Penumbra Inc (PEN) 2015 Q3 法說會逐字稿

Good afternoon. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Penumbra, Inc. third-quarter 2015 conference call.

(Operator Instructions)

I would now like to introduce Mrs. Sarah Thompson, Head of Investor Relations for Penumbra. Mrs. Thompson, you may begin your conference.

Thank you operator, and thank you all for joining us on today's call to discuss Penumbra's earnings release for the third quarter 2015. A copy of the press release and financial tables, which includes GAAP to non-GAAP reconciliation, can be viewed on our Investor Relations website.

During the course of this conference call, the Company will make forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality, compliance and business trends. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those described on our prospectus dated September 17, 2015 relating to our IPO filed with the SEC.

As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our periodic filings with the SEC, including the prospectus previously mentioned for a more complete discussion of these factors and other risks that may affect your future results or the market price of our stock. Penumbra disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise.

Thank you very much, and with that, I would like to turn the call over to Adam Elsesser, President -- Penumbra's Chairman and CEO. Adam?

Thank you, Sarah. I would like to welcome you to Penumbra's first earnings call. With me today are Sri Kosaraju, our Chief Financial Officer and Head of Strategy; Daniel Davis, President of North America; and other members of our Senior Management team.

Before we go to our third-quarter update, I would like to remind everyone on the call about who we are. Penumbra is a global interventional medical device company. We have a broad portfolio of six product families across two major markets: neuro and peripheral vascular.

We started the Company in 2004 with a focus on neuro, and last year we expanded into peripheral vascular with an impactful portfolio of products and a dedicated sales team. Our products address conditions that include ischemic stroke and hemorrhagic stroke, which involve blockage or rupture of blood vessels in the brain, and peripheral vascular conditions that can be treated through thrombectomy and embolization procedures. Our markets represent a combination of markets with attractive growth opportunities such as ischemic stroke and also more established markets where we are a new entrant, such as hemorrhagic stroke and peripheral vascular.

Over the last decade, we have worked to develop a foundation for long-term growth, which is based on our cooperative culture, our leadership brand, and our ability to expand into new areas. Today we have approximately 1100 employees, and together with our physician and hospital partners, we have positively impacted hundreds of thousands of lives with our products. With this foundation, we are starting our next phase as a public company with a straightforward strategy to continue to work on impactful products across a varied product portfolio.

Now turning to our results. Our total revenues for the third quarter of 2015 were $50.4 million compared to $32.5 million for the third quarter of 2014, an increase of 55.3% as reported and 61% in constant currency. We achieved net income in the quarter of $0.9 million compared to $0.2 million in net income for the same period last year.

Our revenue growth was based on strong fundamentals across both of our major markets, neuro and peripheral vascular. I will discuss a few key themes, and Sri will go through some specifics.

Let me start with three key updates from our neuro business. First, we continued to see the strong initial momentum in the ischemic stroke market carrying forward following the presentation of the MR CLEAN trial in Q4 2014.

We believe the presentation of the results of the MR CLEAN trial was a watershed moment in the field. The trial demonstrated the benefit of intra-arterial or mechanical thrombectomy plus standard medical therapy over standard medical therapy alone. There are an estimated 690,000 ischemic strokes a year in the United States, of which only a fraction of patients are treated with mechanical thrombectomy today.

We see the key driver in growing the number of mechanical thrombectomy procedures to be the development of infrastructure to improve patient flow and systems care. In the quarter, we saw a number of positive steps being taken.

There are an increasing number of great ideas around streamlining stroke patient treatment. As an example, Penumbra has been involved in and is trying to support ideas to better diagnose large vessel occlusions at the EMS level.

Additionally, we have also seen entire sessions of medical meetings dedicated to presenting ideas to improve and streamline patient flow at hospitals. These discussions are important as we explore the most efficient way to move patients from the site of stroke to the ambulance and then finally to the angio suite. While we saw the initial momentum affect in mechanical thrombectomy procedures post MR CLEAN continue into the third quarter, we anticipate that future growth will be more gradual as these key infrastructure steps will take time to develop and implement.

Second, while we anticipate competition as the market grows, we did not see its effect this period. We believe that competition is important for advancing this field. It has existed in the field for well over a decade, and it has pushed us to work harder and stay innovative.

To illustrate, in May we launched our ACE64 reperfusion catheter in the United States, which represents our fifth generation of innovation in ischemic stroke. ACE64 is based on our latest technology and provides significantly greater aspiration power than our prior reperfusion catheters, which we believe contributes to improved clinical outcomes and reduced procedure times. Our team continues to work diligently on new technology for the future.

Our third notable update in neuro is in hemorrhagic stroke. We are preparing for the introduction of the Penumbra SMART COIL. The SMART COIL represents our second neurovascular coil and includes a feature that has long been requested by leading physicians in this field.

The feature is a coil that becomes progressively softer within the span of an individual coil. We have received very positive feedback from initial cases with leading specialists in the field.

The neuro coil market is well established, and with our SMART COIL, we believe we are now poised to offer a product that can be easily used across this entire market. We believe the SMART COIL can be an important opportunity for our neural business.

Now let's turn to a few notable updates within our peripheral vascular business. While there is a lot of excitement in our neuro, we are very encouraged with the early progress we have seen in our peripheral vascular business.

The results in the period exceeded our expectations. As a reminder in the middle of 2014, we started selling our peripheral embolization and peripheral thrombectomy products in the US through our dedicated peripheral sales teams. On July 1, we expanded our Indigo System to include CAT6 and CAT8, which represent larger sizes to complement our existing Indigo portfolio.

These new sizes along with the new venous indication have provided physicians the ability to treat a number of additional arterial and venous diseases more effectively. For example, physicians have treated deep veins, thrombal veins, IVC and pulmonary arteries, SFA, profunda common femoral and popliteal arteries. There is a high incidence of blood clot in peripheral arteries and veins, and we are offering extremely impactful products in what we believe is a paradigm shift from current treatment modalities.

While we have a number of important updates in this quarter, the growth of our peripheral business is a great illustration of our long-term strategy, to create an innovative medical device business built on very impactful products. I will now turn the call over to Sri for more specific details of the quarter.

Thanks Adam, and hello everyone. As Adam mentioned, our total revenues for the third quarter ended September 30, 2015 were $50.4 million, an increase of 55.3% compared to the third quarter of 2014 or 61% in constant currency.

In the quarter, our geographic mix of sales were 70.2% US and 29.8% international. Neuro and peripheral vascular represented 72% and 28% of sales in the quarter respectively.

More specifically, revenue from our neuro business grew to $36.3 million in the third quarter of 2015 from $27 million in the same period a year ago, an increase of 34.5% or 40.9% in constant currency. Our neuro growth was mostly driven by sales of our Penumbra system which includes ACE and ACE64.

The initial rate of this growth was created by the excitement following the MR CLEAN trial and has now extended through three full quarters. We remain optimistic about the future for the ischemic stroke market, and we expect the rate of growth over the next several quarters to be more gradual as many as the infrastructure development initiatives that Adam discussed will take time to implement.

Revenue from our peripheral vascular business grew to $14.1 million in the third quarter of 2015 from $5.5 million in the same period a year ago, an increase of 157.6% or 159.7% in constant currency. While we saw favorable growth in peripheral embolization, the majority of growth in the period came in peripheral thrombectomy with the new venous syndication and the introduction of our larger sizes within our Indigo System.

It is worth noting that during the third quarter, we primarily went to hospitals who had the smaller sizes of our Indigo System. The process for adding the new sizes at these hospitals took less time than we expected.

Going forward with new hospitals, we would expect a more typical three- to nine-month cycle due to value analysis committees. That being said, we are extremely excited about the early success of this product.

Our gross profit in the quarter was $33.5 million or 66.4% of revenues compared to $20.8 million or 64.1% of revenues for the same quarter last year. Our gross margins benefited from strong revenue growth and favorable product and geographic mix.

Moving to our operating expense, total operating expense for the quarter was $31.3 million or 62.1% of revenue compared to $20.5 million or 63.1% of revenues for the same quarter a year ago. Our research and development expenses were $4.6 million for Q3 2015 compared to $3.9 million for Q3 of 2014. The increase was primarily due to greater compensation expense resulting from increased headcount to support continued investments in our products.

SG&A expenses were $26.8 million for Q3 2015 compared to $16.6 million for Q3 2014. Our spend increased as a result of our growth in headcount. Additionally, we expanded marketing programs and saw an increase in legal, professional and consulting expenses in the quarter related to being a public company.

We are currently planning initiatives and projects across our R&D and SG&A areas that could result in further increased spending. We had net income of $0.9 million in Q3 2015 compared to net income of $0.2 million in Q3 2014.

Moving to our balance sheet, we ended the quarter with $159.1 million in cash and cash equivalents. Our IPO closed on September 23, 2015, and with the greenshoe exercise, we issued a total of 4.6 million shares for net proceeds after deducting underwriting discounts and operating expenses of $124.8 million.

Now I'd like to turn the call back to Adam for closing remarks.

Thanks Sri. I will close by saying we are excited about the impact that our products can have in some significant markets.

We were able to achieve strong revenue growth with disciplined spending. We will continue to invest appropriately for growth within the same disciplined approach that has been so important to our Company's prior success.

This is just the beginning for Penumbra. We look forward to many more calls ahead and to sharing more market perspectives as well as heartening patient stories which remind us of the important work that we're doing with our physicians and hospital partners across the world.

Thank you for joining us, we will now open the call to questions.

(Operator Instructions)

Mike Weinstein, JPMorgan.

Thank you, can you hear me okay?

Yes.

Sorry, I'm on a cell phone, so I apologize. Let's start with the peripheral vascular business. When you came public, I think the perception from a lot of people was that a stroke company was a play on the belt of intravascular therapy for ischemic stroke, which is understandable. But your peripheral vascular business is developing incredibly fast. You have had a sales force in place for a little over one year, and your business is growing much faster certainly could be anticipated, Adam.

Can we talk a little bit about that? 50% of your growth, or just about, was from peripheral vascular, which I'm sure a year ago you never would've expected. And can you talk a little bit about the developmental business, how it has been able to grow as quickly as it has? And then I'd like to spend a little bit more time on Indigo.

Let's start by talking about both the embolization business and then a little bit about Indigo, specifically, this quarter. With our embolization business, we have a very differentiated product, and the response has been really quite great over the last year plus. And we've seen fairly consistent growth.

Related to the particular growth this quarter, a significant chunk came from the introduction of our larger sizes and the venous indication for Indigo. There was a nuance that both Sri and I touched on, and that was the way that the sales cycle happened this quarter. Since Indigo was already in a number of centers, the additional sizing that we added happened a little faster than the typical time frame. And going forward, we're going to resort to the more typical value analysis committee time frame of three to nine months. We got the benefit of that this quarter.

As it relates to the product itself, we are in the earliest stages of the success of this product. To remind you, we are looking at a real paradigm shift in clot management in the peripheral. We are going from an area where many people think about lysis and multiple day lysis of clot to a much more immediate acute setting in which they can take out the clot and do it successfully most of the time.

There's going to be a long process for us to work with physicians, to learn successes, to learn new access techniques, to learn things that work as we roll out this product. We expect it will take time to do that, but there is no question that the early response is very heartening.

Out of the feedback you're getting on Indigo, is it that you are replacing or displacing some of the existing thrombectomy systems in the marketplace? Do you think you have a better approach, better device? Or do you actually think that you are expanding in that market that's really on -- and taking share from lysis?

I think there are -- certainly, we're three months into this launch, so it is a little early to make any definitive statements. We certainly anecdotally have heard about a number of cases in which traditional devices were used and not successful, and we came in and were successful. And that's obviously exciting, but it's anecdotal and too early to bring any real data to bear on that.

We are also primarily focused on the larger area of that market, which is using lysis. And as I alluded to, called it a paradigm shift, I thinks that's where the real work happens. Like we all know, you don't embark on a real shift, a paradigm shift and expect it to be that quick. It's going to take us time.

Also within peripheral thrombectomy, it is not as contained as stroke. Stroke is one very specific disease. Here we're talking about removing clot on both the arterial and the venous side and in different places.

So DVT is very different than pulmonary embolism, which is very different than clot in the arteries below the knee for example. Each one is going to require a specific process. To answer your question, I think we are expanding the market beyond the traditional competitive devices.

Okay, a few more questions on my end, and I will let somebody jump in. First, Adam, you referenced some of the things that hospitals have been [reached] to set protocols in place to manage for patients and start to use in the vascular therapy. Can you talk about what hospitals are doing and the pace at which that's occurring?

And then second, and Sri can jump in as well, you were not planning to be profitable this quarter, but your business is obviously doing a lot better than you're expecting, obviously, this quarter. If you could just talk about how you want us to think about the balance of investment versus early profitability?

I will start with the question around stroke systems care. There are really several areas. The first, before you even get to the hospital level, we have to get to what happens when you have a stroke.

First you have to know that you are having a stroke or know someone, have someone around you know it is a stroke as opposed to feel like you're not feeling that well and go lie down. That's the first hurdle that requires more and more awareness.

The second big hurdle comes from when you have a stroke and you call the ambulance, does the ambulance, the EMS provider know how to diagnose it? What tools do they currently have?

There is no perfect tool to diagnose that you've had a large vessel occlusion. There are some early discussions around certain hospitals getting ambulances that have a mobile CT unit in it. That's obviously an amazing change and benefit, but also expensive, and is obviously not going to be available across the country or across the world in the short term.

What other tools are available to diagnose first that you've had a stroke and second that it is a large vessel occlusion and you can get to the right hospital? Those are going to take time, they are all done on a local level. There is nothing national about that process. Town by town, county by county have to deal with those issues.

Once you get to the hospital, some hospitals have done really world-class work already, and part of what we've seen this year in growth is the ability to streamline the protocols. So you hit the hospital door, you bypass the ER, you go straight to the angio suite and you get treated in a short period of time.

Other hospitals are starting the process of talking about how to do that, how to properly staff it, how to train people so that you can have that kind of time when you get to the hospitals. Nothing about this growth is going to be linear, it's going to come in fits and starts as centers and towns and communities tackle this question over the next number of years.

On the question around our profitability, I will turn back to Sri to address that initially.

Mike, two things.

This obviously was a nice top line quarter, and two unique factors, we talked about the neuro market continuing for a third full quarter post MR CLEAN, and as you alluded to, the peripheral launch accounting for half our growth. So we'd say the top line obviously was very favorable, and it goes back to our model that when we see revenue growth like this, it drops to our bottom line.

This was -- we'd characterize as some unique factors in this particular period that led to that. But we are thinking about other initiatives around our operating lines, SG&A and R&D. I don't think anything has necessarily changed, but in pursuing that growth, we're going to continue to make the investments, the timing of that will happen. But it's our view that as we go forward, the revenue growth will outpace the OpEx growth, so we will have leverage that's created.

As a final comment to Sri's answer, we have a lot that we want to accomplish in development and work around our existing products and new products. Nothing should be read into this that we are not very focused on continuing to grow the business the way we've always grown it.

The way we manage projects are not based on a percent of sales. We manage based on project-based management, and the timing around that varies a little.

Understood, thank you. Congratulations on the quarter.

(Operator Instructions)

Bob Hoskins, Bank of America.

Terrific, can you hear me okay?

Yes.

Great. Good afternoon and congratulations on a great start. This performance looks nothing like I think any of us modeled up and down the income statement.

I too wanted to start with peripheral, because obviously your revenues were about 2 times what we modeled, at that $14 million. So I just wanted to get a sense for how clean a number that really is. Is the jump from Q2 to Q3, is that mostly just procedure-based? Were there a lot of boxes placed in the quarter?

Just want to get a sense for how clean it is, and I fully recognize what you said about why it was a little better than you expected. But I also want to make sure that $14 million is the new base, we're not going to go backwards from here and then up again. Just a couple comments on peripheral.

You touched on a really important point about what is the right base Bob, and two things I think we talked about on this call. One, we launched these larger sizes on July 1, the first day of the quarter, and there was initial demand that was ready and waiting for that product. And two, as Adam also alluded to, going into the customer base that we focused on first, that process happened a lot faster.

So we got out of the gate a lot faster, and I think our view on how this progresses over time now that we are going to new folks, there is going to be a process of building that effort. So the base that we are starting from isn't necessarily the base that we are all looking at this quarter.

And as we look at the longer-term opportunity, we still feel very good about that and very good about the growth prospects. Nothing's changed in how we view, how we proceed from a growth perspective on that. But just a two important points to answer your question, and I will let Adam jump in too.

The way I would pinpoint that is, what Sri said is absolutely accurate. There is some nuance to the selling process into new hospitals with these initial orders that makes us a little bit unique.

But that being said, what we had hoped for this product and the success we are seeing, really the paradigm shift across all the sub areas that we are working on as I've laid out with DVT, PE on the arterial side really gives us a lot of optimism about the long-term success of this product family.

What we set out to do is working. But as I stressed earlier, there's a lot of work to do. You can't have a paradigm shift in treatment and have it just happen out of the box. There's a lot of work to be done in terms of training, education, case support, all those things to make sure you continue to do well. And that hard work is really going to start moving forward.

Can you remind me -- in the quarter where are the bulk of the cases happening? What types of --

In terms of the location? They are really varied, the diseases. They're very varied.

What is interesting about it, and I will let Daniel Davis speak to it in a second, is every physician had a different mindset around what this product would be used for. And as they have success, they may expand that. But Daniel can give a little more detail on that.

This is Daniel Davis. Bob, it's a great question.

So really as we've gone out to customers here, customers had a certain perspective in mind, often where they saw this technology fitting. And as they've had success, they've actually expanded the disease states that they may address. For instance, if they were using CAT3 and CAT5 on their arterial side below the knee, they saw these larger sizes as an opportunity to address PE. And with success, they've then, in some cases, started to move into some of these other disease states. So we see that as a factor that could benefit us long-term.

Other physicians haven't seen an options for patients beyond lysis, so we've had other cases where a physician has exhausted all possibilities with multiple days of lysis, tried other mechanical devices without success and then found the Indigo System and brought it into the hospital on an emergent basis and have been able to successfully revascularize patients. So we're really seeing it there in both places.

Lastly, you mentioned a couple times, as you mentioned before, as we work through the infrastructure issues, you expect the stroke growth rate to moderate. But obviously we're working off a materially higher base than we assumed just a little bit ago.

I think most of the street has been modeling 20% to low-20% growth off of the old base. Off of the new base, do you still think low-20% is a decent place to start in terms of thinking about the go-forward growth rate here? I'm not really talking about Q4, I'm mostly talking about 2016.

I don't think much has changed, Bob. I think there's a couple points I will make. We have been saying for a while about this market growth post MR CLEAN, and we experienced one more positive quarter of it. But as we continue to say and feel that that will normalize as we go through.

And two, I think it's important for all of us to understand that the comps will look different starting next quarter in Q4. Next quarter will be the first quarter that will include a comp with MR CLEAN, so you will start to see those numbers that I think you are alluding to. And that's an important consideration as we think about optically what that growth rate looks like this quarter versus next quarter and beyond.

But still relatively comfortable with the low-20%s in terms of the go-forward growth outlook?

I don't think anything has changed from our perspective on that.

Terrific, thanks.

Larry Biegelsen, Wells Fargo.

Good afternoon, thanks for taking the questions. I will echo my congratulations on a strong start.

Back to Bob's question on 2016 maybe more broadly, Adam, if you could talk about some headwinds or tailwinds for us to consider next year across neurovascular, peripheral and new product launches. I wasn't sure if Bob was asking about growth overall for Penumbra or for the ischemic stroke market or your growth, that low-20%.

I think consensus says your growth at about 25% before this call in 2016. If you could comment on that or clarify what you are speaking to regarding the growth rates to Bob's question, thanks.

Maybe I will touch on the second question first and Adam will touch on your first one. We're not talking about guidance on this call obviously, and as it relates to color, I think one thing we can say pretty clearly is, as it relates to the fundamentals, nothing has changed in how we see the overall opportunity or our path forwards in terms of growth.

We did in this quarter -- again I will just reiterate, see the benefit of a couple of things in each market in neuro and in peripheral. But as we look forward and as it relates to the growth rates we should take away from this, our view hasn't changed in how we think about that or our overall opportunity.

Larry, to address the larger question of headwinds and tailwinds, again, I will start with peripheral and look back at neuro. We are off to a great start, we have a product that we are very excited about, and we've seen some really amazing success stories. I mean really profound stories that have impacted and changed the clinical outcome for a lot of patients.

But when you do what we are trying to do, which is change a decades-long practice in treating clot management both on the arterial and the venous side, there's obviously going to be some real work ahead of us that takes time, that takes effort, that takes a good clinical case support. We just have to do that work.

We have a decade of practice doing that, and we have an amazing team of both direct sales reps, as well as clinical support in the field that can help do that. So we feel very comfortable about that work. But it's real work ahead of us.

Flipping to stroke, in our neuro business, we've been in that field for a long time. So we understand the process. We're going to have -- and we've talked a lot about during the road show competition and what does that look like and pushing ourselves to continue to make better and better products that can do this. We are very comfortable about our role in innovating stroke projects, and we feel that we will continue to offer things going forward.

There's real work ahead of us, and the infrastructure stuff is critical. Without it, this field will not grow. And we have some ability to impact that, as do some of the other device companies, but we don't control that in the same way. So that requires some patience, and whatever support we can add, but it does require a little bit of patience as we watch that.

And again, it's not going to be linear. There are going to be times when we see some real growth in that world happening from those centers and those regions doing work and then times where that's not going to be as obvious. So that's how I think the next year or so unfolds.

Thanks, and then on your neuro embolization sales have been flat to down in 2015. How should we think about the business outlook with the SMART COIL being launched? Can you reaccelerate growth there?

And just lastly for me Adam, can you talk about your strategy in peripheral, just your broad strategy there? Are there any gaps in the product portfolio that you'd like to fill, and do you expect to do that organically or inorganically? Thanks for taking the questions.

Thank you, good questions. Our neural coil, there are a couple of reasons, and we were pretty clear around this during our IPO road show. We obviously have put an immense focus on our sales team, as well as the corporate level around stroke this year.

Really this is one of those rare moments in medicine where we're going to have this opportunity, so we put a huge focus on that. And without a doubt, that focus has had some impact on our neural coil business, and we did that very purposefully.

In addition, we are getting ready for the SMART COIL. We've done all of our valuation work. And we are, as I said during my prepared remarks, getting ready to really launch that product at the beginning of 2016.

We are very optimistic about that. We think it will have an impact, but it's a competitive field, it takes time to penetrate and get on the shelf in various hospitals. So it won't have this major hockey stick effect, but will be a very impactful part of our business over the next several years.

Related to strategy in peripheral, if you look at the past, that may be the best guide to our future. We have always looked at the areas that we are currently in and continue to iterate. Stroke is a good example, we're going to do the same with our existing portfolio in peripheral and continue to expand the offerings in both embolization as well as thrombectomy.

But we will always look beyond that and see if we can do important work around impactful products. That is the thing that we're going to look for. As we've gotten more into peripheral and started to understand many of the various diseases, there is certainly work that we can do to add to our peripheral business over the years.

There is an interesting fact, and that is our business with a dedicated sales force is somewhat complementary. Obviously if we're in cases where we are working and training and working on the thrombectomy side, that is an opportunity to work with the same physician on the embolization side, as well. So I think we will continue to see additional success there. Again, takes some time.

Thanks for taking the questions.

Jason Mills, Canaccord Genuity.

Thank you. Good afternoon, folks and congratulations on a great quarter. Can you hear me okay?

I want to start with stroke. Adam, with MR CLEAN you mentioned you are three quarters in, but you are less than at this point two quarters away from the other impactful trials. [extend ais with prime, etc.] I'm wondering anecdotally what you think of what you're hearing from clinicians in terms of how impactful those other studies are that maybe did not get as much publicity as MR CLEAN did, but yet showed similar outcomes, positive, for endovascular therapy and what that means specific to the US stroke market, given that most of those were US-based trials.

And then also sticking on stroke for a second, I'm wondering what you saw US versus Europe stroke progress this quarter. In the road show, you talked about the European stroke model actually being a little bit more mature and you could see actually the penetration of the stroke opportunity a little faster in Europe.

Did you see that this quarter or did you see more growth in the US? And I have a few follow-ups. Thanks Adam.

Let me start by commenting on the first part of your question. The other trials were critical in that they were confirmatory of the results of the MR CLEAN study.

Without that, we may not have felt the momentum going into doing this. So that was critical. They were published in the New England Journal of Medicine and very important to get the momentum coming out around this.

We are now in a phase where the folks who do this, the physicians who treat these patients are bought in. I just came back yesterday from the World Federation of Interventional and Therapeutic Neuroradiology, one of the larger meetings that deals with neural interventional in the world. It was held in Australia this year. And the whole conversation was around the fact that we are now, have accepted that this group of patients should be treated and now how do we embark on making sure that is actually done and done the right way.

Within the community, it is well regarded. When you go beyond that, there are folks whether at the EMS level or emergency department level that don't know yet, they have not yet been brought into the mix in some situations. In some places, very sophisticated, and others aren't. So it will just take time to go forward, but the other trials were important as a confirmatory.

Regarding Europe versus the US, it is hard to talk about Europe as a whole just like it is hard to talk about the US. There are places within Europe, countries within Europe that are much more advanced than other countries in terms of their ability to address and pivot to treat stroke. And that is not fundamentally changed in the last number of months. Again, some coming into these trials that have already done a pretty good job of treating more patients than other places, but the difference between the two has not fundamentally changed.

Thanks for that. There have been a couple of questions around your expectations moving forward. You have seemingly tried to help with the models, but do you expect not the same level of growth rates as you saw this quarter, and you talked about the right base moving forward.

So when we think about the fourth quarter, understanding that the growth rate percentage rate may not be what we saw on this terrific third quarter, but I'm wondering, given the juxtaposition of some very positive things falling your way in Q3 that may not recur offset by seasonally fourth quarter in your business is typically stronger, should we use the third quarter as a starting point, or should we expect to see revenues a little lower in the fourth quarter? I would hate to get it directionally wrong in the second quarter out of the box. And maybe if you don't want to give actual guidance, just puts and takes help refine how we're thinking about it.

It is the right question Jason, and I think everyone is trying to parse through it. Obviously it's a great quarter for us, and we talked about great fundamentals, but there are a lot of unique factors. From our perspective, it would not necessarily be appropriate to use it as the base.

It's a 55% as reported, 60% constant currency year over year, or 19% sequential, we haven't seen a quarter like that. There are some unique attributes that have lead to that, and it encourages us that we got there quickly on it.

But as we move forward and we're focused on developing these opportunities the right way over time, it is not necessarily going to be the new base at least for the next few quarters. And that is an important consideration for everyone.

But it does encourage us in clearly illustrating how attractive those opportunities are. So we are very excited about that, but I think you're onto the right note in parsing through these items that we discussed. It's not necessarily the new base.

I just want to add, we talked a lot about this on the road show. We are really looking at building this for the long haul. And when you have products, particularly the best example now is our peripheral product as well as SMART COIL launch, which are new products for us, you want to do it the right way.

You want to lay the groundwork, you want to have case support and clinical support around it because the possibilities are too important and the impact that we can have is too great. So we are not rushing, we're doing it the right way, and I think our success so far clinically has proven that strategy to be the right one.

Terrific quarter, thanks. I will get back in queue.

There are no further questions at this time. Mrs. Thompson, I turn the call back over to you.

And with that, on behalf of our management, thank you again for joining us today and for your interest in Penumbra. We look forward to updating you on our fourth-quarter call.

This concludes today's conference call. You may now disconnect.