Good afternoon. Welcome back. My name is Bill Pavanik, and I'm a senior analyst here at Canaccord Genuity. Welcome to our 19th Annual Medical Technology Diagnostics and Services Forum. With us next, we're going to have TriSalus Life Sciences. From TriSalus, we have Mary Szela, CEO, and David Patience, CFO. The format is going to be a short five to ten minute presentation followed by a fireside chat. With that, I have Mary, come on up.
Thank you, Bill. Thank you to Canaccord. I'm really delighted to be here today. I'm excited to share the TriSalus story. Just a quick overview of the company. We are a pioneering oncology company that has developed a technology that can actually improve the amount of drug that's delivered to tumors, both malignant and non-malignant, and importantly, also avoid drug delivery to normal tissue to prevent complications. Our technology is called pressure-enabled drug delivery. We have very favorable reimbursement, and that reimbursement was garnered from CMS due to, and I'll show you later, some of the clear data that it actually improves the amount of drug into the tumor, reduces complications, saves CMS money, and most importantly, improves outcomes to patients. We have a very robust market opportunity. What we're essentially doing is upgrading the microcatheter market. What is the microcatheter?
We all know it's just a tube with two holes. We have a more sophisticated technology that's improving drug delivery to tumors. That's really our main competition. It's a $2.5 billion market opportunity. We currently primarily focus on the liver, but there are many other applications for this technology, and I'll share a little bit about that. We have a strong IP, and we've been growing 50% a year and have multiple years of just incredible high growth. We're high margin. We're about 85% margin. I'm excited to tell you about our company. What is the problem that we're solving? What you're looking at right here is a little picture of what an explant would look like when you look into a tumor. You can actually see, oh, did it not advance? There we go. Did it go? Okay.
What you're seeing here is a picture of what it looks like if you looked under the microscope of a tumor. You can see collapsed vessels. You can see cancer cells growing rapidly. You can see some of the stromal tissue that's there. You see some of the fluid that's in the tumor. What you see in these tumors is very high pressure. Often the drug that you're infusing systemically is the pressure in the tumor is higher than what your heart can pump at. There's actually data out there for high pressure tumors, largely liver, pancreatic, and many other solid tumors. Sometimes the pressures are 150 millimeters of mercury.
Everyone sitting in this room probably has a mean arterial pressure between 70 and 90, so you don't have to be a PhD to know that you're not getting drug in the tumors. That's the problem we solve. What you're looking at here is this is a picture of an interventional radiologist trying to perfuse a liver tumor. On the left, he's using a microcatheter. Can you see the circle? He's trying to infuse into the circle, but he can't because the pressure inside that tumor is higher than what he's infusing, the pressure that he's infusing at. Actually, you see it to the right. You see kind of the dark area and kind of a blush area. If he was using chemo or radiation, that would be going into normal tissue, and that would create a lot of complications.
On the right is our TriNav, a pressure-enabled drug delivery. That infuses the entire tumor all the way down to the microvasculature. We've actually measured this preclinically and in patients. It can be anywhere from 40%-500% more drug in the tumors. What we know is that if you get more drug in the tumor, this is not our study, but many other studies, if you get more drug into the tumor, we know you improve overall survival. We have a wide array of different devices. This is our TriNav. We have a TriNav Large. We have a TriNav Flex. Each of these configurations of our device are customized for the type of patient anatomy that a physician may encounter. Do they have really tortuous anatomy and they need a more flexible device? Is the vessel larger so they need a larger one?
What you're seeing on the end is really the magic in our technology. See that little cone-shaped item? What that is, is a SmartValve, and it opens and closes in sync when the heart opens and closes. Think of our device as like a tiny little auxiliary pump placed in the vessel of an artery that physiologically opens up that vessel with just the right amount of pressure so it doesn't rupture it, but it can infuse that whole microvascular bed of the tumor to get more drug into it. What we've done with CMS is we created some really robust data, health economic and outcome research data. This allowed us to actually get our own procedural code. What we showed them is that we can get more drug into the tumor. That was statistically significant.
The biggest reason why CMS gave us our own procedural code was that we were able to reduce patients getting readmitted into the hospital within 30 days by 50%. That paid for the entire cost of the catheter plus. Every time anybody uses our technology in a procedure, they're saving $8,000 plus. We also improved complication rates, improved liver transplantation rates. There are quite a number of very robust clinical benefits. Here are the procedural codes. They're highly favorable to the hospital economically. Our technology is well reimbursed. This is written only for a pressure-enabled drug delivery device. It's unique to us, and we have our own codes, and they're permanent. We call on the interventional radiologist. It's a single call point. There are about 400 doctors, and they cover all the range of the procedures that you can actually use our technology in.
One key thing I wanted to say is we don't need to get a new reimbursement for any one of the new applications I'm going to talk about. Our main focus is in the liver. We have less than 10% market share, so significant growth opportunity. We also have physicians using it in some of these other applications, and they can use the same procedural code, embolization code, anywhere in the body other than in the neurovasculature or the coronary vasculature, so anywhere other than the heart and the brain. This is the market opportunity. These are some of the new applications. The liver is our core market. About 90% of our sales today are in the liver. Now that we have a full portfolio of devices, we really believe this will accelerate our growth even faster.
We're seeing physicians use this in many of these other applications, and I'm just going to run through them very quickly. These are these other markets. We just had a webinar about a week ago, and we're really excited to show you. This is the value of our technology. We actually worked with two physicians to customize our technology for the treatment of uterine fibroids. About 50% of women have these. You can get surgery, which is typically a longer recovery. It could affect their fertility. What you're looking at here on the left, this is about a minute apart. The physician's trying to perfuse the fibroid with tiny little beads, like almost the size of sand. What it does is occlude the vasculature so oxygen is no longer getting to the tissue, and then the fibroid just necroses. They don't have to have surgery.
It can be done in about 45 minutes, and they really don't have pain. In the standard microcatheter, he's not really perfusing the whole tumor. Look in the TriNav. Look at how we can illustrate and show the visualization of the tumor down to the microvascular bed. Additionally, because we can open up all those vessels, we can get beads all the way down into the microvascular bed, and we get very robust outcomes for that. It's also that because we protect off-target delivery, we don't get any of those beads into the normal myometrium, they don't have pain. He did this procedure in 12 minutes. He was able to visualize the tumor rapidly, get in, do the procedure, get almost a complete result, didn't have the patient had a major reduction in pain.
With this technology, he feels like he can treat more patients in a day. Another new other application is for multinodular goiter. You know when you go to the doctor and a physician feels your trachea, he's actually palpating, are there nodules on your thyroid? About 5% of the patient population in the United States in the population have nodules. They can be dangerous for you if they're not treated. Small ones can be ablated, but if they're large, we need to have them taken care of either through surgery. This is an alternative. The beauty of our technology is we don't have to go through the carotid artery to access the nodule. Because we have pressure-enabled drug delivery, we can go through a tiny inferior thyroid artery and fill up the nodule with these bland beads.
It typically necroses in about a week and a half. The big beauty of this procedure is we do not have to have patients go on long-term thyroid replacement therapy, which is typically lifelong, and the reduction in stroke is dramatic. Really exciting procedure. We will have a webinar on this, on the innovator, the physician who innovated this procedure, in about two weeks in the middle of December. We also have our own device for pancreatic cancer. I do not think that came through. I mean, let me show you this one. What we are excited about in the pancreatic cancer device is because we have that pressure-enabled drug delivery, we chose to go through the venous anatomy. If you go through the pancreas in the arterial bed, it is incredibly tortuous and difficult to get to.
We're able to go through the venous anatomy, dwell the drug for quite a substantial amount of time. We've tested this with nelitolimod, our TLR9 Agonist. We're also in a collaboration with Boston Scientific right now to advance Y90 Beads for the treatment of pancreatic cancer. We believe that this technology, all of these technologies, both on the liver and on the pancreatic side, as well as in some of these other tumor applications, we're agnostic to the type of drug that's administered. We could administer chemotherapy. We could administer radiation beads, and we can immunotherapy and other types of treatments with this type of technology. The last application I'll talk about before I close is a genicular artery embolization. This is another one that I'm very excited about. Everyone knows osteoarthritis. Everybody kind of believed it was this condition of wear and tear on the knee.
You're either overweight or you're this weekend warrior, and you put a lot of pressure on your joint. This is a physician out of Japan that innovated a procedure. His whole hypothesis was, if I embolize the arteries feeding this smoldering embolization around the joint, can I eliminate the pain, number one, and can I stop the disease progression? The Japanese data, they followed it only up to five years, but they're able to delay knee replacement up to five years. We think it's ultimately longer if we followed the patients longer. One of the most exciting things is patients literally, their pain stops almost immediately. In fact, we just met with CMS, and they're very excited about a demonstration project.
Originally, we thought they were excited about the cost of delaying knee replacements, but what they really were excited about is all the reduction in the opioid prescriptions and the pain drugs. They feel like this could be a major change and give patients the relief they want but not having the proliferation of opioid drugs. I'll just go to the corporate. Currently, we have about 50 million shares outstanding. We just reported Q3 earnings of $11.6 million, and we can answer some questions on that. Our guidance is for the fourth quarter. We typically have the strongest quarter of the year in the fourth quarter. I was telling investors today, I'm wondering if there might even be more acceleration just because of all the concern over insurance that people before the end of the year try to get their procedures in.
We have quite a bit of milestones and new data coming throughout the year. We've completed all of them, and we're waiting for the launch of a new technology in December. This will allow a physician who doesn't want to switch to the use of our technology and wants to use their standard microcatheter, they still can get the benefit of our SmartValve. They can actually use those together, and it will be used under our same procedure code. By the time we get those four, we'll have everything a physician needs to treat any single patient. I'll probably close there because I know I went a little bit over time, but thank you so much.
Great. Thanks, Mary. Let's bring up David, and we'll go through our fireside chat. You've left us about 11 and a half minutes. Yeah, sorry. That's okay.
I added too much.
No, I think that's a fantastic overview. Thank you. I think the story has definitely evolved over the last couple of years, and so I think it's always good to get a refresh for investors. We'll start with some financials real quick. I'll put David on the hotspot here. Q3, a little light versus our expectations. September is a record month. Some of the comments you just made, year-end spending. Just help me understand, in our eyes, maybe what went wrong, what went right, and how do we think about the fourth quarter and beyond?
Sure. Do you want me to take that? Yeah, if you want. I can jump in. Yeah. No, July was my first month at the company, and it was down from June. And so to be quite honest, everyone at the company but me knew that.
Procedure volumes were down, and that's really just a function of the industry and folks taking vacation, to be quite honest. We had a nice rebound for a record month in August, and then September was another record month. That was very much anticipated in the seasonality. If you remember the year prior, we were flat Q3 to Q2, quarter over quarter, but still showed year-over-year growth. Where we are today is we're very excited entering the fourth quarter and very confident we can hit our number.
Okay. In terms of active accounts, what's the focus of the sales force? Is it more new accounts, or is it more docs and procedures and existing accounts? I ask the question especially because you've had a proliferation of product iterations this year. Yeah.
When we started, when we got reimbursement, kind of our permanent reimbursement in early 2024, our big effort last year was to get as many VAC approvals as possible. We sent everybody out, tried to get it in as many hospitals. This year, it's all about growing utilization in our current accounts. Typically, we only have one doctor using it in our hospitals. Now that we have all these new products, we feel now is the time to really drive penetration with additional physicians.
I'd like to delve a little more into that uses because as we go from liver to other indications, kind of what have you experienced from your customers? Just anecdotally, just give us some examples of kind of how that's really changed for you over the past 6, 12 months.
I will tell you that uterine fibroid image that I shared with you, this was Dr. Kang who was doing liver cases, and he started doing uterine fibroid. He chatted with us. He liked what he saw with TriNav, but he was having a lot of clogging issues, and he did not feel like the technology worked as well. We met with him back in June. We actually modified the device and literally launched it to him through a market evaluation last week. That was the first one. He could not be more thrilled. That is the same thing that happened with thyroid. People were using TriNav, then they decided to employ it in another application. We were helping them modify it and really perfect it for that particular procedure.
We see as people use it in the liver, actually the leap to another application is pretty simple.
Same with GAE?
Same with GAE. I mean, it's just they see how the valve works. They get the improved visualization, the deeper penetration, the less off-target effects, and then they go use it in another application. We did not even know anything about those. All of this came through physicians. One physician showed me 38 different embolization codes where he feels like our technology could be used. We just haven't gone there because we haven't had the time to do that. There's so much opportunity in the liver.
Grassroots is driving a lot of this. I'm going to switch to operating leverage, stripping out the one-time expenses, closing out the nellitolamod studies. Your actual operating expenses were nominally down from Q2 when I look at that.
How do we think about growth of expenses going forward in the drivers? Really, we're getting at, do you have enough cash to get to break even? What are going to be the kind of the levers you're pulling going forward? Does driving to break even impact your ability to drive top line?
Great question. Great question. Just looking at the third quarter, what we're targeting right now in the near term is getting our R&D on a GAAP perspective to about $3 million a quarter. Sales and marketing's at $7 million, and then G&A's at $4 million. Essentially $14 million in GAAP. We have about $2 million per quarter in stock-based comp. Cash OpEx was something in the neighborhood of about $12 million. We weren't too far off of that once you strip out a little bit of the accounting one-timers.
With that, if you just look at that at $12 million on an 85% gross margin, it's about $14 million a quarter for break even. We're not too far off of that today. What I want a few people have noticed that some people I'd like to better bring to their attention is that our sales and marketing as a percentage of revenue over the last three quarters has improved quite a bit. We're really proud of that sales and marketing leverage coming through. That's us just focusing on what are the programs that are helping our reps be productive? What are those marketing programs that are helping our reps be more productive on top? That's where we're focusing. We're going to be scaling our sales and marketing spend.
We are very focused on our operating leverage, especially in sales and marketing, to make sure we're not overspending for top-line revenue.
I want to take a step back with the new products. You launched two key products, the TriNav Large and the Flex. You have Advanced, Next P coming. To drive into these new indications, how much of that is product iteration and grassroots versus how much data do you need to create to help drive adoption? Typically in med tech, we see it's like you need data to drive into any market segment. It's almost like because of what you're seeing grassroots, you may not have a ton of data. If we think about broader penetration into these other markets.
Absolutely. I mean, I think one of the things that we try to do at our company, we're really science-driven.
Everything that we want to do is going to have clinical data that is behind it. This Dr. Kang, who we started working with, he actually pulled a whole retrospective study together of trying to have in all of his cases, both in UAE and liver. That was the basis of a publication that he already put out there. Now we're going to move forward and do kind of a definitive comparative trial with him, a registry trial so we have that type of data. Our goal would be, can we do it in enough patients with the right power that we potentially could get it in the ACOG guidelines? It is another offered treatment that the OB-GYNs would have to offer today because today they do not really offer it to them.
Would this be an RCT versus a standard NHOLCAP?
It doesn't need to be an RCT. We actually investigated that. As long as it's a comparative trial and sufficient power, they would accept it. We'll do that. We'll do the same thing. We did a pilot study in GAE. We're going to scale that to do the same thing. We'll do that. Right now, we have a big registry study in thyroid that will be close to 100 patients in 10 different sites. We're doing that in every single application. The other thing in liver, we have kind of the early innovators and the early adopters. Now we're going to do the definitive taste and tear studies. That will get the whole majority. We think that could actually increase the overall liver penetration for us by over $100 million over the LRP.
As an investor, that scares the heck out of me from a spending standpoint. Yeah, because we can bill for it. Yeah, standard of care. We just have slightly lower margin.
Yeah, based on our reimbursement, all of these studies will be billable, and we will receive top-line revenue for it. It's just the operating margin will be a bit muted because we'll be paying a CRO to help facilitate the study. The one thing that's great about the business is these studies, we think we've really de-risked the business from a procedural standpoint in the liver. We want to go for that foundational study. We're going to get paid on it as well when we do it from a reimbursement. When you go into each of the new applications, it's the same formula. Do we have the right device?
Does that device provide the right user experience for interventional radiologists to be successful, to prove out that clinical value, show that clinical value in a study? For some of these applications, you want to be able to help drive patient volumes as well for the OB-GYN. Prefer surgery. Now, all of a sudden, a woman has a choice, and she's aware of an embolization procedure that can take 35 minutes. She might opt and advocate for herself to go that way.
We'll be able to do all of that within just the budget that David just talked about earlier. It's not incremental because we generate top-line value.
Okay. You just hosted a physician KOL call earlier this month that highlighted the benefits of TriNav XP. How long does that take to hit the top line? You know what I mean?
As you go into this indication, is this like, we're going into it now. We're just going to do the studies. Is this something that is incremental today but acceleratory in like 12-24 months when data comes out? Or how do we or do docs just start using it?
I'll tell you with Flex, we launched in June, and it's almost 45% of our portfolio already. I mean, it was like unbelievably adopted fast. We think the same thing with XP. We think XP will actually be incremental business because we couldn't treat that with TriNav before. Yeah, Flex was a little more cannibalistic. Yeah. TriNav just kept our user. Like, you know what? Hey, I could use it in 40% of my cases instead of 20. So we still got some incremental business, but it just made their consistency much better.
XP is really a new case because they didn't have a TriNav before. We're already seeing it. We just launched it on Tuesday. We're already seeing it, so.
Excellent. Let's talk about reimbursement. You got mapping. What have you seen since getting specific codes for reimbursement for mapping earlier this year? How should we think about the impact going forward?
We've seen today, and I also want to just really thank John again. We first got our first reimbursement code, and actually, John Young from Canaccord called me and said, "Mary, I'm not sure this code is really covering your technology for mapping." He was right. We went back to CMS. CMS said, "Yeah, he's right." Within six months, we got another code for mapping.
I tell med tech companies, just go talk to John Young, and he'll be able to help you with your reimbursement. What we've seen with having the mapping code is we've seen about a 30% increase because in a radioembolization case, a physician has to do a mapping or simulation first to determine what the dose of radiation he wants to give to the patient and then use a treatment dose. We get a catheter for that simulation and a catheter for treatment. The reason why you want to use the same technology, just like I showed you that picture of the uterine fibroid, what if you use the microcatheter and you calculated a dose and then did it for treatment using TriNav? You wouldn't have the appropriate dose for the tumor.
We've seen about a 30% bump in our business just based on that alone. The big challenge with the mapping code is these are permanent codes. Doctors have never seen this before, so we have to train the hospital to bill. Anybody who's worked with hospital billing departments knows that's a little bit longer process. We actually brought on a company called Z- Health, and it's a company that is founded by an interventional radiologist. He gets on the phone. He actually can talk to the hospital and walk them through it. We provide that support to our customers.
With the using TriNav for mapping and the final procedure, I would assume, given your ability to deliver more drug, you're probably using less drug overall when they figure out how much.
What is the financial impact of is there a financial impact of using less drug? And if so, have you calculated?
We haven't calculated on the liver, but we did this. Dr. Kang actually calculated it, that it was actually a cost savings to the procedure of the embolics that he was buying. And it was close to about $1,500.
So you had another reason. Okay. I'll open up, see if there's any questions. We're out of time, but if there's anything from the audience. If not, we'll wrap it up.