pricing is a modest tailwind for us. We take price or attempt to take price as contracts come up for renewal. That was certainly the case in Q3. And then the second tail win that we drive from pricing standpoint is the continued conversion of accounts onto our VTE PPP pricing program which mathematically ends up creating a bit of a tail. And so those were the dynamics we saw in Q3 and again, very consistent with what we have described in the past.

Our next question will come from Richard Newitter with Truist securities. Please go ahead.

Hi, good evening. This is Robin in for, Rich. Thanks for the question. So, just to one, I guess on the next gen delivery system, can you talk a little bit about what the actual improvement is that can make you able to win share in that case?

So, you're a little garbled there. But I think you're asking about the next Gen Arctic system and what attributes of it gives us confidence we're going to be able to take share. Do we get the question.

That I can take that one? Yeah,

Thanks for the question. We are really excited to bring ar back to market as you've heard in the comments already. If we rewind back a year and a half to first generation artics, what we recognized was that there was a great need for mechanical thrombectomy for the acute ly ischemia market. And that obviates some of the shortcomings of both surgery, lytics and other approaches, the Arctic gen one system was very safe, but we realized we could improve with some of the of use with how the components work together as well as to improve the thrombectomy results. And we believe with this new generation of artics which has a protection scheme to reduce digital embolization, has an upgraded funnel as well as a mechanical thrombectomy platform that we're going to really realize the promise of what this technology can bring.

Thanks. And then I guess my next question is on the P&L you know, we're all trying to kind of calibrate our models for 2025 is anything you would want to point out in terms of this past day to sustain operating profitability. You know, it looks like R&D is taking a pretty big step down this year. But the street hasn't stepping back up next year just hoping to get some colour on puts and takes and where should we be thinking about where the profit drivers are coming from for next year? Thanks.

Yeah, thanks for the question. This is Kevin again. So overall look, I think we feel good about the progress that that we're making on the operating income line. In Q3, you saw a $9 million sequential improvement on a GAAP basis from Q2, excluding the one-time impairment charge that we talked about, it would have been closer to $13 million sequential improvement. We saw nice improvement on the SG&A line and general stability on the R&D line as we talked about on the last call SG&A. We expect it to step down to a more normalized level like Q1 and it did this quarter in Q3. So really pleased with that and R&D excluding the one-time charge was roughly in line with Q2. So looking ahead as we discussed in the script, we do see SG&A continue to step down in Q4 relative to Q3. And we expect general stability if not a bit of improvement on the R&D line as well. Overall that lands us in an area that's roughly break even from operating margin perspective in Q4, which we're very pleased with. And we think we're well on our way to driving incremental operating leverage into the first half of 2025. And as you heard again in the script, we remain fully committed to driving to sustain a GAAP operating profitability in the first half of 2025.

We have time for about 1 to 2 more questions on today's call. Our next question here will come from Matthew Blackman with Stifel. Please go ahead.

Oh, great. Can you hear me? Okay.

No.

Okay. Thanks for taking the questions. I've got to Drew. I'm pless. I, I think the quote from the prepared remarks is that if we get a quote and quote a positive readout, we'll see CDT conversion. So I guess that begs the question of what you think constitutes a positive readout if you're willing to share and then one follow up.

Sure, thanks for that, Matt. So this study was purposely designed with meaningful clinical end point as the win loss ratio composition. That's exactly what physicians have been asking for. We have moved past the era where surrogate end points really are going to inform clinical decision making as a result. If you look at the five components of the win loss ratio, each of them are important for clinical decision making. Each of them reflect important outcomes for patients. That's the design of the study and that's what you're going to see presented tomorrow and the late breaker tomorrow morning. The opportunity for us if it is positive is meaningful, you know, as you heard Tom describe 280,000 patients, we believe 15,000 of those are still today being treated with catheter directed thrombolytic. That's exactly the readout that pure list is going to shine a light on. So we're very excited to get the data out tomorrow morning. This has been a, you know, three year journey to get to this point. So exciting to be on the eve of that read out tomorrow morning.

Understood. Thank you. And then just on VT Excellence, where are you in terms of accounts across the, the three phases of the program? And just remind us what the trigger points would be to move from one phase to the next. And how about how long that transition often takes and whether that transition period is moving faster recently or just any colour on, an update on the VTEA Excellence Program?

Sure man, I can put a little more colour on that. So, recall that our view is all 1,700 of our accounts are in some phase of a journey towards emerging as a VTE centre of excellence. The vast majority of our accounts are in the earliest phase of our program, what we call engage in that phase. You know, the work is focused on spreading awareness, on establishing a solid foundation, on ensuring that the interventionalists are getting a solid outcomes in their first set of cases. We do some work in the first phase to ensure that the coding and billing is being done correctly and that the hospital is receiving credit for the work that they're doing from a reimbursement standpoint. All that characterizes the kind of work we do and engage. And still today, the vast majority of our accounts are still in that phase. The penetration into the TAM in that phase is in the low single digits, just getting started and laying the foundation from there, we have accounts graduating into the second phase, what we call it power. And in this phase, we're really focused not only on broadening awareness amongst the interventionalists, but also amongst all of the non-interventional stakeholders of the health care for these patients. So the emergency room physicians, the hospitalist, the pulmonologists, the hematologists, all of the other caregivers, we spend a lot of time in power engaging and raising awareness among that group of caregivers. We also spend time focused on the administrators in the empower phase to ensure that they appreciate not only the clinical benefits of flow tr and cloud, but also the economic value proposition that goes along with their therapies. And as a result, they're supportive of the program building effort and investing into the program building effort. We've got a couple 100 accounts in that in power phase and the pan penetration in that phase is in the double digit range and then the final phase from there is a group of accounts that have graduated onto what we call Excel and these are accounts that are beginning to perform as true VTE centres of excellence. They've got a well-defined care pathways and algorithms. Many of them have a dedicated VTE coordinator in place. Many of them are taking advantage of artificial intelligence based diagnostic programs to ensure that patients are flagged. All of those are hallmarks of our most advanced group of accounts. We've got several dozen accounts in that phase. And the tan penetration in that group is north of 20%. We've got several that are north of 50%. So it gives us some confidence we're moving in the right direction. Every account moves along that journey at its own pace. There's really no there's a lot of variability and the pace at which they move along that journey. But the important thing is we're making progress and as we make progress. We're driving deeper and deeper penetration and impacting more and more patients.

That is all the time we have for questions today. We will now conclude our question and answer session in addition to the call. Thank you all very much for attending and participating in today's conference. You may now all disconnect your lines and have a great day.

Thanks everybody. Take care.