All righty. Perfect timing. Let's kick it off. Welcome, everyone. Patrick on the MedTech team. Thanks for coming again to secondary mortgage plannings, global healthcare companies. The best bit, disclaimers. MorganFoundry.com/researchdisclosures. It's very exciting. I'm sure you'll all be going there imminently. What is exciting is getting to have the Penumbra team here. Thank you so much, both Adam and Shruthi, for coming as CEO and President now. Self-exciting. Do you want to start there? I mean, that just seems like a natural place with a new typo in that way. How did that come to be? Adam, you know, do we still have you for a while?
Are you trying to get rid of me or just the implication here? Listen, Shruthi joined 15 years ago in the marketing team, having already had a pretty impressive career at another company where she started as an engineer, went into regulatory and sales, and has just excelled at helping build the company as it is today. The entire peripheral side was something she helped build from the ground up with the others, really instrumental and took over the whole intervention in business a couple of years ago. It's the natural progression. She's respected and liked by really everyone in the company. It's great.
Got it. Got it. I mean, why don't we kick off on a particular area, STORM? Maybe for those just level set people from your perspective, why this matters in PE, what this could end up doing for clinical management of patients with PE, just the overview of STORM from a clinical perspective would be neat.
Great question. On the STORM- PE trial, the first randomized controlled trial, we'll be comparing mechanical thrombectomy versus anticoagulation for the intermediate and high-risk pulmonary embolism patient population. This is a trial actually designed by a steering committee that was composed of both interventionists and non-interventionists. It's looking to answer the question, will CAVT show rapid right heart recovery and will it be superior to anticoagulation with no increased safety risk? Once you answer that question, it also looks at some of the secondary endpoints around the quality of life, functional outcomes, things like that, that will also be interesting information to provide to both the interventionists as well as the non-interventionists. The patient population, if you talk about the numbers, is about 157,000 patients that make up this group of intermediate and high-risk pulmonary embolisms.
I think it'll be the first meaningful data set that provides answers for this important question given it's never been done before. If positive, it will then be information that institutions will be able to use, the PERT teams, as they're called, or the PE teams within each hospital that are making treatment decisions for patients. Having this data will then hopefully provide the information they need for them to move advanced treatment up in the overall paradigm so that when a patient presents with a PE, they're actually referred on to the interventional suite for treatment as opposed to being sent back on anticoagulation.
I think I have a view on this, but from your perspective, how much does the clinical data in the market matter? How much attention is being paid by the docs? Are they, from your perspective within the trial, going to be pulling apart RV/LV and really trying to pull apart the details, or just broad trial success? Is that going to be enough from your perspective to change guidelines?
I mean, guidelines, I think, is a separate topic maybe because there's actually many different sets of guidelines, and they're sort of on a schedule as to when they get updated. This will be one of the data sets that will help inform the guidelines for sure. I think beyond that, it really comes down to, at an institutional level, the folks that are involved in making the decision on PE now have a body of data that actually shows them that treatment with advanced therapy is beneficial with no increased safety risk.
Yeah. I would just add exactly what you said, but one sort of additional point, and that is this is the question that everybody, both on the interventional side and the non-interventional side, have wanted answered. It is important. You know, this isn't, "Hey, let's make up some comparison that no one cares about." This is the question, and we're lucky enough to be the first trial to finish and present that data. There is some anticipation because everyone who, whether they're interventionists or somewhere in the path of care of these patients, really want to know this answer.
You're talking like level one evidence to change things. I mean, we'll get this in TTT.
Yeah. To clarify, I think we've said this now, but the TTT is going to have the primary endpoint, which is the one that matters, obviously, things of, is it superior? The secondary endpoints, there was a they're back-to-back with VIVA missed it because they had to go out three months. We weren't ready to submit those. Those are going to be presented again, of course, with the primary endpoint a week later on VIVA. It's a little odd, you know, to split that up, but it's logical, I think, and when all said and done, it will be pretty obvious.
Presumably, just anatomically, if the RV/LV side, I know you don't want to speculate on the other endpoints, but if that's reading out very positively, you would expect some of the secondary endpoints to be in a pretty good spot as well, right?
Yeah, why don't we let the experts present the data?
Maybe just, again, I want to level set the room without using too many acronyms so that people might be less familiar. RV/LV and why that's the lead and the primary endpoint, just to make sure everyone's level set on that side of things.
Yeah. It's to basically show that, you know, a patient that suffers from a PE has an elevated, you know, RV strain or right heart strain. This just shows that you're able to normalize it by offloading the RV, as they call it. What that basically means is that you've released the strain on the heart, and it's having to work less. That's really what you're trying to do by quickly removing that clot so there's less strain on the heart, and the patient's able to sort of get back to, you know, oxygen saturation levels. That's the most important question because if you don't have that and you don't have that immediate resolution, you can't really think about the rest of it, right? The study was powered to answer that question.
The response is usually pretty rapid as well, right?
Yeah.
Yeah, it's extremely fast.
Yeah.
Essentially, it's just working well.
If the product works.
Yes, exactly.
Quickly, it's fast.
Yeah, yeah. I think we're at 10% penetration today.
Yeah.
If you were an RC, how would you envisage that changing on the assumption of broadly positive clinical data? How would you think about that over a multi-year timeframe?
Yeah. I think it's, you know, like everything else, the data will be the first sort of set of information that's rolled out to both the interventional community through their conferences, as well as the non-interventional community through their conferences. As a reminder, the international co-PIs of this trial are both the interventionists and the non-interventionists. They'll sort of help spearhead that effort of getting the information out. Once the different constituents have the information, they'll then go about within their institution to start updating the protocol. That can take, you know, obviously time for all that to play out. You can maybe kind of reflect back on when MR CLEAN and some of the stroke trials came out back in 2015, for the time period and how that sort of started to, you know, make some change happen in the stroke field.
There are some parallels to be drawn because, again, it's the non-interventionist that's sort of first seeing the patient, right, similar to the non-interventional neurologist that was seeing the patient in stroke.
If we took that 2015 sort of adoption curve, are you saying that that's a reasonable parallel for us to use here?
I wouldn't jump in. The difference is in stroke, there's this fundamental barrier of moving the patient. Where did they show up? What hospital? Only certain numbers would do actually stroke treatment. Here, we really don't have that barrier. Almost all the centers where a physician, I'm sorry, a patient would show up in is able to do this intervention and answer this. Some exceptions somewhere, but most are. That changes dramatically that curve and the time period, you know, to go from one to the other, because you don't have to deal with a very impractical issue. That is something to look forward to, and I think patients will benefit from.
One of the other PRs that gets brought up a lot is Thunderbolt, right? Mm-hmm. Maybe for the audience, give me a sense of what Thunderbolt is, why ingestion time matters, how you see that doing well in the market.
Yeah, let me start back, you know, with the history for two seconds. I hate to bore everyone here, but the company started with its first stroke product. Our catheter had an inner diameter of 0.041 in. It worked. We were amazed. People were anxious that we could take a catheter that big up to the M1, you know, because no one had done it before. We changed how catheters were made, made it softer and more flexible, but the problem is, even though it was big, it was not big enough that it really quickly got ingested the clot. We went bigger and again had to make the catheter different and better. We went to 0.054 in, then we went to 0.060 in, then we went to 0.068 in, and then we went to 0.072 in where we stopped.
We stopped at 0.072 in, not because we couldn't make a bigger catheter, even a bigger catheter that tracks really well. We obviously can do that. We stopped because aspiration works by, you know, the physics of it by having flow, and if you are occlusive or even semi-occlusive, you negatively impact the flow. A lot of other people who thought, "Oh, they stopped at 0.072 in. This is a business opportunity," might not have spent enough time, you know, with the basic physics because it and the data sets now are showing, okay, it doesn't actually do anything different. We didn't do that. Way back when we had a 0.072 in and we've had a few versions, we started another project. The whole computer project was started for stroke.
It happened to have gotten done and usable for the vascular, but it was started for the one issue that wasn't yet solved, which is we can now get catheters to the face of the clot, but ingestion times weren't good enough. We wanted ingestion time to get better and better consistently, not just 60% of the time. That project was started for stroke. It's obviously since been incredibly valuable in the rest of the body. For that reason, you know, we're excited. The field is excited, I think, because the idea of consistent ingestion time is still, we are still chasing that. We hope Thunderbolt might solve that.
One of the advantages would be an ability to drive some pricing.
Yeah.
Given the time is brain and that side of things, that works. I mean, how are you thinking about that price push into the customers and their willingness to pay?
One of the things we've been known for over the almost 20 years of selling to these customers is, we've always priced fairly. We don't take annual price increases and things like that. We want to price this so that the procedure, as it is reimbursed, which is a good reimbursement, is profitable for the hospital because you can't ask somebody to do more and more if it's not profitable to the hospital. That benefits patients. We had priced it so we do well, which we're obviously doing, and the hospital can do well, by increasing the number of patients they're doing. That's true in stroke. It's true in the peripheral. We're pricing this in a way that if you, for example, use aspiration and a thin treater, which a number of people do, this will actually be cheaper than that combination by a little bit.
I think that kind of pricing thought is really important, because it eases the way for a lot of people. For people who just use aspiration, it might be a little more than what they're used to. If you look at all of the cases, it might not because the cases that aren't consistently easy, you know, they might be at 50% or 60%. The other ones take additional stuff and energy, and this might even add out too. I think there is a decent story that it helps the hospitals, which ultimately helps patients, and we do fine.
I was going to say, you're saying maybe half of the cases are the more complex where, you know, you're just these.
Yeah.
Yeah.
Something in that range.
Yeah. I think CAVT, they've also seen what CAVT has done in the rest of the body. It's certainly really changed the way physicians now think about, you know, treating clot in the rest of the body. They're either in shared labs, hearing from their other counterparts, and the hospital system as a whole has also, you know, gotten a better understanding of what CAVT can do. I think that's certainly also what helps.
I mean, for the whole construct of most of the areas you operate in, the hospitals have pretty good margin structures already today, right?
In our thrombectomy business, the things are well reimbursed.
Yeah, which basically helps drive adoption.
Yeah.
Yeah. Okay. That makes sense. I mean, on Thunderbolt, how are you thinking about that adoption curve? How are you thinking about communicating to the customer base, you know, CAVT and the benefits, if you like?
Yeah. I mean, it's a neuro small. Everyone talks to each other. No one doesn't know that Thunderbolt's coming. Launching products in neuro is different than the much larger peripheral vasculature. I think we got this. We have only about 20 years of experience.
Getting them through the XL, which is going to help you basically go to the 20% of the market because you didn't have a lot of exposure on that side of things. How are you thinking about the rollout there? How are you thinking about the adoption curve? Initial discussions, everything on Ruby would be great.
Yeah. I can take that. On the Ruby XL product line, what it's really meant to do is now have an embolization coil line for the larger catheter profile. We've had our embolization coils in a smaller catheter profile and are actually the market-leading coils. We've had that since about 2013 for the rest of the body. We've taken a lot of the same features and brought it to the larger catheter market, which is about 20% of the embolization market as a whole, like you just said. The thing about it is there have been a couple other options that have existed, but they've existed for 10+ years. There's been not a lot of innovation. Physicians have been very eager to see some innovation in the space. From some of the early feedback, it's been very positively received.
We also, at the beginning of the year, in order to have our existing team focus on the CAVT opportunity with all this sort of share gain we were seeing, decided to bring on a new team to take on embolization as a whole so that both of the teams can focus in on those areas and continue to service the demand of our customers. We got sort of lucky with the timing of Ruby XL getting cleared when it did. This new team that's now onboarded and up and running are also introducing a new product to their customers, which is kind of a nice spot for them to be in.
I have to say we brought on this amazing group of people that come from spaces like AAA, TAVR, and other embolization companies, and they've all, it's been awesome to just bring on a team here that's out there, executing on this launch.
AAA is a tough market. I can imagine they're pretty happy to be somewhere else. To your point, that was the 15-year investment side.
Is it that we just have a lot in the chamber when it comes to innovation, and therefore, it would just make sense to specialize the bag just that little bit more? Is that the crux of the issue?
Yeah. Even without that, it made sense. We have that, as we've alluded to and just acknowledged. It really would be hard to do it all and do it with the same focus. What I would say, and to me, anytime you do something like this, you know, hiring, expanding and so forth, we have done that. We've gotten relatively used to it and how to talk about it internally and all. Doing something like this where you're taking away an entire product portfolio that many of these people built from the ground up, it's tricky. We spent some time. I had some anxiety about it. I will tell you, Shruthi and [McMonroe], the Head of Sales for Peripheral, really had this down. They have navigated the communication and the execution around this in a way that is incredibly impressive.
No real big anxiety, a lot of excitement, a lot of, you know, like, "Oh, we can do better collectively." It's pretty impressive. I think it will lay the groundwork for a while, because we didn't have that kind of morale issue that usually comes from taking something away.
I think, how did that communication actually practically work? They did essentially say, "This is just going to be more of an opportunity to focus." I know that as a company anyway, you guys are on more of a stable total comp system if you want less variability in some ways. Did that help? How did the communication work into the rest exactly?
Yeah, I think it did.
We did it.
Yeah. I mean, huge kudos to our sales leaders for doing it the way we did. If you look at the CAVT opportunity and the team knows because you've been called in for arterial cases, venous cases, PE cases, then you add coronary cases, and then you add on top of that all these embolization cases. In order to really be able to focus, in order to continue to see that share shift happen, it needed us to be able to go do this. There was that conversation. Like we always do, we're going to continue to keep innovating in all the areas that we're in. A lot of our reps know that. They've been here and seen that. We also kept our sales leadership structure the same. Our CAVT representative and the embolization representative report into the same manager.
That also helps with sort of that cross-pollination and keeping it all, sort of to a number spared, if you will. I think it's worked out great so far, and we'll continue on the journey, I guess.
Yeah, it's probably obviously a new innovation you talk about across every division, right?
Yeah, it does matter.
I mean, on that point, like R&D in general, like we had chatted about that being kind of your favorite people for both of you internally.
You can't say that in a public forum. Come on.
Some of your favorite people. I mean, you know, they're the ones that give you the ammunition anyway.
Yeah.
What do you put down for that, like keep that culture, that sort of starting entrepreneurial spirit? How do you keep that going in a company that's gotten a lot bigger over the years?
That's a great question how to keep it going. Of all the things I worry about, I don't worry about that for the simple reason that it is just so ingrained in, I mean, one could screw it up by demanding different behavior, but we're not going to do that. We have created an environment around innovating, which needs sometimes messy timeframes and schedules are not always perfect. We don't innovate to that. We innovate to really focus on the product doing something that nothing else does. We have a team, a lot of experienced people, a lot of younger people, the way it all works, it's kind of magic. Anyone who wants to spend time, I love doing that, not to learn about the specific products, but obviously, that's not something we share. What the thought process is, what the culture is, how does that work?
We've done that for some, and people walk away pretty jazzed about that. I wish I could take some credit for it. It is just a remarkable group of people who have dedication to making something better than it exists today to treat a serious disease. That's mobile work.
I'm a finance guy at the end of the day, so I'm going to have to ask a couple of your, as Musk described, boring bonehead questions. I'm going to have to ask a couple. The guide implies a bit of a detail in the second half. How much is that a sort of conservatism, just sort of, you know, I'm not going to say calm before the storm or something like that. You know what I mean? How much is that relative to what you're seeing in the markets?
Right. We put out a guide at the beginning of the year. Nothing has fundamentally changed other than we raised it a little bit to match the need. None of this is new information. This is how we're guiding. I think we obviously did learn our lessons from a year ago, and we're going to try to be more disciplined in that.
You have a number of catalysts, obviously, heading into next year. What would you think of as the base in its thought process around growth the next couple of years? You know what I mean, like a slightly more midterm.
I'm not obviously going to give a specific number, but I will tell you, in addition to the catalysts you pointed out, we also don't have the headwind of China that we had this year. It's much more, you know, a teeny number comparatively. It won't be that kind of headwind. I think in terms of a [percentage] growth rate, that obviously takes into account those things. When you step back from the specific numbers, I think it's pretty obvious to sense that we have a lot of confidence in the momentum.
The products across in arterial and DVT, now in our embolization business on the neuro side, obviously, the Thunderbolt coming, RED, the 43 Silver Label, and now the emergence of MMA cases with our unique coil that isn't shaped, that can seemingly have a unique place in treating a large number of people, almost, you know, when we just thought to be bigger than three volumes, we're in a pretty good spot. We have a fair amount of momentum going into next year. I think that's a fair statement.
Do you feel like the U.S. market's been incredibly strong for the longer of the time? Is there any reason that anything would derail that? How do you feel about that midterm as well?
Yeah. The DVT market's made up of PE and DVT. We just spent, you know, a bunch of time talking about PE and what that looks like. DVT is sort of this interesting part of it that is not always talked about as much. There is obviously data that's already been out there that treating iliofemoral DVTs is appropriate, which is why we're treating some of them. I think the size of that opportunity from a pure number standpoint is the biggest, you know, one. We've been working with hospitals around the clinical, you know, with clinical data that we've gotten from Vizient, and on what does that look like clinically if you're treated with CAVT, and then what does it look like from a health economic standpoint? That's a pretty compelling argument.
We have to add that into the work we're doing, which we are, and I think we can make a huge impact. I think it is starting to become obvious to physicians that technology and products matter. They're not all the same. You can't have a catheter and a syringe or a catheter and a pump and say they're all the same. Technology is going to start to really play an outsized role in differentiating how patients are treated. I think that's shown up in the last three quarters in our numbers, and I think it will likely continue.
As an outside observer, at least for me, it felt like there was a slightly bizarre fashion with comparing and contrasting the different players in the market. Did you feel that way too when people were overly fixated on the competitive environment relative to the data?
Yeah. It's an understandable process. I mean, when you're competing, we get fixated on it. It's part of the process. That's not how we feel right now because the product's doing well. It's got a lot of momentum. People are trying it, they're using it, they're excited. As I said, we're not done innovating. When we can keep adding to the core element of how to do this faster and more effectively, I think it's going to be hard to catch up at some point. It's.
I mean, it's the truth for pretty much all of my companies, but the vast majority of the discussion ends up being U.S.-based. I'm curious how you're viewing the OUS, and if you could split it, you know, I guess it's developed and sort of more emerging, about how you view that opportunity.
I'll briefly, you can add. The last year and a half plus, we've sort of taken the time, over two years, to deal with some things that, you know, over time, it sort of evolved and changed. We had markets change their reimbursements, so we weren't profitable anymore. This has changed. You know, economies have changed in certain countries that have lowered reimbursement. We had to sort of deal with that. Now, we're not new to the international markets. We've been selling internationally for 80+, 80 years. We have people all over the world. We have a fairly good understanding as one can have. I think we've done a lot of that hard work. I think last quarter started to show the beginning of that in our international business.
I would expect that would continue as we move to this new phase with all of our franchises, not just the core thrombectomy franchise, you know, that we've talked about. I feel pretty good about it. That being said, obviously, the reimbursement, the price point, the scale of the U.S. business in our footprint here is going to be bigger than the other places.
Have you found any of the systems particularly more user-friendly from a manufacturing standpoint, selling into them? Have any of the individual countries or regions been better to do business in from your perspective than others?
Yeah, it changes. If I look back over the last 10 or 15 years, it ebbs and flows. It changes, and that sort of makes sense. Economies change. Politics change, so you have to be nimble. I think we've learned how to do that over the last number of years, and not first settle in to just expect it to be one way because it's not. I think that will put us in a pretty good spot going forward.
Yeah. We have the team, like Adam said, the distributor partners for many years, and then the ability to sort of stay fluid as the landscape keeps changing and focusing in on the latest technology where we're able to get the reimbursement and kind of work through those processes. It takes time. At the same time, I think we feel good about the last 18 months of work that's been put in and trying to see the impact of some of that.
You do a reasonable number of investor meetings with Rob, Adam. You get probably the same questions over and over again, most of which I've asked here, so apologies. What do you mean? What are you surprised you don't get asked about? What should I be asking you that I'm not? I'm sure that the internal focus on things isn't necessarily what's matching the external fixation on different things. To your mind, what doesn't get asked?
Yeah, that's a good question. I think we covered, I mean, usually, it's how do we stay so innovative that you actually get asked that, which I appreciate. We are, I think we covered a lot of good ground. I think the fields we're in are not insignificant. I think it is, it's an interesting time because of the launch of Ruby XL on the MO side, and the focus with the Salesforce, and the neuro, you know, interest around MMA that our embolization business is going to have a good run. That should be, you know, I hope viewed as a good thing, not a, you know, it's accretive. It's not going to hurt us. It should be good.
I'm excited that we can have a positive impact on some areas that we weren't otherwise in, at the same time having, you know, a real, you know, likely moment, around some of the disease-based thrombectomies.
We'll all be looking forward to TTT. Thank you so much. Really appreciate it. Thank you.
Thank you. Appreciate it.
Thanks for having us.