Well, good afternoon, everybody. Thanks for joining us. Very pleased to have with us Anteris Technologies, Wayne Paterson, CEO and founder, and there's a number of other roles and adjectives that I put behind that. Advocates, you know, of what's become, you know, the one of the promising TAVR valve programs in structural heart. I wanted to start with maybe some of the recent events around financing, strategic interest, and sort of like clinical interest in the product. I just came from CRT, where you hosted, or the team hosted a packed session with many of the, you know, KOLs from the specialty around structural heart and TAVR, and that level of engagement, that's not the first.
I think there was a really strong session at New York Valves last year, and increasing interest, but it seems like it's sort of firing on all cylinders. Maybe, what's the pull? What's the interest? What's the hope that clinicians are attaching to DurAVR as a fourth but potentially really strong additional contributor to TAVR?
Yeah. Thanks, Matt. Shocking as it may sound, the interest in the product, of course, is not recent, and it's the result of a plan. That plan has been basically looking at an established space with a very different lens, in terms of aortic stenosis and taking a more total disease management approach, which started eight years ago. You have to build data and evidence and science to get to the point where we are today, where there is all this interest. Total disease management really looks at a disease beyond the product. It's a very pharma-centric view, an industry I came from.
Whereas I think the industry we're in with med tech, and particularly the TAVR space, is a very engineering-focused view on the product. We looked at the opportunities in the space. It's a $10 billion space, but only represents about a 15% patient penetration after a decade. That's not outstanding penetration, and that's, I think, because the disease is not necessarily being addressed by the conventional products for a bunch of reasons that you know, Matt. Where we are at the moment is the culmination of all of that thoughtful planning, physician input, and a deep understanding of the clinical situation of what is a fatal disease where there is no pharmacotherapy.
That started us looking at things like left ventricular remodeling and laminar flow that are both linked to outcomes and mortality, but not really being proven or shown in conventional products. After many years, we've of course studied these things and shown them both in our product and relative to others. It puts the product in a position in this market where it's not only a later entry, it's addressing very different things to the existing products. Also, it's the first radical redesign of this particular valve type in 20 years. It only addresses these issues because we changed the valve design to what's currently available, then got that up on the podium.
We realize that if you're going to win at the point where you launch a product, you have to do it many years before FDA approval, and you have to have clinical data that supports your claims that is relevant to patients that move the ball forward and relevant to physicians. That then leads to all of that physician excitement that you talked about at CRT. We're showing things on the podium that hasn't been shown with these products before but is also highly relevant to outcomes for physicians and for patients. That then leads to, of course, strategic interest of which has been around us for many, many years now, three, four years.
Yep. No, that's understandable. I guess, even Dr. Reardon, I think in that session said something like, you know, when we sat around the table however many years ago.
Eight, nine.
Nine years ago and designed this from the ground up, and then he went on to say a bunch of things about it. That process I don't think was something that was attempted by any other manufacturer. Things like repositioning, things like self-expanding, things like you know other elements, design elements that thought maybe were gonna be important or competitive or had you know important elements of I don't know , clinician adoption, taking down the barriers, the technical barriers to getting a case done, those have all seemed to be kind of like been dismissed over time.
Just to address that, Dr. Reardon's one of the most important physicians in the world in this space, but we did have a blank piece of paper. That gives you benefits of hindsight. We did invite physicians to the table eight, nine years ago who had already a lot of experience and said, "Where's the gap?" basically. Those things come from a delivery system you mentioned was one of them. The doctors were very clear it has to be this. But we also took a very, very much a clinical science approach in a space that didn't in what was really an engineering approach, and we both know that.
As you progress, you're either gonna hit those hurdles that are set for you or you're not, and they're gating items as to whether you move forward. Being at the point where you're clinically superior, easier to use is not a random event. It's a function of if you don't get there, you don't exist because you're not gonna compete against what's available in the markets at the moment. You can only get there if you set those gating items, then get over them and prove the next point. If you don't, there's no product to bring forward because it's not clinically better than what they're currently using.
Got it. I guess there's been learnings. You know, somewhat, you know, your clinician team knew this nine years ago that the platform really should be balloon expanding, but there's been a series of data releases and long-term results that have kind of driven that point home, you know, right up to the point of an investment from Medtronic. That's certainly gone your way. One thing that is probably, you know, less obvious and has, I think I'm sure you believe has a great deal of promise, however, is the tissue platform, which was kind of at the core of where you started.
Ironically, it's sort of like the last benefit we're all likely to see because it's gonna take the longest to prove that out. Maybe talk a little bit about, you know, how it's different, why it's different, when you expect to have started to see some of the differences in other tissue products.
Well, I mean, yeah, I mean, we started with the tissue platform. It is the barrier to entry. It took 20 years to develop that, and it's what started me on the journey towards TAVR and not surgical repair, which is a very small space. The science we understood because we have 55,000 patients that have this material. It's also acellular versus decellularized. The remnant DNA is not there. We knew this 10 years ago, and that's what we presented to the physicians before we moved to the next step. Where I see a huge gap, which is stunning to me, is that Anteris has more tissue science and data than any company out there, and proven.
We have published data over 10 years showing no calcification in highly calcific populations with tens of thousands of patients. We take Ultra RESILIA because tissue has become a discussion again. Ultra RESILIA has less than two years of data, and what we're hearing just this week at CRT from a presentation by a very preeminent authority scientist in this space, Stephanie Sellers, I think you know her, that stuff is calcifying out there. There is no evidence beyond a year or two, and in the clinic, it's not awesome. We're very comfortable with the amount of tissue science that we have. The numbers and the longevity is stronger than anybody's.
We have also studied the prior tissue in SAPIEN and certainly in Evolut in structured studies, statistically controlled and powered, and absolutely demolished them in terms of calcification. The science is compelling, but it is a space that kind of lacks a lot of clinical science, as we both know. When you start to have the science, you'll find that there's huge gaps in some of the clinical claims that are being made out there that is not substantiated or supported by good structured clinical studies. That tissue then led us to create the first biomimetic valve in the world, single piece, 3D-molded.
Apart from the anti-calcific properties, the cross-linking that comes with these tissues, and these are all learnings for me, I come from a different space, allows us to mold this into a 3D shape, which conventionally you're not able to do with other tissues. The other point that we're seeing that's super interesting right now is that we're seeing signals around porcine tissue that are not necessarily giving us confidence to the future, meaning the doctors and the scientists. Porcine tissue, as we saw with the Evolut six-year data, beyond the design of the valve, has been implicated as one of the problems is the tissue.
Now, porcine tissue was used back in the day because it's thinner and, you know, we often say this is not your father's TAVR, but if you go back to your father's TAVR, it was about getting your French size down by decreasing the material. There is another product out there called the Siegel Valve, also porcine tissue. So I expect that to translate to those products. On the back of that, we see the Ultra RESILIA 3 valve is a thinner bovine material. In fact, Stephanie Sellers just presented this, that it has a lot of fluttering because of that thinness, which is what we see with the porcine valves.
There's a lot of signals now that we are seeing longevity on these patients where previously they frankly died three to four years post-procedure, the high-risk patients that you know well, and the data wasn't seen and it wasn't available, it wasn't studied. There's a lot of data now that implicates a whole bunch of different things around how these valves work from a mortality perspective, from a durability perspective. Tissue is but one of them.
To be fair, if I can, to some of the other players, it's the combination of the tissue and the patient or the size and the application and the deployment. You know, some valves, it seems, just do better in different size patients, and some valves, you know, do better in different size configurations of their products. That's another kind of, you know, another sort of dimension of learning that's starting to come out of this. It's a space that you would think is gotta be mature by now and we have to have this figured out. It seems very much. It's still a learning, growing space. Which, you know, brings me to the question about the market.
I think when you first started talking about DurAVR, at least the questions I would get, I don't know if you would get the questions, is like, why? Like, what, you know, it's slowing, it's maturing, Edwards kind of has the lock on this market, and Medtronic's right there, Abbott's coming. What's the value add? You've talked about some of the reasons why, but maybe talk about your expectations for how, you know, when you reach commercial in the U.S., you know, how you anticipate landing in that market and, you know, where you see the opportunity is. Obviously, it's in gaining share in a very, very large market, even though it might be growing in the mid- to high-single digits at the moment.
Yeah. Yeah, it's the right question. We don't anticipate anything. We plan it and execute it. I think that's the critical way to look at this. If you were to look at your, go back to B school and look at your BCG matrix, Edwards had most definitely placed their SAPIEN compound or product into cash cow and had most certainly educated the markets that this was mature. That premise is fundamentally flawed when you've only got 15% patient penetration in a fatal disease. Therefore, 85% of patients are unserved, which seems to go against the whole reason for being as a healthcare company, right? Your objective is to treat patients.
The analysts went with that for many, many years and believed that the market was mature because they used to tell me that. Yet I was looking at another $40 billion of untapped patient potential out there, and I didn't understand it, just looking at incidence prevalence of the disease state. I started to understand why those patients weren't being treated and a whole bunch of things that came in the background and the shortcomings of the products in those patients. When we talk about what's the expectation to launch, first is understanding the opportunity. If I was to put this on, look at Porter's five forces, put this onto a BCG matrix, it's a rising star.
It's not a cash cow. And depending on your portfolio and your product, the science that's evolving might even put your product into the dog quadrant, right? Just depends on where you are. There's many ways to look at this space, and that's a good way to look at it is just which quadrant is your product falling into and why. We look at it that way. The other thing to know is when you launch a healthcare product, of which you know I've done many times on the pharma side, you launch five years before FDA approval, not after FDA approval. If you're trying to launch after the FDA approval, you already lost market.
Five years out, you know how to penetrate, therefore your anticipation becomes more of a plan and more of an execution. The centers that control TAVR in the U.S. for that, you know, billions of dollars, really amounts to the number of 70 or 80 key centers. Many of them were working with us from day one on the development of this product, so they are well known to us. I mean the very big centers. They're in our clinical trial, which is underway right now. We also understand the clinical value of why you would use DurAVR. Ease of use, critical, right? We've obviously covered that when we developed it.
Clinically better, clinically superior. The value adds is not only for this physician on the delivery side, but also the patient and patient outcomes, which we've been proving on the podium for three years now. The laminar flow, the LV remodeling, the things that lead to mortality in this disease, where the existing products have not addressed them because they are, frankly, a very different design to the product that we brought forward.
Okay. Yeah, I think a lot in there, and you've talked, we've talked before about the Porter's five forces and the sort of you know, basic kind of simple B school approach that you've taken to figuring this out and other launches and products and portfolios in the other companies you've been involved with. I mean, obviously, one person's rising star might be another person's dog if they're in trouble from a share perspective. You know, what are some of the. Not that you're gonna face these challenges because I think my view is when you reach the market, there's going to be interest in adopting the valve at least to start in some specific cases and then opportunities to go wider.
Those cases might be, you know, we don't wanna use Edwards in this very small annulus, for example, but the hemodynamics and results are really promising for this balloon-expandable valve. We'd rather use that than a self-expanding valve. That's a great sort of beachhead and foothold. What do you think, you know, from your work so far on the market, you know, why is this growing slower than you would think given the low penetration of the market? Can't be education.
People kinda know about this product. You know, maybe it's referrals. I mean, what would you—if you had a large marketing budget of an established player and you were saying, "This is what we need to move this lever into third gear or fourth gear," what are some of those things?
I have been in that position with big drug launches, you know, $5 billion-$6 billion in revs per year per drug, where you come into a market that is either not understood, diagnosis might be an issue. I think all of these things come into play. The difference is on that side, at five years pre-launch, you're spending a lot of money to educate the market, understand the bottlenecks, and clear them, right? My brother-in-law is an interventional cardiologist, so I have a good insight to what happens in the hospital setting. I do think that this procedure, there's obviously some nuances between the cardiac teams, the surgeons, and the interventional cardiologists that create some rate-limiting factor.
I think also the diagnosis, in many cases, this is an asymptomatic disease, so whether it's at the family physician level or even the cardiologist, not the interventionalist, you don't always get that patient brought forward. There are, I think, multiple factors as to where the bottlenecks exist. So, like, there's procedural volume issues between doing your tricuspids and your aortic stenosis patients. Many of these things exist from a procedural structural perspective. All of that said, I think also the products were not necessarily moving the needle forward on those patients. The incentive to get treated earlier was not necessarily there, and of course, treated later very, very important.
Surgical, you know, surgical valves are only just starting to decrease now, and they may even come back with what we've seen in recent data. What I do think, firstly, companies strategically five years out should understand these issues and should and where I, you know, I talked about my launches, you solve for those issues in spaces where you've never seen products used before. If you haven't, then you're gonna run against all these structural things once you're rolling. This is the difference when you launch after an FDA approval. You haven't worked out those issues, and suddenly you're in a market and here you are.
I do see that changing. I do see help from the companies, which is their job to help clear the structures, whether it's, you know, education, whether it's financial support for studies, nursing staff, and so on. The procedures and guidelines are also starting to change, and we're seeing debate about whether this even becomes an ambulatory care procedure, which, you know, you can do a TAVR in 25 minutes these days in conscious sedation with the right product, right?
Yeah.
I think there's a lot of things changing here. I do think it is a fatal disease. There's no pharmacotherapy to treat it. We are getting a better awareness. We have technologies now like 2D MRI, 4D MRI, that also helps with a lot of these things. It will get bigger and bigger. Whether the current companies in the market are able to capitalize on that is unknown to me, but their products certainly are not fit for purpose for these younger patients. That's clear from a science point of view. That's been established. I think the question is, if you're gonna grow the pie, what product are you gonna use in the low risks, early TAVRs, asymptomatics? Probably not the existing products.
Yep. No, that's still a lively debate, I think, and some questions around, you know, what patients want versus maybe what is the best for a younger patient. You know, reimbursement's another. I mean, reimbursement has come down as length of stay has come down. This year, for the first time in TAVR, it'll be ticking up.
Yep
Which is a positive. That's. I don't think that's uncommon for a procedure that used to be a three-day length of stay and then went to two and went to one. The basket for that device came, you know, down and that. It's hard to quantify, but that certainly was a drag to the extent that more hospitals are making money doing TAVR than breaking even. It's gotta be a positive, and I don't see a reason for it to go down again now. I don't know if you see a reason for it to go down again now.
Well, not at all. My first degree is economics and I grew up in the era of health economic modeling for pharmaceutical reimbursement. That's really important because you use cost-utility analysis, cost-benefit analysis formula to the payers, whether it's in the U.S. or Europe or the social healthcare markets where they cover the cost of drug. In terms of cost to society, benefit to society, qualities, all the things you use in those models I haven't seen on the med tech side, but that's how you justify pricing. You see pharma pricing doing this, I'm not justifying that, and med tech pricing doing that because there's not a lot of health tech modeling, and you can clearly see that in TAVR.
There shouldn't be because longevity is not there. All of that said, we've taken a health tech approach, you know, with Europe. We will be looking to show the clinical benefit relative to the competitors to justify a premium price which we believe we should have. If it's proven that DurAVR, for example, extends your mortality curve by five years, that's worth a premium.
Sure.
If you get off the table better and your exercise tolerance is better, that's worth a premium. It's all about justifying, which the other two haven't been able to do and probably haven't thought to do it. They certainly can't justify a premium one over the other, and then the pricing they were getting was pretty decent. We're not about to look at this as a price penetration model. If you bring real science to the table as on the pharma side, it's justifiably worth a price premium. You've got to justify that to the payers and to the regulators, which we intend to do with science.
Sure. Yeah. Oftentimes, at least in the U.S., work within the construct that's put before you.
Right
At least in the near term. One of the things with the time that we have, you know, there's probably more than we have time to talk about, but one is, you know, I'll just say the risk of the execution of the company. I think it diminished significantly with the $ 300 million raise you accomplished in earlier this year. I think that's a plus for clinicians. That's a plus for investors. That's just an easier way to think about the structure. It's an easier way to run the company without that sort of overhang, if you will, which is great.
I mean, the one thing that's a near-term recent benefit, but long-term in this space, talking about market development and thinking kind of bigger picture with more vision is there's a lot of. There's the beginnings of this recognition that many of the patients that we're treating for tricuspid, for mitral, for aortic, you know, for a variety of other things, AFib, et cetera, are really just, you know, migrating towards this thing called heart failure.
Mm-hmm.
You know, multi-valve, multi-device therapy, you know, approaches to treating this very, very large and maybe the most expensive, you know, patient group in the planet. When and how. You've got your eye on the prize at the moment, but when and how do you think you or others in the industry start pivoting to look at this in a bigger way?
I can't speak for the others, but about four years ago, we started approaching the heart teams and heart failure doctors. At CRT this week, we had a whole session with heart failure physicians. Again, you can't be looking in—this stuff has to happen back here. We acknowledge that there is a polytherapeutic approach to heart failure, and it will kill you. It's obviously hits the mortality. We understood this when we started looking at left ventricular remodeling. The number one cause of death for aortic stenosis patients is heart failure. It is a polytherapeutic, multi-team approach. At no point will we isolate the ICDs from the surgeons, from the heart failure physicians.
As I said this week, just at CRT, where you were at, there was a heart failure specific roundtable with physicians. It was very well attended, run by Anteris. People are speaking. We've already joined the dots on that. Our product fits into the puzzle, into the equation, and I think it's very effective at remodeling this disease. We are clearly bringing down that LV, for example, by 30%. That brings it back to the normal range over six months. That's disease modification. You won't see that with others. We've already done the work. Is there more to do? Is there more evolving? Of course, there is.
Yeah.
It's science. It's evolving. We're certainly riding that pony all the way as well.
Okay. You know, interesting pipeline on the back of market entry, sounds like, which will be exciting. Thanks so much for taking the time.
Great. Thanks, Matt. Appreciate it.