Good afternoon, everybody. Thanks so much for joining us. My name is Matt O'Brien. I'm one of the med tech analysts here at Piper Sandler. Very pleased and excited to have CVRx with us. We've got Kevin from the company, who's the CEO, and then Jared, who's the CFO of the company. And the old CEO's sitting in the back there, judging every word that comes out of my mouth. It's a little nerve-racking, but so I don't know, Kevin or Jared, which one this is for, but I know you wanted to be conservative with the guide for Q4. I get it. But it assumes only about $1 million of incremental revenue, compared to an incremental revenue bump versus Q3. This time last year, you did over $2 million sequentially. You've got sales force getting more and more productive, etc.
Why would it only be up $1 million? I mean, what is there something that you're really trying to message, or is it just trying to be conservative?
Yeah, it's a good question, Matt. And thanks for raising it. So I think for those that have followed the story, we talked a lot back in the April, May timeframe about doing a bit of a reset on the business. So we ended up doing a little bit deeper sales force transformation in the first quarter than what was initially anticipated with the annual guidance, coming right out of the gate. As a result of that, we've been growing, I think, sequentially about 8%-10% since that new reset. But it really was setting a new floor for us. So, looking back to 2024, comparing against those examples, we really do have a large portion of the sales force that is new compared to that timeframe.
I don't know that it's easy to compare the ramp that we saw in 2024 to what we're now seeing in 2025. As for the rebuild of the sales organization, I think, you know, just a couple of things to call out is we had, you know, deeper cuts in the first quarter. We backfilled a lot of those folks in the second quarter. We've been watching them move up the productivity curve and are really using that data to define what our guide should be going into Q4. But we are pretty happy with the folks that, you know, we've been able to bring on board. And now it's just a process of getting them trained up, getting them active in their individual territories, and getting their accounts productive.
Got it. And can you talk a little bit about the, you know, the attributes of these different sales reps? I mean, where are they coming from? Are they, like, coming in with a Rolodex full of, you know, relationships?
Yeah, it's a great question. So we are, as Jared said, we're thrilled with the caliber of the talent we've been able to attract. It's a different, different DNA, effectively, than you often find in early-stage startups. It's a necessary move from a very sort of scrappy, early-stage, mercenary, you know, relationship-driven sales team to one that's really focused on the methodical process of driving adoption of a new therapy. And so that's a systematic, disciplined, they call it the grind. It's a very different selling approach, and it's what we need in this chapter of the company. So a lot of our efforts, these were the initial crew, were great people, but as is often the case, they're not the type of skill sets we need in this next chapter. So we've really tried to focus on that.
They're coming from, you know, lots of them from Abbott, from Inari, from J&J, kind of across the spectrum, Relievant.
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Reps that are, in many cases, have cardiovascular backgrounds, but in almost all cases, understand the sort of new therapy introduction process.
Got it.
[crosstalk]
Does that mean, Kevin, that they ramp faster than?
Great question. Yeah. And so we've, and we've talked a little bit about how long it takes them to get productive. And one element of that is where they're coming from. Do they understand cardiovascular medicine? Do they understand heart failure? Another is, are they inheriting a territory that has good accounts that are up and running? Or are they inheriting a territory that needs some trimming or pruning? Or are they inheriting a greenfield piece of dirt? Right? And so it can be anywhere from 6- 12+ months based on the confluence of those two factors.
Got it. Okay. And then how do we think about the, you know, productivity per rep? What kind of metrics can we think about for that group at your ASP, you know, as they ramp maybe in a year or two?
Yep. Yeah. So historically, you know, we've been seeing these active territories producing about $1 million of revenue on an annual basis. Our target for each of these reps coming up to speed is closer to around $1.8 million. And the way that we've built this model is saying we want each of these reps handling about three to five active implanting centers. And within each one of those centers, we want them treating at least one patient a month. So if they're handling five accounts, doing 12 implants a year, it's about 60 revenue units per territory. At an ASP of around $30,000, then we'd see revenue of about $1.8 million. And that's still the basis for our model to reach cash flow break-even as a business, is to get each one of these active territories up to that $1.8 million of revenue per year.
Of existing territories today? You don't have to add.
And continuing to add territories, right? Because we want each one of those active territories today to grow from $1 million to $1.8 million, but then also continuing to add new territories and ramping them up to that $1.8 million target.
Okay. But Jared, just to be clear.
Yeah.
We're on the cash break-even side.
Yeah.
The existing reps you have today, if you got them to 1.8, you could be cash flow break-even.
Yeah. And that, that's the model is we want to continue to add territories.
Okay.
And get those current reps and in total get the average.
Everybody.
Territory up to 1.8.
That gets you a break-even.
Exactly.
Okay. Understood.
Yep.
How do we think about, you know, the rep rebuild here? You know, how is churn kind of trending? And then where are you going to get that group to by the end of this year?
Yeah. So right now we're at a total of 50 active territories. We've been adding about three per quarter. That's the expectation here for the fourth quarter as well, is to get up to 53 active territories. I think, you know, the ones that we are seeing come up and become active are those ones that we hired in the first quarter, now starting to see some level of productivity. As far as the churn or turnover that we had seen earlier in the year, it really did normalize back in Q3. So we saw a little bit deeper turnover or transformation in the first and second quarter. That normalized, we were able to backfill a lot of those reps and see a return to normal turnover rates in the third and fourth quarter here.
Got it. Okay. Excellent. Going forward, should we expect kind of that three reps per, you know, per quarter, in the future? Or how do we think about that?
Yeah. I think as we're looking to 2026 and, you know, some of the early guides or reference to guidance for 2026 that we've given up to this point, it's still based on adding around three territories per quarter.
Okay. Okay. What about the accounts? The thing that is always kind of stuck out to me, and, you know, I don't find companies like you guys do, but, but the one, you know, one system per month per rep, that just seems like, you know, it's like a lot of these places, you know, WATCHMAN's doing like, "I'm doing 10, you know, this day." You know, and so doing one a month just seems like a pretty low number. What do you need to, to get it, you know, you've got the data that shows that this is a better product for these patients. What do you need, you know, for, for clinicians to really adopt aggressively? What's needed there, Kevin?
So yeah, it's a great question. So a couple of different ways to answer that. Maybe I'll start with the last part. So the three after sort of an intensive scrubbing. When I arrived at the company 18 months ago, we spent a fair amount of time understanding the lessons learned in that first chapter, understanding where the key barriers to adoption were, understanding the sort of DNA of the team we needed selling in the field, and one of the things we reconfirmed and have now since twice more validated is the barriers to the adoption of this therapy are threefold. The first is awareness in the clinical community around, number one, that devices should be used to treat a disease that's been treated with medicine for 50 years. That's a big one.
Number two, where those devices fit and where in the treatment continuum should they be considered and who are the patients that could benefit. So that's awareness, number one. Number two is evidence. And we have significant evidence. We've developed significantly more since our pivotal trial and will continue to do so. We've got enough evidence for today's physicians and enough to build a significant business, but we always need more. And different physician groups have different hot buttons, different degrees of conservatism. So as you know, we're investing in a major new RCT or will likely do so. So that's part of an effort to really try to build out the suite of clinical evidence that supports the therapy. So that's a big piece of adoption. And number three, maybe most painfully, and most recently is reimbursement, right?
And so none of this happens unless a physician believes that the patient they prescribed this for can actually get it. So it is continually grinding away on those three barriers. It's not the quality of the therapy. It's not the 94% responder rates. It's not the 97% freedom from complications. It's not the procedure itself. Those are all, thankfully, really simple and clean and acceptable. It's really the fundamentals of awareness, evidence, and can the patient get it?
Yeah.
They have access.
Do you need to partner with a bigger provider to be able to do that, be able to educate? I mean, you're CVRx. You've got a nice balance sheet, but, but I mean, do you need somebody bigger to really, you know, muscle all of this through?
That's a great question. I would say not necessarily. I mean, a lot of the things we are doing, they're exactly what I did at Medtronic and at Abbott, and our colleagues have done it at Boston Scientific. So, you know, yes, a larger sales team would allow us to do it more quickly, but the sorts of things we're doing and the tools we're deploying to address these barriers are the very same. And we're doing them at the same scale, I think, that I would have done back in early in my career and same with our colleagues.
Got it.
So mixed, mixed answer to that.
Yeah. And then, you know, I don't want to bring this up too much, but, you know, the clinical study you guys ran, recently, you know, it didn't show the mortality benefit. Never really going to show the mortality benefit. Does that still come up as a gating factor to adoption?
Short answer is no.
Okay.
No. And so I think obviously we will, in part because of COVID, that was a difficult time to be running a clinical trial, and the changes in the control group, a spontaneous 25% reduction in events in the control group threw the statistics out the window, so we were unable to test that hypothesis. We believe there will be other means of testing that hypothesis, and in March of this past year, we presented a third-party real-world evidence study on the Premier database that showed an 85% reduction in hospitalization, so that's dramatic. That's credible. The payers sat up straight when they heard that, so we think there are ways to effectively get at those mortality and morbidity endpoints that eluded us.
But I would say that rarely comes up today because the physicians we're calling on appreciate the fact that these patients deserve better and that quality of life matters, and they have more than enough data to treat them on that basis.
Can you talk about the Premier database and what you're going to do with that going forward?
Sure. It's one of a number of real-world evidence databases. In this case, it's one of the larger. It covers 1,300 U.S. hospitals, all payers, and so that's an example of a dataset. There were more patients in that dataset than were in our pivotal trial, and there are multiple other similar databases, Cosmos, Truveta, CMS, where you can develop pretty robust datasets and do some pretty sophisticated analyses on how the device is being used in the real world, and from a payer standpoint, that's really valuable data, and to them, that's a more realistic description of their exposure, how the device is being used in the wild than in a somewhat artificial clinical trial environment, so we're excited about that. There's more to come.
But we think, obviously there's a potential new RCT for indication expansion on the table, but we've got lots of evidence we can generate in the near term to fill some of those gaps.
Got it. Okay. So maybe let's talk a little bit about the RCT. There's a lot of discussion on the call about that. Maybe just walk us through number of patients, you know, design, timing, things like that.
Yeah. Great question. We have, as we've stated, there were two steps in the process. The first was agreeing with FDA on a study design, on a protocol. The second was gaining CMS Category B designation, so getting it paid for. I'm pleased to say we did agree with FDA on a trial design that's now been posted to ClinicalTrials.gov. We have submitted now for step two to CMS to secure Category B designation. The timelines are a little bit wonky because of the shutdown, but we think early in Q1 we'll have a readout from CMS. If it's positive, we will proceed with the trial.
Okay.
So the trial, as described on ClinicalTrials.gov, is 2,500 randomized patients, randomized two to one between device plus GDMT against GDMT alone, drug therapy. So it will be almost twice as big as the largest heart failure device trial ever done. So this is a significant investment. It's a significant leadership, contribution to the field. It will be, I think, something that every heart failure physician will want to be part of. We're starting to feel a little bit of that already, even as we've not yet agreed to do the trial. So we're excited about it. The primary endpoint will be a composite of mortality and morbidity. We think it'll take four to six years to enroll and follow up, and we know that it will triple our TAM.
So this is really, as we've looked across the spectrum, our new Chief Medical Officer spent a fair amount of time looking at all the different ways we could expand the indication or the application of this therapy, across disease states and populations. And we kept coming back to the idea that our physicians tell us about regularly, and they say, "Look, this 35 EF cutoff is artificial. I have patients who are at 40 or 45 who I think could benefit. You need to help me get them on label and covered." Similarly, they say this NT-p ro, this cutoff we have of this blood marker; it's somewhat artificial, but they say, "I have lots of patients that are just north of 1,600. Why can't I treat them?" And as far north of that as 5,000, you need to look at those patients.
If they're adjacent, they have the same disease, they're being seen in the same clinics by the same people. Today they're being passed, right? So it was obvious for us that that was the right place for our second chapter. And obviously it has a significant impact on our TAM.
Okay.
And maybe just to touch on, you know, the size of the trial and the potential cost of something like this, right? 2,500 patients sounds like a very large investment from a cash perspective as well. I think as Kevin mentioned, the fact that we are submitting this for Category B coverage from CMS would allow us to continue to sell the devices for this trial, any patient randomized to device, to the hospitals. They would continue to get reimbursement from Medicare for those procedures, helping us to offset the cost of running this trial. So the overall estimate for the cost would be in the range of $20 million-$30 million, and it would be spread over that five to seven years that it would take to run this trial.
I think most of us that have been through this process before know that the vast majority of the enrollment in these types of trials happen towards the end of the trial. We believe a good chunk of that cash burn, that $20 million-$30 million net out, would actually come towards the back quarter or half of the clinical trial.
Got it.
Okay.
Okay. So are we thinking like five years to enroll? Is that the expectation?
Kind of in that range of four-to-five years to enroll.
To enroll.
Exactly.
Then the follow-up is.
Two years.
Two years. Okay.
Yep.
Okay. I'm just. I worry a little bit. I know it's a good. You're giving yourselves a lot of wiggle room to enroll, but like I'm just thinking about the control arm. Who's going to want to enroll in that with heart failure? I would be like, "Yeah, it's okay. I don't want to, you know, I'd prefer to be in the actual.
Yeah, and you point out one of the challenges. I mean, this is a very morbid condition, and the mortality rates are higher than the top five cancers, so that's always a challenge. Unfortunately, the heart failure community is anchored on a two-year follow-up period.
Right.
So one-year follow-up will not get us what we need, long-term to convince clinicians or guideline writers for that matter. So we're sort of stuck, which is one of the reasons the trial is 2,500 patients.
Right.
It's, it's a significant investment, but it's what we think we need to do.
Yeah. And I think, I mean, we've run trials in the past, right? And one of the biggest benefits to patients to participate in these clinical trials is it's some of the best care they'll ever receive. In this type of environment, they're going to see so much more attention from the physicians and the caregivers in those hospitals during that two-year period that oftentimes they will sign up to be part of that, to get that extra attention and care.
Do you worry about some of the conflicts that you ran into with the last study, surfacing here because of that better care on the control side?
I don't think so. I mean, you know, as Kevin mentioned, the biggest, you know, factor for us was COVID when it came down to, you know, what was happening with hospitalizations within BeAT-HF. So that dramatic reduction in the number of hospitalizations in the control arm specifically had a significant factor on the outcome of that trial. So we're trying to bake that in. Barring another global pandemic, we believe we've set this structure up appropriately, to be able to win this trial.
Is that how you have to preface every single discussion on this?
Yeah.
Barring another pandemic.
That's how we live life.
The effect on the control arm from COVID was greater than ENTRESTO.
Oh, oh my.
Just to put that in perspective. So it dramatically changed their course, right? They were still sick, but they just weren't going to the hospital.
Okay.
If, unless they were really.
Is there any way to do subgroup analysis on the?
We've looked at a lot of that. And so there's some publications on the way to kind of break down what happened on a postmortem basis. But regardless, we need to continue to study the therapy on a prospective basis, and we'll keep doing that.
If you move up on the EF side and the blood marker side, doesn't that put you into the same bucket as what Impulse Dynamics is doing? Am I missing something there? And then, you know, how do you think about, like.
Yeah.
The therapeutic differences?
Yeah. Great question. So there's actually, you correctly point out, we're both moving the EF up to 50 and moving this NT-p ro up to 5,000. And so the first of those, the EF change, we already compete technically with Impulse Dynamics over half of their indication between 25 and 35. So this would actually put their entire indication within ours. But in reality, we don't compete with them. They and we are together fighting this 40- to 50-year-old paradigm that exists where giving patients medicine and sending them home for eight years is just sort of the way the disease is treated. And so, you know, we often don't consider them a competitor. We and they are often at the same meetings telling the exact same story and the idea that devices have a role in this disease state, an appropriate role, and that patients can benefit.
So, I'm not sure that materially changes our relationship with them. You know, we believe we have a well-understood and proven mechanism of action. We have a very simple procedure that's extravascular. We have no patient compliance or physician follow-up or programming necessary. So the things that make our therapy different from theirs won't change regardless of the indication.
Okay. That's helpful. Thanks for that. What about just, you know, and I know I'm bouncing around here a little bit, but just talk about the, your account. You know, I know there was a kind of refocus on the accounts you're going after and really trying to go deep in these accounts versus having just a presence in some and not really being that productive in the accounts. How does the bell curve look for some of your higher-end and higher productive accounts?
Yeah.
I mean, how many implants are they doing a month?
Yeah. So we, what we have shared is that, and what you can tell from our data is right now there's an average of 1.7 units per quarter per account across all 250. And in that 250 are a number of accounts that are very typical from an early-stage commercial effort. They're dabblers, whatever you want to call them, but they're accounts that are using us at a very low volume. In fact, we're trying to sunset some of those out of the mix. We'd be happy to do so, but that's easier said than done.
Yep.
So if you look across the 250, it's 1.7 per quarter. Roughly 20% of all accounts are doing at least one a month, which I agree is the bare minimum when you've got hundreds and hundreds of patients in their catchment. One a month seems like an easy bar, right? And it should; we should far exceed that. But 20% are there already. In our top accounts, we have a number of them doing more than 10 implants per quarter. So significantly higher than that. And so our, as Jared mentioned, our two levers that we'll be pulling here for the next years to come is get all these new sales reps productive, get them up to speed and contributing, and get these accounts adopting at a much deeper level.
Right.
There's tremendous leverage across those two improvements.
Got it.
That's really where we're focused.
Okay. I don't want to talk about, you know, one of your competitors, but another company in this space too much, but didn't they just get an approval? I don't know if they had a reimbursement update too. So now that they've got more favorable, I think more favorable technology or, or reimbursement, could that help grow the market? Can you, like, is the halo effect?
This is Inspire?
This is Inspire.
Oh, sorry. Impulse Dynamics?
Yeah. I mean, could that.
Yeah.
Build the whole market higher and then that you get the halo effect from that or is?
Yeah. I think that's probably a net positive. Yeah. And so they have. They're part of this new TCET program where they have.
That's what it was.
Temporary Medicare coverage as long as they collect data on their patients. So I'm sure that will help them, which will help us.
Okay.
Again, we don't really see them as a competitor. There are so many patients out there. We can each be extremely successful and still only be dipping our toe in the water.
Okay. And then maybe talk about reimbursement. You know, is that, is that a huge gating factor for a lot of clinicians at this point? And where are you at? And then let's talk about Level 6.
Yeah. So I would say it's less and less so. Thankfully, we've had a remarkable 12 months, you know, securing permanent inpatient reimbursement going from 17,000 to 45,000.
Yep.
For the third year in a row, securing $45,000 on the outpatient side. This year, we were quite pleased for the first time to have been started in the July preliminary rule in 1580 at $45,000, so we think that's a signal from CMS that they know our therapy doesn't fit or belong in Level 5, and so we will continue. We have, we'll go into year four here. We've got a playbook that's been quite successful two years in a row, three years in a row. We will fight that fight again and believe that long-term we will end up in a Category 6, a permanent Level 6 code.
Okay.
The third piece I just mentioned is the Category I code that goes into effect in about three weeks, which will be a big step forward. It will do two things. The first, it will create specific and certain patient payment for the surgeons who do this procedure. Up until now, they've each been on their own to negotiate their payment for their services and hope that those payments are fulfilled after the fact, which is not always happening. So the surgeons themselves will know, "I'm going to get 11 RVUs if I do this procedure," $566 on average. The second piece is that moving from Category III to Category I allows us to get out of the current dynamic is the payers, if they see a Category III code, they will automatically deny you. And they can do so using software alone.
No human being even sees those prior authorizations, so by moving from Category III to Category I, we take that tool off the table, and every single prior authorization has to be reviewed by a clinician, so we believe that will be reviewed for medical necessity, which is objective, we believe, and so we think that will both improve our success rate and shorten the time to approval, and it's not going to happen overnight, and it takes time for those codes to be updated and the systems to be updated, but that is a significant contributor to friction in the adoption process today.
Got it. Okay.
The long answer to your question, but it's getting better and better. We'll be fighting these battles for years to come, but we're winning.
Okay. Okay. All right. You know, fingers crossed that that starts to get, you know, more systematic. Jared, the, the gross margin in Q3 was outstanding. Can you talk about the durability there on that metric? I mean, you know, it, it just given the, the stability on the pricing side, is that, is that fair to say, you know, expect something in this level or even a little bit better?
Yeah. So, two components, right? Price first. So we've been kind of hovering closer to $31,000. In Q3, we saw a nice step up to $32,000. That helped us drive that gross margin up to 87%. The other side of it is the cost side. Right now, I would kind of point the durability more on the cost side than on the ASP side. There is still upside for ASPs, but at the same point, I don't necessarily want to bake in a set $32,000 price point moving forward at this stage. Again, we can achieve it. I just don't want it to be built into the models. On the cost side, it's really a function of just continuing to produce more and more units at our facility in Minneapolis, Minnesota, and being able to spread those costs over those units.
So we believe we do have more durability, especially on the cost side. But high gross margins in that 85%-86% range are reasonable for the future.
Got it. And I'm going to try to sneak in one real quick. Cash position, you're saying we can get the break even, you know, with what we have. If you have to run the study, do you have to raise the money?
Yeah. So the way we're referring to cash at this point, $85 million in the bank, we burned $10 million in the most recent quarter. We believe we have at least three years of cash on the balance sheet, assuming we refinance this debt facility, which we do not believe will be an issue.
Okay. But if you have, if you run in the study, you have an extra $5 million per year.
Again, on the cash burn for that study, most of the burn associated with it is out years three, four, five, you know, in the back half of this study, so we're not going to see the impact of that over the next few years where we would have our highest cash burn.
Got it. Makes sense. All right. I kept us long here. So we'll cap it there. Thank you so much, guys, for all the feedback. Appreciate it.
You're welcome. Thank you.