All right, thanks everyone for joining the Baird Global Healthcare Conference. We have Penumbra for this session. Pleased to have Adam Elsesser, the CEO of the company, here to join us. I believe you can send in questions, but we have a pretty decent or pretty hefty Q&A schedule prepared here. So I did wanna start off maybe just on some high levels for the past couple of years. You had a new product. I think you've talked about it as one of the most meaningful product launches in the company's history. Did a pretty significant margin expansion over that period. Did announce one of the first kind of repurchases, I believe, share repurchases for the company.
But as you look out over the next couple of years, when you think about penetration in the different markets, of where you are, I guess, what are you most excited about? A lot of the time we get some newer investors to the story that are new and wanna learn more about how you're thinking about growth over the period, how you're messaging over the period. But how should we think about a couple of those pieces?
Yeah, well, first of all, thanks for having us. I'm glad to be here. Really, this is a pretty transformational moment in the company's history. As people know, we've been working at trying to remove clot initially for stroke patients and expanding it to the rest of the body for twenty years. It's a challenging technical feat. There are all kinds of trade-offs. There are ways to do it. You either aspirate it out or suck it out, or you grab it and pull it out, and all of those have had sort of limitations and trade-offs over the years, and with the launch of...
It's actually two products that launched last year, one in the arterial side, Lightning Bolt 7, and then, Lightning Flash, and now Flash 2.0. Really, with those products, we got to the point. We are now at a point where those trade-offs are really limited. We can get the clot out faster than anything else, and that's a huge deal. You don't really get to start unless you can get the clot out faster. And then, our safety profile is much better than any other technology and or modality, even non-mechanical. And so for the first time, really, we have the ability to start talking about all the patients that we can treat. And that's, that's been sort of the reason we're in existence.
That's what we've been shooting for, and we're really at the beginning stages of being able to talk about how do we go get the other 90% of the patients, you know, looking at the U.S. numbers, that we're not yet treating, and obviously, it's incredibly exciting, it's rewarding, it's a lot of work ahead. We have a really great strategy, and we're starting to execute on it, and it's gonna hopefully play out over the next, you know, three, four, five years, in a pretty, pretty profound way.
I think that 2019 maybe was the last analyst day that you set out there. You put the goal for $1 billion by 2023. You ended up hitting that. Just trying to think about how we should gauge the longer-term growth of Penumbra. I look at, you know, consensus, right? The next billion comes by 2028. That's a 14% CAGR, I guess. You know, you do 12%, and you get to, you know, 2029. So how do you think about that next, you know, billion-dollar mark that you're looking to get after?
It's a great question. I'll start by saying, you know, I'm batting five hundred on projecting out numerically, how we're gonna do the $1 billion of sort of hit rate when we said. Obviously, last year, I was less effective at predicting. So I'm gonna sort of not indulge in the sort of numerical thing, other than to sort of really walk through the thing, the work ahead and the things that we're doing, so that people can judge what is the likelihood that we're gonna be able to go after this. You know. When you're starting with blood clot in the body, you're already starting with one of the more significant clinical, acute clinical issues today. That's a big deal.
No one has ever said, "Blood clot is a good thing." No one's ever said, "I'm so glad you have blood in your arteries, or your veins, or your lungs," or obviously, with stroke patients. So getting it out quickly, getting it out safely, are really the critical things, and we're now at a place. Again, we'll get better and better, products will continue to evolve. We have more things coming, as you know, and in fact, showed up on Monday on the website, but the FDA website. But we did get one of the three new products that I've alluded to, cleared, and I'm excited about that. It's a product that will be used in arteries below-the-knee.
We're pretty excited about opening up that new area with CAVT. The product, by the time we have product and get ready to launch, it'll be sometime, you know, mid plus October, so it's not today, but it's coming very soon, and again, that will give us another opportunity to go after more of the patients that we've talked about.
Maybe we'll just stick on that point. Then I heard you mention mid-October. Is that a launch? Is that-
You know, we got clearance, we're getting ready to, you know, you've got to do a lot of the paperwork to follow-up.
Mm-hmm.
-and get the product ready, and, you know, IFUs printed and all that. So that's an estimate of some time, when we think-
And-
We'll be ready to go.
The below-the-knee segment for peripheral arterial disease-
Arterial, arterial.
So when you think about the need or the value proposition that you would have with a thrombectomy, assuming CAVT thrombectomy product, in the below-the-knee segment and in the arteries, how do you think about the landscape that's out there? Why do you think that CVAT or CAVT is a, you know, product that should be going into this market? Can you help us just frame up how we should be thinking about this and the contribution?
Yeah, it goes back to the two fundamental things that we've said. We think with our experience with Lightning Bolt 7, which is for above-the-knee arterial side, the way that product has worked, how fast it can get the clot out, the safety profile is profound. And we have seen a huge change, obviously, just last quarter. You know, that was the fastest-growing segment of our businesses with Lightning Bolt 7. Below the knee is significant. There's a significant number of arterial patients that have clot below-the-knee, and this just brings that tool to it.
You know, ironically, you know, if you think about the Thunderbolt in its trial, you know, we're taking a similar technology as Lightning Bolt up into the brain. Obviously, taking it below-the-knee makes an awful lot of sense.
I think oftentimes in below-the-knee versus, you know, above-the-knee, you have a smaller anatomy-
Mm-hmm
... vessel size, right? So it's more difficult to get into even across stents and atherectomy devices. So can you help us think about why this product, right, is the right one to go after it? And when you think about the maybe installed base that you have today of the arterial segment for above-the-knee, you know, how quickly and, you know, easily can you get into the below-the-knee segment with-
Yeah
... with the existing companies you have today?
If we can get deep into the brain with Thunderbolt, we can certainly go below-the-knee. Again, we are known for our ability to make catheters that can get there. And then adding the Thunderbolt technology, the modulated or Lightning Bolt technology, depending on which vascular bed you're in, the idea of modulated aspiration. I think between the Thunderbolt cases together with the, you know, the 12,000+ Lightning Bolt cases, we already know it works. It works really, really well. Getting there and the access point really has been sort of our, you know, our specialty over the years, and adding this technology to speed up getting the clot out safely is really needed.
Across DVT or VTE, the neurovascular segment, you've always kind of talked about, you know, market expansion, gaining share, a bit of price in there.
Yeah.
So when you think about the arterial segment, we'll even go with Bolt, but as well as what you could do below-the-knee, my guess, maybe it's more market expansion. But how do you think about those three kind of pieces to where the growth from this newer product comes, and do you have a name for it yet?
We do have a name. It will have the word lightning in it, and which makes obvious sense. We do have smaller catheters right now that we take below-the-knee, but just basic aspiration, sort of like, you know, base, like what is done in stroke. So this will be clearly an additive on those cases. But I think more than anything, what we've seen with Lightning Bolt 7 is opening the door for people who were doing open surgery or catheter-directed lysis, to now feel that there's an opportunity, a very clear opportunity to switch because of the speed that CAVT brings to the table, as well as the safety profile. So I think it's, you know, pure numbers.
Ultimately, it will be more market expansion. You know, obviously, in the short term, there'll be some gain from our existing users out there.
Mm-hmm. You talked about the... I think at the time, there was three or so new CAVT products. This clearly is-
I mean, it's two more.
... one of them. So from the other, you know, two more, right?
Yeah.
What-
There's actually-
How-
... way more than that. The ones that I called out because we have a little more sense of timing, so there are obviously more than that in the future of our company that we're working on, but two more that make up the suite of products that I alluded to.
Over the next-
Three years out.
... the next 18, 24 months?
No, I think what the last update was said something like nine months or something...
Okay
... if I'm not mistaken.
and the other two in, some other type of vascular bed, an existing vascular bed? Any way to think about...
Yeah, we haven't specified that and, for competitive reasons, I'm not gonna be more specific right now, but they do open up the opportunity to go after cases that we're not necessarily treating today.
Okay. I wanna go in more into the VTE segment.
Sure.
But want to step back, first, just around the update to where you are today from the guidance for the full year. Three or four pieces in there that resulted in the lower guide on the Q2. Can you walk through, maybe just the timing of when those things kind of popped up and how, you know, you get into Q2, and you lower kind of the outlook? Obviously, there's a couple pieces that are-
Yeah
... you know, near term. You had the change to the way in which you're thinking about the philosophy for VTE.
Yeah.
But just help us think through the timing and the implications for that and what you baked into that kind of new guide.
Yeah, look, obviously, we called out specific things with, you know, CE mark in Europe, and which we had hoped for much earlier in the year, and that's been resolved. So it will be helpful, you know, tail end of this year and into next year, as expected, when we made that guidance change. China, which is really just the ebb and flow of what's going on there, and a small bit for embolic. The rest was really focused just on the fact that I got ahead of ourselves. Last year was a crazy transformational year with the launches of both Lightning Flash and Lightning Bolt 7.
And around this time, I leaned in more than I should have, and we spent the better part of a year just talking about our guide and all of that, instead of the substance of the business, which again is totally my fault. So by doing that, I think we've allowed room for us to be clearer about what our outlook for the business is and how we're gonna go do it, the work we have ahead, both in terms of market access and share gain, you know, and how do we think about these products and their performance, and how this field develops, and I think that's been helpful. People have seemed to respond pretty positively to that.
It sounds like China and U.S., right, have... Or sorry, OUS, have the opportunity to reaccelerate next year off of what-
Yeah
... now clearly is a lower number this year. When you think about the 2023-2025 for pure U.S. thrombectomy, you do have tougher comps still in the back half of the year. I think it implies 20%-ish growth in the U.S. thrombectomy segment. So how did you take into consideration what maybe the market implications are, the share gain, you know, implications are? I think you talked about how price no longer really is a tailwind. This is all volume growth at this point. So just help us think through that kind of back half U.S. thrombectomy segment.
Yeah, we have a lot of momentum. Obviously, in the arterial side, we saw a significant growth in this last quarter with Lightning Bolt 7. Obviously, in the fourth quarter, we're gonna have at least part of the quarter to have our new product, so that's positive. And on the VTE side, on DVT and PE, we're seeing a lot of interest with Flash 2.0. It's really an opening, which I think is significant because we now have a product that objectively gets the clot out faster in those vascular beds than any other modality and/or mechanical product. And that's the first step in any case: Can you get the clot out fast?
And if you can, then you get to have the next conversation, which is we can get the clot out faster, and we don't. If you're already inclined to use a mechanical tool, we get it out faster without the same safety limitations that our biggest competitor has. And that's not to say, you know, that's not a negative comment. That's not a, you know, competitive comment. You know, I guess it's technically competitive. It's just a fact. You know, we don't have the same warnings in our label that they have for a reason, because the tools are different. And that's just something that people should know. As doctors are making decisions and learning new technology, they need to know that. So we don't have to worry in the same way about cardiac decompensation.
We don't have to deal with shed blood and all of the information and data that says it's not a good thing to put it back in. We don't have to worry in the same way, 'cause we're not pushing the boundaries of what our own contraindications say around wall-adherent clot on the DVT side, so those are just those are facts. Those aren't mean statements, you know? It's just relevant to talking to doctors about what's actually happening, and I'm somewhat amused that, you know, there's this idea that somehow that's competitive chatter. You know, it's just facts. Anyone can verify them pretty quickly, so we have to have those conversations, and doctors are raising it with us, and they're realizing, "Wow, I can get the clot out really fast now without those safety issues." That's a good thing. That's what we want.
That's what everyone is trying to do. I think it's a pretty awesome moment for the field to have the innovative technology that we've developed.
I know you got asked this on the Q2 call, but if we look at kind of the exit rates in the second half of the year, around 10% for the total business, we talked about China, right? The OUS-
Yeah
... thrombectomy segment, right, appearing clear to reaccelerate next year. Maybe deceleration in U.S. VTE, but still maybe on a strong number. So as you've gone from some of those thoughts, a month ago or so, how are you thinking about... I know you're not gonna give any comments on the number for 2025, but just thinking about whether or not acceleration off the back half still, you know, is possible even with some of these, you know, newer segments that are coming online.
Yeah, look, the-
Great.
2024, we had a couple of headwinds that were unique. We talked about the China one. We've talked about on our embolization business, which is primarily a business focused on the vascular side, our access business, which is primarily a neuro business. Exiting certain markets, OUS, because of we were sort of losing money as reimbursement in certain countries has gone down over the years. Always hard to do that, you know, because we have other business in those countries, and so when you exit, you know, you have to to sort of do that. But we decided this was the year to do that in certain countries. And so when you add all that up, we aren't gonna have those same headwinds in 2025.
And we're gonna have the benefit of some of these new product launches that I've alluded to. Flash 2.0 is one of them, and we're seeing the benefit of that pretty dramatically. So we're set up, I think, for a pretty good year going forward. We hadn't... You know, we're sort of back the second half of the year, really starting to get going on some of our early work on the market access that I've delineated before, so that we can start to set ourselves up for growing the market in 2025, 2026, and beyond. So I think we're, you know, without putting numbers on it, qualitatively, we're set up for, I think, a pretty good run going forward.
The international U.S. embolization access businesses, you know, get a little bit less airtime than the other segments. But how do you think about those markets in a steady state? You know, are they mid-single-digit growth, high single-digit growth, when you think about the next-
Yeah
... few years, what, what does that look like without some of the moving pieces?
Yeah, I mean, so stepping back and just, you know, talking about our embolization access business and sort of what is it? I think it'd be helpful to sort of walk through that, and I think the answer becomes obvious. So if you look at our neuro access business, when we started Penumbra back in 2004, it was a long time ago, there wasn't a product, there didn't exist any neuro designed access tools or, you know, guide catheters. Anyone in neuro who were doing procedures were using products designed primarily, you know, for the coronary and using them up in the brain. So we designed size-specific products, right lengths, and really sort of built that whole franchise and that business in the neurovascular field.
And we've stayed pretty, you know, on top of that. And we've had, this year, another launch product called Midway, that is doing really well in the access category. So I think that business has given us a great foundation. We're known for it throughout the world. People like our access tools. And again, not every country is reimbursing appropriately, you know, for us to be in those markets. But I think we have a pretty significant share and are well known for that. Is that growing? It's definitely growing. Is it the kind of market... You know, we're talking about all neuro procedures, so it sort of grows with the market, you know, not something that can somewhat grow independently, and it will continue to do that.
But obviously not as high as the possibilities with thrombectomy, where it's just dramatically underpenetrated. And the same sort of goes true on the embolization business, which is primarily a peripheral business. The products we are selling initially started out with a neuro focus, and as we moved on, folks realized that the coils, which are primarily bigger in diameter, longer than a lot of coils, and softer, have unique properties that are really valuable in the peripheral space, particularly. And we've just added to and built unique shapes, and sizes and so on, over time, where they're just valuable. And that market is growing, but again, more steady state. It's not gonna grow, you know. You know, it's a penetrated market where we have pretty dominant share.
It will continue, like we've seen over the past couple of years, to grow.
On the U.S., I guess, VTE thrombectomy segment-
Okay.
Our assumption at this point is the market itself, high teens, maybe somewhere in the low twenties, range, so far this year. When you think about your position in DVT, PE, the opportunity out in front, you know, maybe more so in the PE space than in DVT, but can you help us think about how you're thinking about the next two to three years from a market growth, adoption perspective? You have new trials coming out in the next couple of years, as well as from your competitive perspective, you know, how we should think about the share gain potential and PE and also DVT.
Yeah. Well, let's start with share gain, and then we'll talk about market growth, 'cause I think both are slightly different, and both matter. Focusing first on DVT, I think we've seen over the past year and a half, really two years, a significant shift already in share in DVT. I think that, you know, we'll continue to educate. And I think, given, again, some of the issues and the safety stuff with our competitors, we're gonna continue to see a share shift there. Again, that's not a negative comment, it's just a practical comment. If you can get the clot out and not have some of those downsides, that's a better thing.
I think DVT has a slightly different pathway to grow. There aren't the need for randomized trials in and at this stage in the same way as PE. We already have a pretty good sense through the ATTRACT trial, even though it wasn't a positive end outcome, that iliofemoral DVT, you know, benefits typically. So that's a huge chunk of patients there. It's really the market access work that now kicks in. Now that we have such significant share, hospitals are engaging around that work, and that will continue to drive it. On PE, obviously, we started the year with a much lower share than DVT. I think Lightning Flash 2.0 has proven to get the clot out faster and as, again, more and more people try it. And again, that's not nothing.
You know, you got to get people to stop what they're been doing the last couple of years and try something new. But as that word is spread and as people are opening up their mind that the clot can come out much faster, I think it becomes a solid base to take share, and then the market access work kicks in from there. The trials are significant. The first trial that our competitor's running is really a slightly different trial. It's comparing sort of two experimental things, sort of not the standard of care so much. It's their device versus catheter-directed lysis, if I'm not mistaken. That, that's not gonna be bad, you know, I think helpful for the field.
I think the real trials that will come in the future, in the next couple of years, are the ones that are comparing against anticoagulation. And I think those, I'm pretty excited. We have one, competitors have one, NIH has one. There's a number of them coming, and I think that will be more akin to the stroke trials. I do want to just remind everyone, you know, and you remember this, you know, during the stroke trial world, you know, ultimately the best product as it kept getting innovated was what won. They're not very product-specific trials. And again, most of the trials in the stroke world were with not our product, not even our modality, and we obviously came out on top.
In large part, because the things that I have said before here, you know, getting the clot out faster is important, true in stroke for this, and doing it safely, again, true in stroke for us. Those are the things that ultimately sort of win the day, and I think all of us would agree, if we're being treated, those are the things that we'd want. And so I think our innovation puts us in a good shape for that field, too.
All right, we've got two minutes, and I want to spend some time on neuro, but just a last one on VTE. I think in DVT, U.S. share maybe closer to 50% or so, maybe half that or so in the PE segment. Do you think the portfolio you have today or with FLASH 2.0, that your share of the U.S. thrombectomy market and PE should be closer to what it is in DVT?
Yes.
Yeah. Okay.
But, you know, I'm not gonna be satisfied with that.
Yeah. Okay, on neurovascular, again, we got two minutes left here. So, the growth in this segment, I think, relative to our expectations, for Penumbra itself, has been coming in a lot better than we had anticipated. The competitive landscape out there is there, and it sounds like, you know, that's a market, maybe that's a mid-teens, you know, type grower. When you think about what Thunderbolt can do, relative to the growth that you've already seen with SENDit, how should we be thinking about this maybe above market growth, over the next couple of years for neurovascular?
Yeah, I think we have to wait and see, you know, once Thunderbolt has the enrollment done, you know, we can get into a discussion more about that. But I'm optimistic, you know, just how the pace of that's all going. And I'm getting pretty excited about it. I think the bottom line comes down to the same thing. In stroke, we saw a lot of private companies come in, all of them with very similar technology, sort of guide catheter-sized products, these 088 products. We have a guide catheter of that size and have for many years. It's a lot to push up into the M1. They don't really fit all the time.
One of the datasets that was presented at the SNIS meeting showed that it doesn't even get to the face of the clot the majority of the time. So I think that's a limitation, and I think the field sort of realizing, okay, we went one step too far with this, and now we really have to focus on the technology, you know, that we've had. I think Thunderbolt will add to that. I think having as many people try our cath, our RED series with, you know, particularly RED 72 with SENDit really sets us up great for Thunderbolt when it comes.
Okay, I had one more, but I think we're out of time, so-
Okay.
We'll stop it there.