Inari Medical, Inc. Price & Performance (NARI)

All participants will be in a listen only mode. And should you need any assistance on today's call, please signal a conference After today's presentation, there will be an opportunity to ask questions. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Marissa Beitz, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Welcome to Inari's conference call to discuss our Q3 2024 Financial Performance. Joining me on today's call are Drew Hikes, President and Chief Executive Officer and Kevin Strange, Chief Financial Officer. This call includes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 Statements made on this call that do not relate to matters of historical fact should be considered forward looking statements including statements related to Inari's estimated full year 2024 revenue, operating loss or profitability expectations, and the expected operating performance and potential strategic benefits of Linflow. These statements are based on Anari's current expectations forecasts and assumptions which are subject to inherent uncertainties risks and assumptions that are difficult to predict Actual outcomes and results could differ materially from any results performance, achievements expressed or implied by the forward looking statements due to several factors. Please review Inari most recent filings with the SEC particularly the risk factors described in our latest Form 10 ks. For additional information.

Any forward looking statements provided during this call including projections for future performance, are based on management's expectations as of today. Inari undertakes no obligation to update these statements except as required by applicable law.

On today's call, we will refer to both GAAP and non GAAP financial measures announcing our Q3 twenty twenty four results, Please refer to today's press release for a reconciliation of the non GAAP measures discussed on this call and referred to in the release.

The press releases and slides accompanying this call are available on our website at anaremedical.com. A recording of today's call will be available on our website by 5 p. M. Pacific Time today. And with that, I'll turn the call over to Drew Hikes, President and Chief Executive Officer.

Thank you all for joining our call today. In Q3, we continue to drive strong adoption of our therapies.

Resulting in record revenue of 153,400,000 dollars and 21% year over year growth. Based on our year to date progress, we're pleased to raise our full year revenue guidance and reaffirm our expectations to reach sustained operating profitability in the first half of [indiscernible] Before proceeding, I'd like to formally welcome Kevin Strange, our new CFO to today's call. With over 15 years of experience, including over 4 years here at Inari, Teva brings tremendous expertise, judgment and leadership to our C suite. He has also shown a steadfast commitment to our mission and patience. Additionally, I'd like to thank Mitch Hill for his contributions As a reminder, Mitch will remain with Inari through early January as we continue the transition. Turning back to our quarterly results. We drove strong performance across the entire Inari portfolio including in our market leading PE and DBT therapies and in our emerging therapies portfolio. We also delivered robust growth in our international business, As we advanced into the 4th quarter, we are as excited as ever about our leading position in large and underserved vascular markets.

This is especially true as we await the presentation of Peerless data at the TCT Symposium tomorrow. We believe this presentation marks the beginning of a golden era of randomized controlled data focused on thrombectomy for patients suffering from VTE. In Q3, our global BT revenue was 145,300,000 dollars up 19.7% versus the prior year. Underpinned by our commercial expansion and market development efforts.

During the quarter, saw stable underlying market and share dynamics. The market for U. S. VT procedures remains significantly underpenetrated and as the market leader, we continue to expect to drive robust growth and adoption of mechanical thrombectomy for to come Our VTE focused sales force the largest in the industry, continues to mature as we hire reps and split territories at a measured pace.

The team is making progress in helping their hospital customers build BT Excellence [indiscernible] To help ensure that each patient diagnosed with the DVT or PE is given consideration for interventional therapy.

We are excited that a substantial opportunity remains ahead and we look forward to continuing to drive higher adoption and penetration Turning to our clinical work. We are proud to usher in the golden era of randomized controlled trial data in VTE through the presentation of our peerless data tomorrow.

As a reminder, Peerless is the first of our 3 major RCTs to complete enrollment. Cureless was designed to evaluate patient as compared to catheter directed thrombolysis As a reminder of the patient population addressed by this study, we believe the annual incidence of intermediate high risk PE is approximately 280,000 patients.

All of whom are eligible for mechanical thrombectomy with FLOWTRIVER Of these patients, today we believe only 15% to 20% or about 50,000 patients annually receive any type of catheter based intervention We estimate that of those 50,000 about 1 third or 15,000 patients are still being treated with catheter directed thrombotic Based on our ASPs, we therefore see roughly $150,000,000 opportunity to convert the remaining catheter directed thrombolytic procedures to mechanical thrombectomy with flowtriver. Of course, this is alongside the opportunity to continue to convert to 80% of patients still being treated by conservative medical management with any coagulation alone. Should tomorrow's data be positive, over time, would expect many more patients to receive mechanical thrombectomy treatment with our flow treatment device due to its unique large bore aspiration technology and blood return capability. Data from the trial will be presented at TCT by Doctor. With some Jabber. Professor of Medicine at Emory University School of Medicine, during the late breaking clinical trial session at 11:44 am Eastern Time tomorrow I look forward to talking with many of you on-site and hope many of you will also join us for our peerless discussion happening at 2 p. M. Eastern Time tomorrow following the late breaking clinical trial session.

Beyond Purelyx, we're making progress on enrollment in our 2 other currently active RCTs, both of which compare our products to conservative medical management Peerless 2 comparing flow treatment of anticoagulation alone Inari PE and DEFIANCE comparing clotzriever to anticoagulation alone in DVT We believe our investment in these studies will further advance the field change guidelines extend our leadership position and ultimately change the standard of care in VTE away from conservative medical management to frontline treatment with Flotriever and Clotriever. Turning to our Global Emerging Therapies business, In Q3, delivered over $8,000,000 in emerging therapies revenue, up 64% versus the prior year. We expect emerging therapies to deliver a strong finish to the year with several Q4 catalysts already in place and still others coming soon.

Years of purposeful investment in this segment has led to the addition of 4 distinct patient populations outside of VTE together comprising a $4,000,000,000 TAM in the U. S. Alone. In our chronic venous disease portfolio, we continue to advance the adoption of Venacore following our full market release earlier this year. As a reminder, physicians are using venacort as both a tool to treat CBD and in certain cases to augment treatment in DBT. The addressable market in CBD includes an annual incidence of approximately 100,000 patients representing a $1,000,000,000 TAM and a substantial prevalence pool of over 1,000,000 patients. CLTI also remains an exciting opportunity for us Lymphflow offers new hope for the 55,000 patient per year suffering from no option CLTI, translating into a $1,500,000,000 U. S. TAM. I'm pleased to report that our U. S. Launch is progressing well. As we formally anniversary the addition of Lynpro to Inari, we're making great progress. As of the end of Q3, we have received back approvals in over 50 the approximately 200 high volume LEMS salvage centers of excellence that comprise our early launch target. We look forward to supporting initial procedures and growth over time across these and more centers.

In addition, have been hard at work to iterate on the 1st generation Linpro system, as is the INARI Way. Earlier in the quarter, received PMA approval from the FDA for our next gen stent delivery system and I'm happy to share that we are now in limited market release.

We look forward to beginning the broad commercialization of this key component in 20 [indiscernible] Continuing with our work on Linflow, I'm pleased to highlight that the NTAP proposed earlier this year for Linflow procedures performed in the inpatient setting went into effect as planned at the beginning of October.

Thanks to the NTAP, reimbursement for inpatient procedures has now increased by as much as $16,250 Regarding outpatient procedures, as noted on our last call, in Q3, CMS proposed to increase hospital outpatient reimbursement for the LYNPRO procedure from 27,500 to $35,000 a meaningful increase This enhanced reimbursement is relevant to the roughly 20% of lymph cases currently performed in a hospital outpatient setting. We expect to see the final ruling from CMS for outpatient reimbursement in the next 2 months. In acute limb ischemia, I'm pleased to share that we recently received 510 clearance for our next gen ARTIK system and have commenced a limited market release This product serves a $600,000,000 U. S. TAM characterized by tremendous unmet needs and a lack of purpose built tools.

ARDEX will not only address patients who would have been treated surgically, but we believe this 2nd generation device improves upon other repurposed Endovascular platforms We plan to commence a full market release later in Q4. Our final emerging therapies market addresses using our enthril device Based on physician feedback, we're working on a 2nd generation inthro platform and we look forward to bringing it to market next year, As evidenced by the great progress made year to date, we're confident our emerging therapies business can one day account for at least 20% [indiscernible] Finally, would like to discuss another record quarter in our international business. Revenue of $11,500,000 was up 76.4% versus the prior year Strength was primarily driven by adoption of our solutions in Europe. [indiscernible] LatAm, we recently received regulatory approval for Flotriver in Brazil are in the early stages of our launch in that market. We're also making continued progress on our expansion efforts into both China and Japan. In China, we've been hard at work for 2 years to gain regulatory clearance for clothever and flowtrhever. Of late, in conjunction with the National Medical Products Administration, we ran a 25 patient study for clot Trievers in China We're excited that we've recently completed that study and have submitted the data to the NMPA We're now finalizing our go to market strategy and we'll have more to share about that by year end.

Turning to Japan, we are pleased to announce we've obtained PMDA regulatory approval for our Platte River device and are seeking reimbursement approval later in Q4. Looking ahead, our next step in Japan will be in the form of a post market study of approximately 100 patients supported by our recently established distribution agreement in Japan. In conclusion, we're excited about the progress we're making internationally and expect total international sales to one day account for at least 20% of Inari revenue. Before turning things over to Kevin, I'd like to highlight as we always do, a patient story that demonstrates the impact of our technology and highlights the kind of patient that makes the Peerless study so relevant. A 58 year old woman in Louisiana was admitted to her local hospital where she was determined to have an intermediate risk pulmonary embolism with large clot burden. Her physicians were familiar only with the ECOSTrombolytic procedure. Despite 11 hours of alytic infusion in the ICU, her improvement was only marginal. Given that she has completed the recommended treatment, she was discharged home with the hope that she would recover on oral anticoagulation.

Unfortunately, that same evening, she was taken to a different hospital with persistent symptoms of trouble breathing and passing out Her CT scan showed no change in her clotford from before. This hospital with the assistance of an eye medical and developed a comprehensive PE thrombectomy program and had several physicians well versed in using the flow throughver system. In a short 45 minute procedure, the patient had all of the acute and chronic thrombus removed from her lungs. The FlowSaver device was successfully used to safely return 6 cc's of the patient's own blood back to her. She was discharged home the following day and has since recovered completely This case highlights the limitations of catheter directed thrombolytic therapy and ICU length of stay The case also points to the need to educate more physicians about the benefits of flowTree which include immediate symptom relief rapid heart recovery and short length of stay These benefits are directly attributable to the Flotriever system's unique mechanism of action which offers both best in class thrombectomy and the safety of blood return. Our peerless study will directly address the thousands of patients like this one. With that, will now turn the call over to Kevin.

Thanks, Drew. Turning to our Q3 2024 results. Inari's revenue for the Q3 of 2024 was $153,400,000 up 21.4% over the same period of the prior year. This represents sequential growth of over 7,600,000 dollars Global VTE revenue in the 3rd quarter was 145,300,000 up 19.7% over the same period of the prior year. Global Emerging Therapies revenue in the 3rd quarter was 8,000,000 up 64% over the same period of the prior year.

International revenue of $11,500,000 was up 76.4% compared to the prior year. Our best in class gross margin was 87.1 percent for the Q3 of 20 24, compared to 88.5% the prior year period. The year over year change was due to product mix the ramp up costs associated with new products and increasing internationalization of the business. Sequential gross margins improved by 80 basis points over Q2 [indiscernible] Operating expenses were $147,100,000 in the Q3 of [indiscernible] Compared with $109,800,000 for the same period in the prior [indiscernible] R and D expense was $29,400,000 in the 3rd quarter of 2024, compared with $21,500,000 for the same period of 2023. The increase in R and D expenses was primarily due to a one time non cash impairment charge associated with previously capitalized software development costs increases in personnel related expenses, clinical and regulatory expenses.

We anticipate R and D expense as a percentage of revenue to decrease sequentially in the final quarter of 2024, to a level similar to that of Q2.

SG and A expense was $108,300,000 in the Q3 of 2024, compared with $85,600,000 for the same period of the prior year. The increase in SG and A expense was primarily due to increases in personnel related expenses, as a result of increased headcount and increased commissions, share based compensation legal, marketing and other admin expenses. As anticipated, SG and A as a percent of revenue moderated closer to the level we saw in Q1. We anticipate SG and A expense a percentage of revenue will further decrease in the final quarter of 2024. In the Q3 of 2024, the change in our fair value adjustment of our contingent consideration liability was $6,600,000 as our Linflow business continues its [indiscernible] Amortization expense related to the acquired intangible asset was $2,500,000 acquisition related expenses $300,000 In the Q3 of 2023, we had acquisition related expenses of 2,700,000 dollars Inari reported a GAAP operating loss of $13,600,000 in the Q3 of 2024, compared with a GAAP operating income of $2,100,000 the same period in the prior year.

On a non GAAP basis, which excludes acquisition related expense [indiscernible] acquired intangible asset amortization changes in the fair value of our contingent consideration, and impairment of capitalized software and related costs the 3rd quarter operating loss dollars The non GAAP adjustment included $2,700,000 related to acquisition related expenses in the Q3 of 2023.

Net loss was 18 point $4,000,000 for the Q3 of 2024 compared to a net income of $3,200,000 for the same period of the prior year. The basic and fully diluted net loss per share for for the Q3 of 2024 was $0.31 on a weighted average basic and diluted share count of 58,400,000 dollars This compares with a basic and fully diluted net income per share of on a weighted average basic and diluted share count of 57,400,000 and 58,600,000 respectively in the same period of the prior year. As we execute against our goals of driving strong growth and leverage within the business, we are also maintaining a thoughtful approach to managing our balance sheet.

In the Q3 of 2024, our cash flows provided by operating activities were 1,900,000 dollars We look forward to driving improvement in this area going forward.

At the end of the Q3, we held a healthy balance of cash and investments totaling 111,600,000 remain confident in our ability to self fund our business and strategic objectives with our current cash and access to liquidity. We anticipate our cash balance will remain above 100,000,000 for the duration of the year. Turning to our 2024 outlook.

We are raising our full year 2024 revenue guidance to 601.5 to $604,500,000 an increase of $3,500,000 at the midpoint of our prior guidance range reflecting growth of 22 percent to 22.5 percent over 2023. Our guidance reflects contributions from all three of our growth pillars. DTE, Emerging Therapies and International.

Lastly, I would like to comment on Inari progress towards profitability. We are continuing to invest in our strategic objectives to drive growth, while remaining fully committed to achieving sustained operating profitability. Looking ahead, we will continue to strengthen our profitability profile and feel very confident in delivering on our commitment to sustained GAAP operating profitability in the first half of twenty twenty five. Also anticipate roughly breakeven GAAP operating income in Q4 of this year. With that, I'll turn the call back to the moderator for questions. For the Q and A segment, we will be joined by Doctor. Tom Tu, INRA's Chief Medical Officer. At this time, Morgan Stanley. Yes. Thanks for taking the question, guys. Just wanted to get your views on core VT market health as we push into 2025. Right now, I think the Street modeling USVT revenue growth in the low to mid teens, which kind of lags that 18% to 22% you've called out previously. Would just appreciate any sense of how you're thinking about the core market next year and the moving parts we should keep in mind as we refine our models? Thanks.

Yes. Thanks for the question, Tom. I can get started on that. And Kevin and Tom may want to join in as well. But I think you heard in the prepared remarks our view in Q3 was that the market was stable. With what we've seen earlier in the year stable underlying stable share dynamics as well.

Our VTE business globally grew 20% in the quarter.

A little faster than that OUS, a little slower than that. Here in the U. S. But suffice it to say, we see a long runway for continued robust growth within BTE. And we're going to keep investing in the areas that are going to drive that growth and purpose built technology and high quality data, including RCT data starting tomorrow morning. With PURELISS. With continuing to invest in our commercial footprint and our market development efforts under BT Excellence, all of that gives us confidence that there's a long runway here given how early we are in flexing this market away from conservative medical management to mechanical thrombectomy with FlowTruver and CloudTruver frontline.

Great. And then just on Linflow. Obviously, you mentioned you've got the NTAP in play now. So what kind of uptick in procedure demand you anticipating here? Or just any color of what you've seen so far in October would be really helpful. Because I think emerging therapies may be missed our estimates slightly in Q3. So just appreciate any sense of the growth algorithm for this part of the business as we exit the year and push into 20 20 Thanks, Calum. I can get started on that one as well.

So Lymphflow was an important part of the growth we saw in emerging therapies in Q3 It grew [indiscernible] year on year. We did see some roughly flat sequential growth in emerging therapies, but lymph flow within emerging therapies did grow sequentially Q2 to Q3 We're coming up on a year anniversary with Limpopo. And we are very pleased with the early commercial ramp We had always viewed [indiscernible] foundation building year.

With lymphoma and I think that's largely the work we've accomplished. We've strengthened the supply chain We've gotten the team aligned and organized We of course have gotten NTAP and Newtek APC both in place for enhanced reimbursement NTAP, as you mentioned, went online October 1.

And that will further enhance what was already a pretty attractive economic value proposition So we're seeing nice growth with Limflow month after month, quarter after quarter. And we anticipate that growth certainly to continue next year with foundation that we've established here in 2024 we're going to be able to leverage that foundation to really have a strong really first commercial year in 2025 with Linflow and clearly the NTAP is going to provide a nice tailwind for those efforts.

And our next question will come from Marie Thibault with BTIG. Please go ahead.

Good evening. Thanks for taking the questions and congrats on a nice quarter. Wanted to ask here a little bit about what's a assumed in your Q4 implied guidance this year. Certainly, your remarks to Calum on 2025 growth drivers. But I want to understand could Peerless have an impact? Are any of these kind of new LMR devices built in? What's kind of assumed in the Q4 guide?

Yes. Thanks, Marie. This is Kevin. I can jump in on that one. Look, I think overall, we feel good about the growing 21.4% and the overall strength of the business percent year to date.

We feel like the raise that we've afforded here throughout the year of $15,000,000 at the midpoint.

Really drives where we want to be towards the end of the year. That's really reflective of the confidence that we have in the business overall. There are obviously some moving pieces here that we've got heading into the end of the year with the Arctic just coming online now. So we've got Peerless that's going to be rolling out here shortly.

And we've got Linflow, of course, it's going to be coming online with the end caps.

But overall, I think the confidence here is reflected in the $3,500,000 raise at the midpoint and we feel good about the guidance raise here to 22% for the year.

Sure. Absolutely. That's really helpful, Kevin. Maybe my follow-up here on sort of the international market [indiscernible] Certainly, it sounds like you've been doing well in several other countries. Can you talk to us a little bit about some of the catalysts we should watch for internationally in 2025? Thanks so much for taking the questions.

Yes. Thanks for that, Marie. I think as you look out in 2025 with international, I think first and foremost, we're anticipating continued robust growth out of Western Europe. That region has been leading the way internationally. I would anticipate they will continue to do so in 2025 We've got a nice footprint established in Europe. We've got enhanced reimbursement established in a number of European markets, Germany, for instance. I think all of that is going to continue to drive robust growth out of Europe [indiscernible] Alongside that, I think in 2025, you're going to see more meaningful contributions from growth from the other international markets and there's maybe 12 15 other markets across Asia Pacific and Latin America where we've gotten regulatory clearance, we've gotten a commercial presence established, and we're now in a position to drive more meaningful growth. I think you're going to see those markets contribute alongside [indiscernible] And then finally, as you've heard us talk about, we've been hard at work to get onto the market in both China and Japan We're very close in both of those. You heard some of the recent progress in China. We have completed 25 patient study end market, which we submitted to the NMDA.

In Japan, we do have regulatory clearance now for clothever and are finalizing reimbursement in Japan. So we made some nice progress And I think looking ahead to 25, I think both China and Japan will help contribute. We're going to have to ramp in those markets just like you've seen us undertake in other markets. But I think clearly getting into those large Asian markets and beginning to do the work we need to do will be another part of the growth in international next year.

And our next question will come from David Rascotte with Baird.

Great. Thanks for taking the questions and congrats on the quarter here. I wanted to ask a little bit about maybe just your high level on what you're thinking about Pure Less. I know we'll get some better details on that pretty soon. But just wanted to think, should the results there bear out to be positive in the way that you're expecting, what level of investment do you think you could put behind this to either stay in the growth you have, maybe try to pull some levers for some accelerating growth How should we just start to think about that? And again, appreciate we'll have more details once the results are out. Yes.

Thanks for the question, David. As you can tell, we're very excited bring the Peerless data to light. This is the first RCT in the pulmonary embolism space in about 10 years. So I think we're also excited to really raise the bar in terms of meaningful endpoints that patients and physicians and hospitals care about. As far as resourcing this, we anticipate a lot of marketing activity not just intense around the time of the announcement, but also sustained because I think as you heard in the prepared remarks, there's still a lot of unmet need We think a third of patients in the U. S. Who get intervention for PE are getting CDC. And I think that is a large opportunity to improve patient care and also drive revenue. [indiscernible] I heard some of the comments already there. I'm curious for the accounts that you're in, maybe if you could give us a sense for I guess, 1, relative to the goals you made earlier this year around number of accounts you're getting to, maybe where you stand today? And then for those accounts you're already in, Any color around what those accounts look like as it relates to monthly procedures, the reorder rates?

Anything there would be helpful. Thank you. Sure, David. I can try and answer those.

So you heard in the prepared remarks that we've now gained access over 50 initial accounts and that is part of that initial group of 200 high volume lymph salvage centers of excellence So we've made some nice progress here out of the gate in 2024. We're probably a little ahead even of where we had expected to be at this point.

In terms of account opening. So we feel pretty good about the commercial ramp to date. We've got work to do. From a market development standpoint. That is work we knew we were going to have to undertake and that's work we're actively chipping away at as we speak. These are patients that are not being cared for. In most cases by interventionalists. These are patients that are being cared for in wound care and podiatry and then some cases even out in the community with GPs. So we've got work to do to help identify those patients and get them in front of a physician that can really assess whether or not Lymphoma is a new So that's work that we knew we would be focused on and sure enough that is exactly where our team is spending time understanding what that work looks like, what we need to do, what barriers we need to knock down But suffice it to say, we like the progress we've made to date, tons more work ahead of us.

But so far so good in what we've seen to date from a commercial standpoint.

And our next question will come from Chris Pasquale with Nephron Research.

Thanks. A couple of questions on Arctic's It's exciting to see that product back in the market. Just curious how you're going to position it in that segment relative to its strengths versus competitive systems? And is there a particular subset of patients for whom that product is going to be a much better option than what's already available? Yes. Thanks, Chris. I can maybe talk about some of the commercial aspects of it and then maybe Tom can chime in on the the clinical parts of your question. So we are a week or 2 into the LMR. We got 510 clearance maybe it's just a week ago now. So still pretty early. But so far so good. We've got some really good feedback from the initial set of cases As you recall, this has been almost a 2 year journey to get back into the market with ARDEX, this next gen platform with ARTIX. So we're really excited to be back in the market We were very intentional deliberate about the refinements we made to the platform. And are hopeful that the 2nd gen platform will help address what is a pretty significant unmet need these patients.

Over half of them are still being treated with open surgical approaches and we believe that a purpose built tool like ARTIX is going to be a better option for the patients that are currently being treated with other endovascular [indiscernible] So still early. We need to get through the LMR as we always do. But so far so good and it's exciting to be back in the market with Arctic. Maybe with that Tom can back clean up on some of the clinical parts of your question. Yes, Chris. So you asked about how we might position strength of ARTIX in the market. If you recall, the acute limb ischemia market is a mature market. Patients get treated Unfortunately, the treatments that exist currently have significant limitations either because surgery or need for multiple interventions, the use of lytics and frankly the aspiration thrombectomy system that is used a lot of procedures is inadequate for removing clot and results in disalembow We believe in Arctic's we have a toolkit that's the all in one solution. That you have the best in class mechanical thrombectomy, best in class aspiration, and the results that we've seen as Drew alluded to early on but still fantastical results that just haven't been able to be achieved with the technology to date.

So we can't wait to get more experience and then once we get through the early phases, then release it broadly across our customer base.

Thanks. That's really helpful. And then just on the core VT business, curious any differences in trends you're seeing between the 2 segments there, DVT versus PE?

Our sense has been that the PE is continuing to grow a bit faster. Just curious you're seeing the same?

Yes, I think that's right, Chris. You heard in the prepared remarks pretty stable trends we saw as we move through Q3. Think that's true within PE, I think that's true within DBT. And I think our view is exactly what you shared I think at the margin, the PE segment of the market has been growing faster on a marginal basis than DBT. And I think that was a pretty consistent trend that we saw unfold in Q3.

Thanks. And our next question will come from Stephanie Pizzola with Bank of America.

Hi. Thanks for taking the question. I just wanted to follow-up on [indiscernible] you called out the $150,000,000 opportunity that the data could help open up Maybe if you can elaborate a little bit more on how quickly this revenue opportunity could come through or how you expect doctors to change practice from the data if it's positive?

Great. Thanks for the question, Stephanie. And like said, we're very excited to bring this data to light tomorrow at the TCT meeting. Mind you, even with a timely successful trial, I think it takes time for physicians to really read and comprehend the results and then put those conclusions into practice. So I suspect what we'll see is the continued erosion of CDC market share and probably relegating that therapy to very niche uses. But I think the bulk of that transition is going to be a 2025 progress.

Thank you. And maybe just to follow-up, I just wanted to clarify on the U. S. Versus OUS performance in VTE.

We estimate that the U. S. VTE market during the mid [indiscernible] consistent with prior quarters, is that a fair assumption? And is it still fair to assume that most of the OUS revenue is from VTE versus emerging therapies? Thank you.

Yes.

Thanks for that, Stephanie. So the overall growth globally for VTE in Q3 was [indiscernible] a little bit faster than that. OUS, a little bit slower than that here in the U. S. We don't break out [indiscernible] the U. S. Versus OUS, but that at least gives you some context around the 2. And again, relatively stable [indiscernible] In Q3 compared to what we've seen historically. And then finally, last part of your question, yes, the vast majority of our revenue OUS is indeed from VTE. That will likely change over time as we work to bring some of our emerging therapies to the international markets, but today at least the vast majority of OUS is directly attributable to VTE.

And our next question will come from Larry Biegelsen with Wells Fargo.

Hi, it's Leigh calling in for Larry. Thanks for taking the question. Nice quarter. My first question Drew, at our healthcare conference last month, when you were asked about 20 25, you talked about aspiring to be a 20% grower.

And you're confident that will continue to be the company's target going forward. So the question there is, are you confident in that you can grow 20% in 25 Current consensus is closer to 18% growth. And I have a follow-up.

Yes. Thanks, Laid. So looking ahead to 25 we are very excited about the runway for continued robust growth across all three parts of the business.

Within VTE, of course, we're going to be able to continue to leverage Peerless as you heard Tom describe. We've got new products coming in VTE next year, continued traction and work with VT Excellence Emerging therapies will be a big year for us next year with ARTIX.

In full market release with the 1st full year of lymph flow commercially We've got a next gen product coming in Inari continued traction with CBD You heard me describe earlier the catalyst in international across Europe and LatAm and Asia Pacific and some of the new markets coming online as well. So over the next 60 days, we will take all of that into account. We'll have a chance to look at ARDEX in the first 60 days and Peerless in the 1st 60 days, all of that will inform our guidance that we'll roll out early next year But to be clear, what remains unchanged is our commitment to continued premium robust growth. That will remain our top priority in 2025. Alongside that, a second clear priority is going to be the work we're going continue to do impact to profitability. And you heard Kevin describe some of the recent progress here even this year and our confidence looking ahead for that progress to continue. Last thing I'd point to relative to guidance next year is that philosophically, we will continue our historical approach and we put a number out from a guidance perspective we want to be highly confident in delivering on that number.

I think that's another part of our guidance that won't change looking ahead to next year.

That's helpful.

And just for my follow-up on China [indiscernible] Is there an update on flow Trever in those markets? And any additional color you can provide on the market study in Japan and the distribution agreement? Thank you for the questions again.

Sure. Thanks, Blake. So we've been working the last couple of years to gain regulatory and reimbursement approval in both China and Japan for both Flotriever and Class Reaver. In both of those markets, for different reasons, clot fever has led the charge. And is a step ahead of where we are at with flow fever. So as we enter those markets initially, we'll be doing so with clot triver initially and then following that commercial effort will follow with Flotriver to get regulatory reimbursement and commercial traction with the second product. The 25 patient studies that I described to be clear was [indiscernible] That was a study that we conducted with clotcrever in market in China with acute endpoints, we submitted that dataset to the NMPA and that data will be part of their final regulatory assessment for China approval In Japan, as you heard us describe in the prepared remarks, we do have PMDA regulatory approval. We anticipate finalizing reimbursement approval here in Q4 that will set the stage for us to do our initial work in Japan, which should be in the context of 100 patient post market study which is a requirement from a regulatory perspective.

So that will be the initial commercial effort will be in the context of that 100 patient post market study. Maybe last thing I answer the question on the distribution agreement, we did enter into a 3rd party distribution agreement in Japan for a partner to help us commercialize [indiscernible] as it comes to market here.

So that's another new update that we provided in the prepared remarks. Thanks, Les.

And our next question will come from Bill Plavank with Canaccord Genuity.

Hey, it's Zachary on the line for Bill. For taking the question.

It sounds like Lymphoma is progressing really well in terms of both the reimbursement and back approvals. As we adjust our models tonight, what should we expect in terms of 2025?

So you heard us describe 2024 as a foundation building year for Linflo. That's really going to set the stage for us to drive meaningful growth out of Linflow in 2025. And that is going to be building off the foundation of supply chain work that we've done this year, the NTAP, the team being aligned Newtek APC coming online, all those things contributing to the growth. Within emerging therapies, [indiscernible] clearly lymph flow is going to be an important part of the growth story with emerging therapies I think ARDEX moving into FMR will be another key driver for us within emerging therapies. And then of course later in the year we'll have a next gen platform launching with Inari and along the way as a backdrop we'll continue to do the work with VinaCore and Rescor in chronic venous disease. So lots of nice catalysts shaping up in emerging therapies next year. I think the top of that list is going to be the growth we're anticipating out of Linflow.

And our next question will come from Michael with Jefferies.

Good afternoon and thanks for taking my questions.

I guess just a follow-up on on Peerless. Assuming tomorrow we see where it shows what you're expecting it to show, good outcome, Do you expect Inari will benefit entirely from that study or is there a potential for a class effect that could just lift mechanical from back to me more broadly? Thanks for the question, Mike. I don't think there's going to be a class effect attributable to Peerless because I think flow retriever is in a class of its own. Remember, the Peerless study randomizes flow trevor to catheter directed thrombolysis And when we're talking about the flow retriever procedure, there's only one device that has the kind of efficacy for thrombectomy as well as the safety of blood return.

That is the flow trigger system. So I think that the results if positive are going to be directly assigned to the Flotriever treatment arm And frankly, if other companies want to try to gain benefits, they should do their own studies.

Got it. Thanks, Tom. And then just one quick one last quick one. You just comment on any trends in pricing in the core USVTE market?

So Michael, I think the trends in pricing again were stable. In the year. We've described in the past that pricing is a modest tailwind for us.

We take price or attempt to take price as contracts come up for renewal. That was certainly the case in Q3. And then the second tailwind that we drive from a pricing standpoint is the continued conversion of accounts onto our VTE PPP pricing program which mathematically ends up creating a bit of a tailwind. So those were the dynamics we saw in Q3 and again very consistent with what we have described in the past Our next question will come from Richard Newitter with Truist Securities.

Hi, good evening. This is Robin in for Rui. Rich. Thanks for taking my questions.

So just 2. 1, I guess, on the next gen venovustat, can you talk a little bit about what the actual improvement is that's going to make you able to win share in that case? A little garbled, Herb. I think you're asking about the next gen Arctic system and what attributes of it gives us confidence we're going to be able to take share? Did we get the question right? Yes, that's right. Okay. I think Tom can can take that one.

Yes. Thanks for the question. We are really excited to bring Arteryx back to market as you heard in the comments already. If we rewind back a year and a half to the 1st generation ARTIX, what we recognized was that there was a great need for mechanical thrombectomy for the acute limb ischemia market. And that obviates some of the shortcomings of both surgery, lytics and other approaches The ARTIX Gen 1 system was very safe, but we realized we could improve with some of the ease of use with how the components work together as well as to improve the thrombectomy results. And we believe with this new generation of ARTIKS, which has a protection scheme to reduce thistal embolization has an upgraded funnel as well as mechanical thrombectomy platform that we're going to really realize the promise of what this technology can bring.

Thanks. And then I guess my next question is on the P and L. We're all trying to to calibrate our models to 2025. Is there anything you'd want to point out in terms of this pathway to sustained operating profitability? It looks like R and D has taken a a pretty big step down this year, but Street hasn't stepping back up next year. Just hoping you can give us some color on puts and takes and where should we thinking about where the profit drivers are coming from? For next year? Thanks.

Yes. Thanks for the question. This is Kevin again.

So overall, look, I think we feel good about the progress that we're making on the operating income line. In Q3, you saw a $9,000,000 sequential and improvement on a GAAP basis from Q2, Excluding the one time impairment charge that we talked about, it would have closer to $13,000,000 sequential improvement. We saw nice improvement on the SG and A line and general stability on the R and D line. As we talked about on the last call, SG and A, we expect it to step down to a more normalized level like Q1 and it did. This quarter in Q3. So really pleased with that. And R and D, excluding the one time charge, was roughly in line with Q2. So looking ahead, as we discussed, in the script, we do see SG and A continue to step down in Q4 relative to Q3.

And we would expect general stability if not a bit of improvement on the R and D line as well. Overall, that lands us in an area that's roughly breakeven from operating margin perspective in Q4, which we're very pleased with. And we think we're well on our way to driving incremental operating leverage into the first half of twenty twenty five.

And as you heard again in the script, we remain fully committed to driving to sustain GAAP operating profit [indiscernible] We have time for Our next question here will come from Matthew Blackman with Stifel. Please go ahead. [indiscernible] Taking the questions. I've got 2. And Drew, on Peerless I think the quote from the prepared remarks is that if we get a positive readout we'll see CDT conversion. So I guess that begs the question what you think constitutes a positive readout if you're willing to share And then one follow-up.

Sure. Thanks for that, Matt. So this study was purposely designed with meaningful clinical endpoints as win loss ratio composition That's exactly what physicians have been asking for.

We have moved past the era where surrogate endpoints really are going to inform clinical decision making. As a result, if you look at [indiscernible] components of the win loss ratio, each of them are important for clinical decision making. Each of them reflect important outcomes for patients. That's the design of the study and that's what you're going to see presented tomorrow and late breaker tomorrow morning. The opportunity for us, if it is positive, is meaningful. As you heard Tom describe 280,000 patients, we believe 15,000 of those are still today being treated with catheter directed trombolytics. That's exactly the readout that Purelysis is going to shine a light on. So we're very excited to get the data out tomorrow morning. This has been 3 year journey. To get to this point. So exciting to be on the e book that readout tomorrow morning.

Understood. Thank you.

And then just on VT excellence, just where are you in terms of accounts across the 3 phases of the program? Just remind us what the trigger points would be to move from one phase to the next and how long that transition often takes? And whether that transition period is moving faster, re recently or just any color on an update on the DTE Excellence Program?

Sure, Matt. I can put a little more color on that.

So recall that our view is all 1700 of our accounts are in some phase of of a journey towards emerging as a BTE Center of Excellence The vast majority of our accounts are in the earliest phase of our program what we call engage In that phase, the work is focused on spreading awareness, on establishing a solid foundation, on ensuring that the interventionists are getting solid outcomes in their first set of cases We do some work in the first phase to ensure that the coding and billing is being done correctly and that the hospital is receiving credit for the work that they're doing from a reimbursement standpoint. All that characterizes the kind of work we do and engage. And still today, the vast majority of our accounts are still in that phase. The penetration into the TAM in that phase is in the low single digit just getting started and laying the foundation. From there, we have accounts graduated into the 2nd phase, what we call Empower, And in this phase, we're really focused not only on broadening awareness amongst the interventionists, but also amongst all of the non interventional stakeholders of the healthcare for these patients.

So the emergency room physicians, the hospitalists, the pulmonologist, the hematologist, all of the other caregivers We spend a lot of time in Empower engaging and raising awareness among that group of caregivers. We also spend time focused on the administrator in the Empower phase to ensure that they appreciate only the clinical benefits of Flotriven and Clotriven, but also the economic value proposition that goes along with our therapies. And as a result, they're supportive of the program building effort and investing into the program building effort We've got a couple of 100 accounts in that in power phase and the TAM penetration in that phase. Is in the double digit [indiscernible] And then the final phase from there is a group of accounts that have graduated on to what we call excel and these are accounts that are beginning to perform as true VTE Centers of Excellence. They've got well defined care pathways and algorithms Many of them have a dedicated VTE coordinator in place Many of them are taking advantage of artificial intelligence based diagnostic programs to ensure that patients are flagged All of those are hallmarks of our most advanced group of accounts. We've got several dozen accounts in that phase.

And the TAM penetration in that group is north of 20%. We've got several that are north of 50%. So it gives us some confidence Every account moves along that journey at its own pace There's really no there's a lot of variability in the pace at which they move along that journey. But the important thing is we're making progress. And as we make progress, we're driving deeper and deeper penetration and impacting more and more patients. That is all the time we have for questions today. We will now conclude our question and answer session in addition to the call.

Thank you all very much for attending and participating in today's conference. You may now all disconnect. Lines and have a great day.

Thanks everybody. Take care.