Inari Medical Inc

NASDAQ:NARI

Earnings Call Transcript 2023-Q1

[Operator]

Good afternoon, and welcome to the Inari Medical Inc.’s First Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Caroline Corner, Investor Relations. Please go ahead.

[Caroline Corner, IR]

Thank you, Operator. Welcome to Inari's first quarter 2023 earnings call. Joining me on today's call are Drew Hykes, President and Chief Executive Officer; and Mitch Hill, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements, including statements regarding the markets in which Inari operates, trends and expectations for Inari’s products and technology, trends in demand for Inari’s products, Inari’s expected financial performance, expenses and position in the market; and the impact of COVID-19 on Inari’s operations and Inari’s customers’ operations.

These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by the forward-looking statements. Please review Inari’s most recent filings with the SEC, particularly the risk factors described in Inari’s annual report on Form 10-K for the year ended December 31, 2022, 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. Inari’s press release for the first quarter 2022 [Ph] results is available on Inari’s website, www.inarimedical.com, under the Investors section and includes additional details about Inari’s financial results. Inari’s website also has the latest SEC filings, which you are encouraged to review. A recording of today’s call will be available on Inari’s website by 5:00 p.m. Pacific Time today.

Now I would like to turn the call over to Drew for his comments and first quarter 2023 business highlights.

[Drew Hykes, President and CEO]

Thank you Caroline. And thank you everyone for joining us today. Our first quarter was successful and highly productive. Revenue growth was strong and we executed crisply across all our growth drivers. We presented what we expect to be guideline changing new data from the largest prospective thrombectomy studies ever conducted in high risk PE. We received FDA approval for two new products, and important FDA label expansions for two additional products, all while continuing our work to drive market expansion and uptake of our devices.

I will share additional details about all of this shortly, but we'd like to start now as we always do with a patient story. This quarter we highlighted story which underscores the impact of Inari’s commitment to generating high quality clinical evidence.

Last month a 78-year old grandmother in New England developed back pain and difficulty breathing. She was seen in an emergency room and diagnosed with a high risk pulmonary embolism. This is the most serious manifestation of PE with a predicted mortality of 25% to 50% despite existing treatments. Thankfully, due to the impact of Inari’s VTE Excellence Program, the hospital network where she presented had developed a system for rapid triage, and she was transferred to a sister institution with the expertise to use ClotTriever. Her physician had recently been informed of the FLAME study results, which show that intervention ClotTriever in high-risk PE patients dramatically reduces in-hospital mortality.

Based upon the FLAME data, her physician had the confidence to perform thrombectomy as opposed to treating her with systemic thrombolysis, which is associated with a significant risk of life-threatening bleeding, long ICU and hospital stays, and poor outcomes.

At the start of the procedure, her skin was ashen and sweaty. She was near death with a blood pressure of 60 and her heart beating 130 times a minute. In a short 45-minute procedure, her doctor was able to remove all of the thrombus, and thanks to FlowTriever, was able to do so with minimal blood loss. While still on the table, her vital signs returned to normal, and she remarked to the team about how much better she felt.

Most importantly, after a short hospital stay, the patient was able to return home to see her grandchildren. This case shows how high-quality clinical evidence can change the standard of care in VTE. We have never been more committed to generating this evidence. It also shows how our systemic approach to market development is driving a paradigm change in the treatment of VTE.

Now I'd like to provide a brief summary of our Q1 financial performance. Our revenue in Q1 was $116.2 million, up 34% year-over-year and 8% sequentially from Q4 2022. The performance was driven by strong underlying procedure growth across both the ClotTriever and FlowTriever product lines. Net operating loss in Q1 2023 was $5.3 million. As a management team, we're committed to our journey to not only invest strategically in the business, but also drive operating leverage.

Our Q1 operating loss was a positive step forward. Throughout 2023, we'll continue to see some fluctuation quarter-to-quarter, but as we move into 2024, we remain committed to achieving sustained operating profitability in the first half of the year. We are pleased with how our business performed in Q1, and we are encouraged by the steady progress we're making across all five of our growth drivers.

Our end markets are large and remain highly underpenetrated and we continue to see strong momentum in underlying core VTE market dynamics. Despite some on-going competitive trialing, we've remained confident in our ability to protect and extend our position as the clear market leader in VTE for years to come. Most importantly, we remain laser-focused on the work of developing the VTE market for the benefit of patients and continue to view competition as potentially additive to those efforts.

With that, I'll now turn to our growth drivers. Our first growth driver is the expansion of our sales organization. Similar to our most recent quarters, in Q1, we deliberately moderated the pace of our new sales territory additions, exiting the quarter with just over 290 territories.

We are pleased with the resulting sales force operating leverage and productivity gains we're beginning to recognize. Consistent with this approach, for the remainder of 2023, we expect to continue adding sales professionals each quarter at this more measured cadence and anticipate ending the year with at least 310 territories. Continued expansion of our sales organization results in smaller and smaller territories. This in turn positions us well to successfully introduce new products to the market and to execute on our second growth driver, which is increasing penetration in existing accounts.

Despite our commercial success and rapid procedural growth, our markets remain highly underpenetrated. Still today, the vast majority of VTE patients continue to be treated with anticoagulation alone and never even see a physician who specializes in the treatment of VTE. Our VTE Excellence Program is a highly differentiated, comprehensive, and repeatable approach to help hospitals establish systems and processes, similar to stroke and MI, that ensure patients are consistently identified, screened, and evaluated by a VTE expert. Although we continue to refine and iterate the program, we're making solid progress moving customers through to the most advanced phases of VTE Excellence, where TAM penetration is three to four times higher than in the earlier phases.

To date, most of our efforts with VTE Excellence have been focused at the local account level. However, building on success we've seen across individual hospitals, recently we have also begun to work with several large IDNs and GPOs at their invitation to replicate VTE Excellence on a system-wide basis. This is another encouraging sign our strategy is working. We believe VTE Excellence is an important initiative for us for at least two reasons. First and foremost, VTE Excellence is focused on developing the VTE market and changing the standard of care.

Secondarily, we believe it also clearly differentiates us from both existing and future competition. Our third growth driver is to build upon our base of clinical evidence. The past several months have been highly productive on this front. The FLAME study was presented as a late-breaking trial at the American College of Cardiology Conference in early March.

FLAME is the largest ever prospective device study in high-risk PE. These are the sickest 10% of PE patients who are in active hemodynamic collapse and historically experience mortality rate of 25% to 50%. The composite primary endpoint in the FlowTriever arm of FLAME was met and was driven predominantly by an exceedingly low mortality rate of 1.9%. This represents a 90% reduction compared to the 29.5% mortality rate seen in patients treated with other therapies in the context arm.

The magnitude of this spectacular mortality reduction with FlowTriever in a very sick patient population cannot be emphasized enough. We believe FLAME will change the standard of care in high-risk PE and, over time, help usher in a new era in PE treatment guidelines. We are pleased to see physicians taking notice of the FLAME data and already beginning to change practice patterns, as reflected in our patient story. We envision a day when mechanical intervention with FlowTriever in high-risk patients is the first-line therapy.

Importantly, we also believe the highly positive results of FLAME in extremely sick patients will be powerful enough to also increase physician confidence in intervening on less sick intermediate-risk patients. Keep in mind the intermediate-risk PE patient population is five times larger than the high-risk PE patient population.

Turning to our randomized control trials, we are pleased to report enrollment in our PEERLESS RCT, comparing FlowTriever to catheter-directed lytic therapy has surpassed the halfway mark and enrollment trajectory remains strong. If successful, we believe PEERLESS will end the use of lytic-based interventions in intermediate-risk PE.

In DVT, we continue to work through site activations for our DEFIANCE RCT, comparing ClotTriever to anticoagulation alone. The study is designed to establish ClotTriever as the standard of care for DVT treatment. Given its importance, we are committed to the hard work ahead to enroll this study. As impactful as we believe the PEERLESS and DEFIANCE studies will be to the treatment of VTE, we also envision a third potential RCT over the immediate horizon. We will have more to share on this topic soon.

In summary, we continue to commit significant resources to the production of high-quality clinical data. Although our efforts are designed to change the standard of care in VTE, while not the goal, they also serve to further differentiate and distance scenario from both current and future competition.

Our fourth ClotTriever is to expand our product portfolio. We have several updates to share here as well. First, REVCORE received the first-ever FDA clearance for the treatment of instant thrombosis in the venous anatomy. As is our standard practice, we've recently initiated a limited market release. REVCORE has been designed to mechanically clear chronic, wall-adherent clot from inside an occluded venous stent. We estimate there are approximately 90,000 venous stents implanted annually in the U.S. and as many as 10% to 20% occlude within the first two years. Previously, there have been no dedicated tools to address this unmet patient need, and although still early, physician enthusiasm and feedback for REVCORE have been high.

We anticipate REVCORE will be priced both within our per-procedure pricing model as well as separately. It also gives us access to a new patient population. Taken together, REVCORE represents an important incremental revenue opportunity. We'll have more to share on the pricing and positioning of REVCORE upon full market release. Patients with instant thrombosis represent a subset of the broader chronic venous disease patient population, the largest of our new target-addressable markets. REVCORE is the most recent addition to a purpose-built toolkit we are developing for the treatment of CBD.

Turning to Protrieve, we continue to be pleased with how the launch is progressing. Protrieve is a device designed to provide protection to the heart and lungs during complex DBT procedures involving extensive clot, which we estimate is approximately 10% to 15% percent of all DBT procedures. Physician feedback has been positive, and we believe there is still a significant runway ahead of us to continue to access new accounts. The recent indication expansion for Protrieve as a sheath for IVC filter removal will add additional momentum to our launch efforts.

As a reminder, Protrieve is generally sold outside of our per-procedure pricing at an ASP of $4,000. InThrill is also progressing well in full market release. InThrill is a thrombectomy system designed for small vessels, including AV fistulas and veins in the upper extremities and below the knee. The combined total addressable market is 250,000 to 300,000 procedures per year in the U.S. alone. We are encouraged by the positive early clinical results with InThrill and the unmet needs it addresses. The recent indication expansion for InThrill to include the specific treatment of AV fistula and AV graft thrombosis will add additional momentum to our launch efforts.

At an ASP of $4,000, InThrill represents an incremental $1 billion market opportunity. In summary, our innovation pipeline is as robust as it has ever been, and we anticipate several additional products initiating LMRs during Q2 alone. Our last growth driver is expansion into international markets. Q1 marked another quarter of record case and revenue production for our international business. Our international business generated revenue of $4.3 million in Q1 2023, up 154% over Q1 of 2022, and 30% sequentially from Q4 2022.

Our performance was primarily driven by continued adoption in Europe, where we were pleased to have received MDR approval for ClotTriever and FlowSaver during the quarter. Beyond Europe, during the quarter we also saw solid case growth in our existing markets in Latin America, Canada, and Asia Pacific. In China and Japan, we are making progress on our pursuit of regulatory approvals while also developing our go-to-market strategies.

We have invested heavily in the build out of our international operations. Given the spectacular unmet need internationally, we believe it's reasonable for this business to represent greater than 20% of total company revenue over time.

In closing, the year is off to a strong start. We believe we're making solid progress across all of our growth drivers. We've made deliberate investments which are designed to help us treat more patients. These investments will continue to differentiate us from competition now and into the future. Our markets are large and highly underpenetrated, and the unmet needs are significant.

Most importantly, our commitment to patients, our people, and solving big problems is unwavering. I could not be more enthusiastic about the health of our business and believe we can and will grow sustainably for many years to come.

With that, I'd like to turn things over to Mitch.

[Mitch Hill, CFO]

Thank you, Drew, and good afternoon, everyone. Inari’s revenues for the first quarter of 2023 were $116.2 million, up $29.4 million, or 34%, from $86.8 million for the same period of the prior year, and up 8% or $8.4 million sequentially over the fourth quarter of 2022.

Compared to Q1 of 2022, our revenue growth was due to our continued efforts to open new customer accounts, expand our sales force, and deepen our relationship with existing customers. In 2022, we significantly expanded both the FlowTriever and ClotTriever product lines and also began commercializing the ProTrieve and InThrill products.

The revenue split between product lines was similar year-over-year, with 34% of our revenue derived from the sale of ClotTriever and other systems during the first quarter of 2023 versus 32% in 2022, and 66% derived from the sale of FlowTriever systems compared to 68% in 2022.

Gross margin was 88.2% for the first quarter of 2023 compared with 88.5% in the first quarter of 2022. The decline was primarily due to additions of new products. This adds additional cost of goods sold due to our per-procedure pricing model. Operating expenses were $107.8 million in the first quarter of 2023 compared with $79.9 million for the same period of the prior year.

R&D expense was $22.1 million in the first quarter of 2023 compared with $16.1 million for the same period of 2022. The $6 million net increase in R&D expense was primarily driven by an increase in headcount.

SG&A expense was $85.7 million in the first quarter of 2023 compared with $63.7 million for the same period of the prior year. The $22 million increase was primarily due to personnel-related expenses as we increased our headcount and secondarily due to higher travel expenses.

Net loss for the first quarter of 2023 was $2.2 million compared to a net loss of $3.1 million for the same period of the prior year. The basic and fully diluted net loss per share for the first quarter of 2023 was $0.04 based on weighted average basic and fully diluted share count of $54.8 million.

These compare with a basic and fully diluted net loss per share of $0.06 based on a weighted average basic and fully diluted share count of $51 million for the same period of the prior year.

As you heard earlier from Drew, we remain committed to our journey towards operating profitability and continue to feel confident in reaching our goal of sustained operating profitability in the first half of 2024.

Moving to the balance sheet, our cash and investments at the end of Q1 totaled $328.4 million consisting of $56.6 million of cash and $271.9 million of short-term investments. By way of reference, our cash and investments as of the end of Q4 of 2022 were $326.4 million.

Our cash flows used in operating activities were $2 million for the first quarter of 2023 compared to cash flows used in operating activities of $9.1 million in the first quarter of 2022. Lastly, I'd like to address Inari’s financial guidance. For the full year 2023, we are increasing our revenue guidance to $478 to $488 million up from $470 to $480 million.

With that, I'll turn the call back to the moderator for questions. For the Q&A segment, Drew and I will be joined by Dr. Tom Tu, ANARI's Chief Medical Officer.

[Operator]

[Operator Instructions] Our first question comes from Travis Steed with Bank of America. Please go ahead.

[Travis Steed, Bank of America]

Hi, everybody. Congrats on a good quarter, and thanks for taking the questions. Maybe I'll start with any call you can provide on kind of March, April, what you're seeing, confidence to raise the guide by more than the beat this quarter. And then also anything, any additional call around like price versus mix, unit volume color you could provide as well at this point that would be helpful.

[Drew Hykes, President and CEO]

Sure, Travis. Thanks for those questions. I can take the first one. I think Mitch can comment on the second set of questions. So, during the quarter, we saw strength and growth throughout each month of the quarter. And the performance was really driven primarily by strong procedural growth across both of the core businesses, FlowTriever and ClotTriever. And that was despite the consistent competitive trialing we saw during the quarter.

ASPs were stable to modestly up. So, that wasn't a big contributor in that 34% revenue growth. New products and new TAMs contributed revenue, certainly, but on a relative basis, still relatively modest. And as a percent of revenue, stocking revenue was the lowest in the quarter that had ever been at any time as a public company. So, again, I think all that points to strength primarily across the procedures. I think it also points to the health of the market and the payoff of the investments we've been making in market development, program development, high-quality evidence, innovation. I think, clearly, there's a very healthy market backdrop that you see there as you look at the Q1 results. So, maybe with that, I'll turn things over to Mitch for the mix-in-the-unit comment.

[Mitch Hill, CFO]

Yes. And, Travis, maybe I think you asked about the monthly sort of performance. We're not really commenting on the inter-quarter trends. We did provide some feedback at the time of the February call, just commenting on the strength of the business in January, February. The business continued strong, you know, during the month of March and I think Q2 is off actually to a very good start as well. So, we continue to be very confident, as you heard us talk about on the main call, with the performance of the business as we think about Q2 and particularly as we think about the back half of the year.

[Travis Steed, Bank of America]

Right, that's helpful. Maybe on Q2, would you still expect that to be up sequentially versus Q1? And then maybe a little more color as well into the new products. I saw an FDA approval just this week on ClotTriever XL and there was the Artix AX last week. Just what you're assuming on that for the full year ahead and rolling that out as well as some of the initial feedback in the limited market release products.

[Drew Hykes, President and CEO]

Yes, so Travis, relative to Q2 and how we're thinking about that, obviously a really strong start to Q1. And I think the fact that we are raising north of the beat, I think signals some of the confidence we're seeing in the rest of the year and how confident we are in terms of how we're positioned for the rest of the year. We do anticipate continued trialing. We think we're probably in the middle innings of the trialing. And as a result, we're anticipating a relatively flattish Q2. Keep in mind, even a flattish Q2 would set up about a 25% year-on-year growth relative to last year or so. And then as we look ahead to the end of the year, the second half of the year, we've got a series of new products coming. You mentioned Artix. We've got REVCORE that is currently working through LMR. We've got a second product working through LMR. We've got three additional products that will be initiating LMR here in Q2 that we're probably not quite ready to talk about yet. But all of that, I think, from a product standpoint, really exciting as you look into the second half of the year. Continued productivity gains from the field organization as we work through the rest of the year. More progress on VTF salience, additional data coming, and then certainly continued traction OUS as well. So I think all that is reflected in the confidence we feel looking ahead to the end of the year and the corresponding increase in the guidance that you heard.

[Travis Steed, Bank of America]

Great. Thanks a lot.

[Operator]

Thank you. The next question comes from Cecilia Furlong with Morgan Stanley.

Please go ahead.

[Cecilia Furlong, Morgan Stanley]

Great. Good afternoon, and thank you for taking the questions. Tom or Drew, I was just hoping one of you could comment on what you've seen post-FLAME. One, awareness of the clinical data specifically. But then two, just talking about kind of the potential both in high-risk, but then kind of the flow-over impact into how centers are thinking about treating intermediate-risk patients. Just would love any color. I know it's early days, but any color on feedback would be helpful.

[Drew Hykes, President and CEO]

Great, Cecilia. I'm happy to take the question. So, of course, we were very pleased and proud to present the FLAME study results. I would say that the anticipation of this trial as well as the reception it's received has been quite fantastic. In fact, we know that at a national meeting later on this year, it's going to be featured as the most important venous trial of the year. And I think given the jaw-dropping results in terms of drop reduction in mortality, as well as the safety signal of doing FlowTriever in the most challenging high-risk patients, I think can't be understated.

Now, we talk a little bit about guidelines and, hey, when is this going to be standard of care? I think we're already seeing traction. I can't tell you how many sites have expressed interest in broadening their treatment algorithm to include these high-risk patients, much like the patient story that we led the call-off with. But I think the more important signal here is that spillover effect that you described. High-risk patients are really only 5% of PE presentations, whereas the intermediate-risk patient population is at least five times or more greater than that population.

And it stands to reason that if we can get such fantastic results in the high-risk patients, doesn't it bolster confidence in applying this therapy to the intermediate-risk patient population? And, of course, we'll see that play out over time, but this logic seems to be taking hold for sure.

[Cecilia Furlong, Morgan Stanley]

Great. And if I could follow up, Mitch, just on OpEx, how would you think about the cadence to the balance of this year, and specifically what you're expecting both from OUS expansion efforts and then on a relative basis versus 2022, your outlook for a more moderated increase to your U.S. sales force?

[Mitch Hill, CFO]

Sure. As we look at the OpEx in Q1 and sort of think about where that might go for the balance of the year, definitely on the R&D side, the Q1 spend, I think, is going to be increasing in a very slight fashion as we think about Q2, Q3, Q4. From an SG&A point of view, the S side of that is going to continue to increase. As you heard in the prepared remarks, Drew talked about the growth in this commercial sales team from the current level of about 290 up to at least 310 by the end of the year. So that piece continues to grow. And the international side of the business is an area of more aggressive investment. We're excited, as Drew mentioned, talking about the second half of the year with some of the growth opportunities internationally. For example, we'll be fully direct in growing in the Australia and New Zealand market in that timeframe, and that, we think, is a real nice opportunity for us. I'm just using that as an example.

So the SG&A side, I think we can see some, potentially, say, a 5% or so uptick from Q1 to Q2. And then I think it would be a very modest increase after that for the balance of the year. Taken all together, the OpEx spend of the company we see growing at a slower pace than the top line. I think that's a good thing, right, as we move on this path to profitability. And we are still committed, as both Drew and I mentioned in the prepared remarks, to this sustained and consistent operating profitability as we get into the first half of 2024.

[Cecilia Furlong, Morgan Stanley]

Great. Thanks for taking the questions.

[Operator]

Our next question comes from Larry Biegelsen with Wells Fargo. Please go ahead.

[Larry Biegelsen, Wells Fargo]

Good afternoon. Thanks for taking the question. Okay, a couple for me here. Just, Drew, I'd love to get your reaction to the numbers last night. They said their USPE-DVT procedures grew over 30% quarter-over-quarter in Q1, and their U.S. peripheral thrombectomy businesses grew 26% year-over-year in Q1. What's your reaction to those figures, and how did your growth compare? And I have a follow-up.

[Drew Hykes, President and CEO]

Sure. Thanks for that, Larry. So maybe just to level set, from a market growth standpoint, I think you've heard us in the past forecast that the market growth, we believe, is easily north of 20%, if you define the market as mechanical thrombectomy for VTE. In Q1, we grew 34%. Our growth in that market is being driven by the continued conversion of lytic-based intervention to FlowTriever and ClotTriever. We're continuing to put new patients on the table, clearly, from conservative medical management to treatment of FlowTriever and ClotTriever. And we're continuing to protect and extend our market leadership position in the market. We did see consistent trialing during the quarter. And, looking ahead, we would anticipate that trialing continuing. But nothing we've seen to date diminishes our confidence and our ability to continue to extend our leadership.

We've got, hands down, what we believe is the best team in the market. We've got a highly differentiated approach to market development, program development. We've got a mountain of clinical data growing bigger by the day. A robust portfolio of innovation. All those things give us a lot of confidence. Relative to some of the numbers that for numbers shared 30% growth off a relatively small base. On top of trialing, I think all of that seems plausible. But I think, in terms of the impact it had on our business during the quarter, 34% growth, I think we feel very good about how we performed despite some of that trialing activity. And I think everything we've seen to date indicates that this is going to be a cannibalization story between CAT-12 and CAT-16 as opposed to a story around share loss on our side.

And maybe the last comment I'd make on the competitive share dynamics, again, is just to remind everybody this is a $6 billion market that's 5% or 6% penetrated with our technologies. As a result, a point of market growth worth 10x a point of market share. So our focus, as you've heard us time and again point out, it continues to be on developing the market, on investing in evidence, on investing in program development. And I think you'll see that play out over time.

[Larry Biegelsen, Wells Fargo]

That's helpful. So just to follow up, same theme. So Q2, you said earlier, Drew, you expected to be flat. And I think previously you expected each quarter to be kind of rateably up roughly $4 million, or at least that's what the street's modeling. So it does seem like something has changed. And I guess, I can just imagine, after this call, how do you know that the flash impact won't get worse? Can you maybe talk a little bit more about what you're seeing with trialing and customers, and, how sticky things have been versus, customers coming back to Inari. Hopefully you understand that, yeah, basically, it seems like the cadence for Q2 changed a little bit. So what changed and how do you, what gives you confidence things won't get worse going forward?

Thanks.

[Drew Hykes, President and CEO]

Yes, first of all, I don't think anything has changed. The consistent performance from CAT 16 that has been very consistent throughout the quarter. We continue to see and hear from our customers that the product is leaving clot behind and has a risk of significant blood loss. As a result, a lot of the trialing we're hearing about is one and done. And we just don't see a lot of sticky share emerging. Again, we're going to certainly see trialing continue into the second quarter. We think we're in the middle innings of that. So we're certainly going to see an impact from that. But even a flattish Q2, still year-on-year is going to set us up for a 25% kind of growth rate. So we still feel very confident about that growth rate all the way through Q2 and into the second half of the year as well.

[Larry Biegelsen, Wells Fargo]

All right. Thank you.

[Operator]

Next question comes from Adam Maeder with Piper Sandler. Please go ahead.

[Adam Maeder, Piper Sandler]

Hi. Good afternoon, everyone. Thank you for taking the questions and congrats on the nice start to the year. Actually wanted to circle back on Travis's question around the ClotTriever device approval from last week. Just I think it's called ClotTriever XI. Any color in terms of what that product entails?

And then also I'll lump this in. Wanted to ask about REVCORE, which I think is, as you mentioned, is an LMR. Just what's the feedback there? How do we think about any potential revenue contribution this year? And how quickly could that progress to a full market launch? And then I had a follow-up. Thanks.

[Drew Hykes, President and CEO]

Yes, I think Tom can take both those, Adam.

[Tom Tu, Chief Medical Officer]

Yes, thanks, Adam. Great question. So very briefly, because we tend not to comment too much on products in limited market release, we did receive FDA approval for a device that's called ClotTriever XL. We have described ClotTriever XL as a thrombectomy system in the ClotTriever family that is optimized for treatment of IVC thrombus. So the XL stands for extra-large, given the size. It's in limited market release. Other than that, we're not going to really comment on the ASP or the go-to-market strategy.

I will say that about 15% of the DVT market is complex DVT, including and primarily involving IBC thrombus. So you can imagine it targeted towards that market. For the second half of your question, I think we can say a little more. REVCORE is a novel device. It's a very exciting opportunity to treat a set of patients with really unmet needs that there's no good therapies for. These are patients with chronic venous disease with occluded stents, and there's really no good option for these patients. We now have a device called REVCORE, which is able to, in limited market release experience, dramatically improve the flow in their stents. We have seen numerous cases of patients suffering for decades with chronic swelling and venous ulcers essentially being healed with the use of this device. Some other numbers that we've shared previously, we think about 90,000 venous stents are placed each year. About 10% to 20% of those are occluded within the first two years, and that's just the incidence. There's, of course, a large prevalence pool of these patients that have accumulated over time.

So we think this is going to be an incremental revenue opportunity. We'll have a lot more to say once we've completed our limited market release experience and go to FMR, but we're very excited about this product.

[Adam Maeder, Piper Sandler]

Thanks for the color there, Tom. And if I could sneak in one more. I can't help myself but ask about the third potential randomized control trial, which I think you referred to as being over the immediate horizon. So I guess first, can you just help us better interpret what immediate horizon means? Is it fair to assume that this could commence in 2023? And then any color on whether this would be for DVT or PE? And kind of the purpose of the trial, is this something to expand indications, change guidelines, you know, head-to-head versus competition, etcetera? Just any additional details would be much appreciated. Thank you.

[Tom Tu, Chief Medical Officer]

Sure, sure. I'll tackle that one, too, Adam. So I think we have not really kept any great secrets here. We are interested in flexing our clinical muscle here. We have invested heavily in the ability to ask and answer very relevant scientific questions. We think we owe it to patients. We owe it to physicians. We owe it to the space to provide these kinds of answers. And this is the kind of data that we're generating across our portfolio that's really going to establish our therapies as standard of care. We think we can run three simultaneous randomized clinical trials, the first of which being PEERLESS, the second of which being defiance, and the third of which, I think I'm at liberty to announce that it's going to be a pulmonary embolism trial comparing FlowTriever to anticoagulation, the largest population of patients being treated currently.As far as timing is concerned, you can expect a major announcement coming within weeks at a major meeting to outline the details of this study.

[Adam Maeder, Piper Sandler]

Thanks for the color there, Tom.

[Operator]

The next question comes from Bill Plovanic with Canaccord. Please go ahead.

[William Plovanic, Canaccord]

Great, thanks. Good evening. Congratulations on the good quarter. My questions are, as I look at the business just based on the mix, it really was the DVT business that grew sequentially. You saw some growth in the PE. I just want to understand, as we talk about the new products that you've launched in the first quarter, I would assume all of those are falling under the DVT bucket? Correct me if that's not accurate.

And then just kind of curious, as you look at those new products, how much did they actually contribute to the growth? So how much of it was your core business versus the incremental from new products?

[Drew Hykes, President and CEO]

Yes, Bill, I'll try to tackle that one. We saw, actually, nice growth from the core products, if you will, the FlowTriever product family. Typically, that's priced, as you know, as a price per procedure for all nine tools in that toolkit. And then the ClotTriever has also increasingly sort of migrated into a PPP model, because we have multiple tools now that are used by the physicians to remove those clots. We have included the new products announced that went full market release in late 2022, which is the ProTrieve and the InThrill in that category that we're calling the ClotTriever and other systems.

So the reason that you see some increased revenue growth sequentially there, a higher rate of revenue growth there compared to the FlowTriever, is because of the inclusion of those products. The products are off to a nice start. They are still going through the VAC approval process with all of our hospital clients. And so it's still kind of early days, I would say. The revenue contribution in Q1, I would say, is modest for both ProTrieve and from the InThrill products. But we think that both of those products have some nice potential for the future.

[William Plovanic, Canaccord]

Okay. And then just an interesting question on the P&L. You had a pretty big one time on the other income or interest income. Is that a one time or is that a recurring given your cash balance? How do we think of that going forward? And thanks for taking my questions.

[Drew Hykes, President and CEO]

Sure, happy to help with that one. So obviously, from a treasury management policy, we've elected to keep our investments in a very, very short term sort of category duration. And we actually saw some significant pickup in the interest earnings of the business. Although we had a million something of such earnings in Q4 of last year, I think it went up to the $4 million range for Q1 of this year.

So we're seeing some real nice returns there that's been helpful for us. We think we're in a great cash position as a business. And that'll provide a lot of flexibility for us in terms of thinking about different growth opportunities and plans for the future.

[Operator]

The next question comes from Marie Thibault with BTIG. Please go ahead.

[Marie Thibault, BTIG]

Hi, thank you for taking the questions and congrats on a great Q1. I wanted to revisit your comments here on GPOs and IDNs signing up with you for the VTE Excellence Program. I'd like to hear a little more detail on what that looks like, what it could mean for doctor adoption within those health care systems.

[Drew Hykes, President and CEO]

Yes, thanks for the question, Marie. I'll kind of jump on that first. And Tom may want to add some color as well. I think, as you heard us describe in prepared remarks, we've seen some really exciting developments recently where the work we've been doing, primarily at the hospital level, has now been recognized at the GPO IDN system level. And they're seeing some of the progress that's being made with our program development efforts. They're seeing the clinical benefits. They're appreciating the economic value proposition. And they're coming to us and saying, hey, we like what we're seeing in these four, five, six hospitals within our system. How could you work with us to replicate that effort not across those five or six, but across our entire system? And how can we approach this at that level, at the system level? So we've had two or three instances of that kind of uptake now at major GPOs and IDNs. And I think it gives us, as you heard us say in the prepared remarks, it gives us some encouraging evidence that we are on the right track here and that VT Excellence is indeed having the kind of impact and having the kind of market impact that it's designed to have.

And the fact that it's now being picked up at the system level, I think, is really encouraging and exciting to think how you could extrapolate from here and the kind of impact that that could have. Anything to add?

[Tom Tu, Chief Medical Officer]

Yes. We've framed our market development work as this deceptively simple idea of simply pairing up motivated physicians who want to use our devices to treat patients with patients that are already diagnosed and in the hospital. And of course, it sounds very simple, but it requires quite a bit of work to achieve that kind of consistent identification of these patients. Up until recently, a lot of that work has been grassroots with our teams working with champion physicians from the bottom up. You can imagine when the hospital administration GPOs and IDNs take on this work, you now can meet in the middle with a top-down and bottom-up approach so that we can achieve this STEMI-like goal of consistent identification and triage of these patients to proper physicians.

[Marie Thibault, BTIG]

Okay, very good. Very helpful. Thank you. Maybe I can ask a follow-up on some of the questions about competition and ask it from a more qualitative approach. I'd like to hear what you're seeing in the accounts when they do decide to use the competitive product or when they decide not to. What are some of the factors that are cited that you hear just on the ground from your sales force? Thanks for taking the questions.

[Drew Hykes, President and CEO]

Yes, so Marie, I think the starting point for a lot of that assessment of trialing is how does the product perform in removing clot? And although there may be an improvement there relative to CAT 12, I think a 16 French aspiration platform in PE, as we know from our own Triever 16 experience, is going to be underpowered and leave clot behind in PE. In a similar fashion, a 16 French aspiration only approach in DVT for the majority of these patients that have chronic walled ear clot, you're also going to see clot left behind. So I think that's maybe one initial area of assessment that we hear feedback on. I think the second area is around the blood loss. And as you increase the lumen from 12 to 16, you increase exponentially the risk of blood loss. And I think we've seen lots of instances where despite the attempted mitigations, there has been a lot of blood loss that's got important clinical implications and safety implications.

So I think those are some of the common themes that we hear from a trialing perspective and why, again, we're seeing a lot of kind of one and done trialing, while we continue to not have had a single account that has converted from Penumbra to an Aria as a result of the trialing. I think all of that continues to inform our assessment that this is going to be primarily a cannibalization story from CAT 12 to CAT 16, as opposed to a significant change in the competitive landscape or competitive dynamic.

[Marie Thibault, BTIG]

Thank you.

[Operator]

The next question comes from Rich Newitter with Truist Securities.

[Richard Newitter, Truist Securities]

Hi, thanks for taking the questions. A couple for me. Going back to just, thanks for some of the cadence commentary that you provided. I think you said 2Q would be roughly flat with 1Q. I'm just curious, does that mean, I mean, historically, 3Q is a seasonally weaker quarter, so is 1Q. Does that mean that 2Q and 4Q are your seasonally strongest quarters this year?

[Drew Hykes, President and CEO]

I think, Rich, for us, looking back the past couple of years, I think we're still kind of formative in terms of truly understand the seasonality trends of the business. But our Q2 has had some seasonality sort of impact, we believe. A little hard to tell back in 2021 because of COVID and maybe a little bit of that, as well, carrying over to 2022.

I don't know that we're necessarily sort of pointing at that. But definitely, as people are out and about and they're ambulating and they're active, it seems to sort of cause a change in terms of the number of people who are experiencing venous clots. I don't know if that helps you with your question. I mean, there's different sort of factors in each quarter of the year, as you understand, that sort of impact the number of working days and impact. And I think it varies, obviously, by account, depending on the number of sort of NARI interventionalists that are present in each account and when they're available to work and perform procedures.

[Richard Newitter, Truist Securities]

Okay, thanks for that. And then just going back to Bill's question on the new product contribution, if you will, the ClotTriever and other, some of the newer products you're launching. I guess to the extent you can quantify that, that would be really helpful. And then also, how did it compare sequentially versus 4Q? Was it up versus 4Q? And then I had one follow-up.

[Drew Hykes, President and CEO]

Yes, the contribution of the ProTrieve and InThrill products was sequentially up. But the contribution in Q1, and for that matter, Q4 was modest, I think we'd call it. I think as the use of those products grows in the future and becomes more significant, we're hoping to provide some more anecdotal feedback about those. But for right now, we're not specifically kind of breaking out the revenue contribution of those guys. We just bundle them with that ClotTriever and other category.

[Richard Newitter, Truist Securities]

Got it. The sequential change, I guess ClotTriever products were included in the ClotTriever volume kind of consideration. But it looks like ClotTriever obviously accelerated or increased more on a quarter-over-quarter basis than FlowTriever. I'm just curious if that has any correlation to possibly where trialing of competitive products is getting done. And I'd be curious to hear if there is any notable kind of sub-segmentation of where FLASH is getting trialed.

[Tom Tu, Chief Medical Officer]

Yes, I can try to answer that, Richard. So from a trialing perspective, I think we saw pretty consistent activity, both in terms of the cadence of the trialing as we move through the quarter, as well as trialing in DVT versus PE. I think we feel very good about how our products match up against CAT 16 in either case. We've got purpose-built tools, both for PE and DVT. So I don't think we're particularly vulnerable in one or the other. And I think we saw a pretty balanced use and trialing in terms of both procedures, as well as the cadence as we move through the quarter.

[Richard Newitter, Truist Securities]

Thanks, guys.

[Operator]

The next question comes from Mike Sarcone with Jeffries. Please go ahead.

[Mike Sarcone, Jeffries]

Hey, good afternoon. And thanks for taking my question. So just a follow-up to Rich's question, just on what you need to see to start disclosing the new product. Is it fair to think, because you started to disclose international sales when they hit that high single-digit millions, is that a good benchmark to use for when we could expect to see or get more quantitative disclosure about some of the newer products?

[Drew Hykes, President and CEO]

I mean, Mike that is certainly one possibility. We wanted to, that was one of the factors that kind of went into our thinking about disclosing the international revenues starting with the Q4 numbers for 2022. We also were frankly receiving so many questions and view about international the growth in. I think as you heard earlier in the call the international outreach of the business has been a significant investment for us now from multiple years running and we’ll actually continue to be for the next few years. So we wanted to provide some visibility in terms of the progress that we are making internationally. And we’re very excited about the growth of the business there, the progress it’s making in Europe in the certain north and south America regions as well as in the Asia Pacific region.

[Mike Sarcone, Jeffries]

Okay, thanks for that. And just one more follow up on the OUS business, I think you called out about $4.3 million in sales in the first quarter. Can you talk about how that stacked up to your internal expectations, and also if you could just provide guidance incorporate any changes to your OUS growth outlook?

[Drew Hykes, President and CEO]

Yes, so the OUS business performed very strongly in Q1. I think it was in line if not slightly above where we had modelled it to be. Most of that growth came out of Europe, still although we are seeing some nice traction in some of the other markets that we’ve started up as well. Certainly the growth in OUS was contemplated in our guidance. And I think it’s an important growth driver for us as we move through this year. Still a relatively small part of the overall commercial franchise obviously, but a really important contributor to the growth and I think as we move to the rest of this year that will only increase. I think we’re also going to see more balanced OUS performance with additional markets contributing alongside Europe as we move through this year and certainly in the next year. And all that was contemplated in the guidance.

[Mike Sarcone, Jeffries]

Okay. Thank you.

[Drew Hykes, President and CEO]

Thanks Mike.

[Operator]

The call has now concluded. Thank you for attending today’s presentation. You may now disconnect.