All right. Morning, everybody. Thanks so much for joining us. Matt O'Brien, I cover MedTech here at Piper. We're really excited to have the CVRx management team here with us here this morning. From the company is Nadim, who's the CEO, and then Jared, who's the CFO of the company. Gents, thanks so much for coming out. Really appreciate it. Thank you for having us. Thanks for having us. So you guys have been around for a little while, but maybe, Nadim, take a few minutes just to kind of give everybody a little bit of background as far as, as where CVRx has come from and where you're at today, and then how you're thinking a little bit about the future of the company. Yeah. So for those who have not followed the story, CVRx is a Minneapolis-based company. We've been in existence since 2001. We have a unique platform technology that leverages a mechanism of action that is very well understood but has not been leveraged yet by any other medical device. So we're the first of a kind. Basically, what we were able to do is get the first FDA approval for a product that uses the brain to address a cardiovascular condition. It's pretty unique. We've always thought that the brain and the heart are connected, and we've developed a technology that leverages one key mechanism to allow us to benefit from that connection between the brain and the heart. So let me explain this, maybe. Can I take a minute to explain this? Sure, I think it'd be helpful, yeah. Yeah. So it's very simple. We have. Each of us, we have carotid arteries, right? So the blood flows through these carotid arteries to perfuse the brain, and our brain is paranoid. It wants to be perfused first before any other organ in the body, so it needs to ensure that the blood pressure and the flow is adequate. So our brain has positioned sensors, pressure sensors in the wall of these carotid arteries. And those sensors, with every beat of the heart, the artery pulsates, and they stretch. So they send neurochemical signals through the carotid sinus nerve to the brain, and there is a specific region in the brain called the cardiovascular regulation system, [CRS], in the medulla, that counts those pulsations coming from the carotid artery to understand how much is the blood flowing, with how much vigor, to perfuse the brain with oxygenation. We, we all have this. This is what allow us to sleep, sit, and stand up and maintain the same blood pressure. It allow us as well to regulate the fight or flight mechanism, for example, and other elements. So how do we exploit this? We use electricity on those receptors. Baro is pressure in Greek, right? So baroreceptors are the pressure sensors. We put electricity, we force them to fire more signaling to the brain. So now we're augmenting the information going to the brain. The natural reaction from the brain to this augmented signaling is to say, "All right, I've got enough. Slow things down," right? So the mechanism with this is called the sympathetic and the parasympathetic tones. So the brain reduces the sympathetic signaling and increases the parasympathetic. So in layman's terms, the sympathetic is the gas pedal, the parasympathetic is the brake. Sympathetic, gas pedal, fight or flight mechanism. The parasympathetic is the rest and digest. What we want for heart failure patients is to lift the foot from the gas- Yep ... and step on the brake. We want the arteries to dilate, the heart to slow down, the kidney to dilate. And if you look at the treatment of heart failure with drugs, we give diuretic to diuresis, we give beta blocker to slow down the heart, we give ACE inhibitors and other vasodilators to dilate the arteries. With our device, one mechanism does these three things at the same time, with one additional benefit. Everything is still regulated by the brain. We do not give any order to any organ directly. We just augment information to the brain. Therefore, all of the compensatory mechanism that the brain has are still working, which is superb. So we've been trialing this now for a few years, and in 2011, we designed this current generation of the device we have right now, the Barostim. We did a first human study in Italy in heart failure, a phase II trial, almost the size of a pivotal trial, 146 patients, randomized control trial, Germany and the United States. Great data, published in 2015, jumped into a pivotal trial under the breakthrough designation in 2016, received the FDA approval in 2019, launched the product in 2020. COVID hit, slows us down for a year. In Q4 of 2020, we started seeing some growth. We figured out how to sell using Zoom and other video conferencing tools, if you remember those days. And in July 2021, we did our IPO, and the rest is history. We've been growing very nicely since then. Okay. Well, speaking of which, that growth really was very good in Q3. You know, just consistent growth in the number of new centers, consistent growth in the number of implants that they're doing per center. What are you seeing in terms of some of those vintages that, Jared, that you like to talk about, from two, three years ago, in terms of your adoption of their adoption, in terms of what you were expecting? Yeah. So Matt, like you mentioned, we break out our active implanting centers by vintage. So those that came on and were activated in 2020, those that were activated in 2021, 2022, and now in 2023. And it's been fairly consistent among each one of those vintages, where we saw centers come on board, they treat a handful of patients. The physicians wanna see, how does this work in their patients? No matter how much clinical data we show them, they still wanna understand what is the impact to their patients. We also hear from hospital administrators that maybe they're not as familiar with the TPT, the transitional pass-through add-on payment for the outpatient procedure, so they wanna see actual results for reimbursement come back. So they put a little governor in place to say, "Go ahead, treat a handful of patients, and then let's wait and see what the reimbursement actually comes back at in, you know, 2021 through 2023." So that has been very consistent, where they treat a handful, pause, wait three or four months, and then they start picking up again. And over time, we're seeing that same trend continue, where on average, after they just get past the two-year mark of experience, we're seeing the average implant rate of about one patient per month.... And that's the long-term goal for us, to be able to reach the cash flow breakeven business, is getting all of these centers up to treating one patient a month. Why wouldn't things start to get a little bit easier and that two years narrow, given you're getting more scale, people can talk to each other. They can say, "Look, we get paid for this regularly." Why wouldn't that start to narrow a little bit? It's, it's a great question. I think one of the things with TPT that people don't really appreciate is that it is very hospital-specific. So it's a very complicated calculation that they're submitting to CMS based on their cost to charge ratio, based on their ZIP code, where they're located. So that they need to understand when they submit all of these, this information to CMS, what it comes back at for their reimbursement. So for the administrators, it is unique, right? Even if they hear from other administrators that the reimbursement has been good when the documentation is submitted properly. I think for the physicians, I think it's just, it's something new, right? And so if they've known a patient for, you know, two, three, four years, they've been treating them with drugs, they've not had other options for them, to try a new therapy that they've never given to anybody else is a challenge, right? And so rather than diving in headfirst and treating everybody, they wanna understand the impact and how this device works, how it ramps up and, you know, impacts their life over time. Does it typically... Do they start with, I don't know if there's an easier heart failure patient, but how do they, how do they go? Is it a younger heart failure patient, and then they ramp up to harder ones? Yeah. Yeah. They go the other way around? The other way around. It usually starts with the patients where they don't have any other options for them, you know- Yeah. They're throwing the kitchen sink to those patients. So often we end up starting on the spectrum of possible patients to the sicker end. And as they start seeing this effect on their patients, they start becoming more open to considering more of their patients up to the other end of the spectrum. But it's interesting, Matt, you mentioned this, you know, whether this, the cities by city penetration has a different, you know, dynamic. And physicians move sometimes en bloc, and you've got the early adopters, innovator, granted, but then you've got the mass markets in the middle, where no one of them want to be the idiot who adapted the therapy too soon, and none of no one wants to be that idiot who did not adapt the therapy when everybody else did, right? Yeah. When we get two or three hospitals already in this region, then become much easier to move that mass around- Yeah than at the beginning. Okay. So, speaking of which, I mean, we're just talking about economics here a little bit. The recent higher APC code, will that help with this dynamic a little bit on the CPT side? Yeah, I... Based on the conversations we've had with hospital administrators, right? I think this helps to accelerate their side of the equation. Okay. Right? So that complicated, you know, calculation to get the add-on payment, I think that, that goes away. Right. Now, we're mapped to a single code. It's much easier for them to understand what the reimbursement would be for this new APC. The question mark is with physicians, right? Do they change their, you know, their pathway? Was their slowness to adopt the therapy and apply it to all of their patients right out of the gate, more driven by the administrators, or was it something that they need to see some actual results themselves from their patient population? So, yet to be seen, but it's, it's likely to remove one of those barriers for sure. Okay. Speaking of which, I mean, we were all expecting the final code to be lower than where it turned out, and so we had factored in some pretty meaningful, you know, price discounting next year as a result of that. How do we think about the metrics on the ASP side of things for CVRx going into next year and then even into 25 as well? Yeah, good question. So just level setting, everybody. So going into 2024, we thought we were gonna be mapped to a code that paid about $30,000 on average to the hospital for Medicare patients. So that was APC 5465. What we put out a press release recently stating was that we were now going to be mapped to a new code, APC 1580, that will reimburse hospitals approximately $45,000 for this procedure. That will take effect January 1st, 2024. So we go from a scenario where we had a code that reimbursed $30,000 and an add-on payment of that reimbursed about $10,000-$20,000, to now just one code that reimburses $45,000. Our model, since the IPO, had assumed that in 2024, we would lose that add-on payment, and our ASPs would have to drop to about $25,000-$26,000 in the U.S. With the new code taking effect for 2024, our expectation is that we'll still see some pricing pressure from where we're at today. Right now, we're selling the device for about $31,000 in the U.S. on average. With volume, we expect there to be a little pressure. So if we can achieve, average selling prices of $29,000-$30,000 in 2024 and beyond, I think we'd be really happy with that result. How does the profitability for the center compare to other things that these facilities can be doing? Yeah. Yeah. So, we, as Jared mentioned, our ASP this year is about $31,000, right? Yeah. The cost of charges of hospitals, based on the calculation we've done, and actually, I presented this publicly to the HAPS panel for CMS convened this- Yeah panel of independent experts, showed $45,900, so about $45,000. So the difference, about $15,000 per hospital. Is this their cost? No, that's their cost of charges. That's what they're telling CMS that they should be reimbursed. Right. Their actual cost is much less than that. Okay, so to go back to figure out what is their cost, for example, for a pacemaker procedure that requires- Yeah ... a cath lab with X-ray systems, et cetera, they expect about $5,000-$7,000. Yeah. Same duration as ours, procedure. It requires more equipment than ours, and yet they're happy with $7,000. So the $15,000, I think, is good enough for the hospitals to be happy with the procedure. Okay. So you guys talked a little bit about, you know, the two sides of the equation as far as adoption goes, and the first was just, you know, just the uncertainty around reimbursement that's buttoned up. You know, obviously, the docs know this works and works well, and there's no option for a lot of these patients. So wouldn't the combination of those two things help with the other side of things as far as clinician adoption? Would it make it- Mm-hmm. A little bit faster for those guys as well? So, you know, just as we think about things heading into next year, ASPs aren't going to be nearly as pressured, and then could adoption be even a little bit better than we expect? We're not here to talk about next year, guys. Yeah. I'm not talking about guides, let me talk about adoption. Adoption rate, you're raising good points. Yeah. Should we expect adoption to be faster? It's too early to say it right now, but will it be easier? Yes, it will be easier. Okay. Did you see any slowdown from this mortality data, which Wall Street got completely wrong, as usual? But just in terms of, you know, what feedback you got from clinicians, because nobody—I mean, we had done a bunch of, bunch of work on it. Sam, who's in the audience, done a bunch, bunch of work on it. We knew it wasn't gonna be... there wasn't gonna be a mortality benefit. It was, it was very low likelihood, but there's still a lots of benefits from the therapy. So, did you see any slowdown? Have you worked your way through that, and is that something where that's kind of behind you at this point? Yeah, actually, the numbers since March shows a slight acceleration, right? Yeah. Yeah. So we announced the results on March 21st. Yeah. We are limited, are still limited in what we can disclose right now proactively to customers, right? If a physician has seen the data and they ask us questions, we can answer the questions right now. But since the data has not yet been approved by FDA nor published in a manuscript, we cannot proactively go and talk to physicians about it. So the impact that we've seen are those physicians who have seen our data at a medical meeting and came and asked us questions about it, or just saw the data and derived their own conclusions. From that, we have not seen a slowdown. One can say we might have seen a slight increase in adoption since that, the data was announced. Now, the primary endpoint as constructed was a composite mortality and morbidity. Yeah. You mentioned mortality. Yeah. May I correct you? It was a mortality and morbidity. You can correct me as much as you want. All right. I need as much- The mortality itself, on its own, if this was the primary endpoint of the trial- Yeah ... we could have had a chance of hitting it. The morbidity, the hospitalization, is where the COVID impact in 2020 hurt us, and we believe it was due to two reasons. Reason number one, patients who have the device, if they had congestive event, they would go to the hospital to check their device. "Is the device working? I should not be having this." Patients who did not have the device, who have a congestive event, would say, "Wait, there is COVID in here. Let me call the doctor." They call the doctor. The doctor will say, "Triple your dose of diuretic and call me tomorrow, and the day after tomorrow, and one more time," and try to stabilize them this way. So we saw a reduction of hospitalizations in the control arm, who did not have a device, by 75% during COVID, but not in the device arm. So it flipped like this, and then it restores itself in 2021, but by then it was too late. That year basically cost us the trial. Okay. And there's no thought of, you know, start doing the trial again? Just, it's just too expensive, too long, I mean... If I do another trial, we talked publicly about doing another indication, which is the HFpEF or EF above 35%. We have... We're accepted in a new FDA program called the TAP, T-A-P, for breakthrough device technologies. We're working very closely with FDA in designing a trial. The beauty about going after the EF above 35% is, number one, it increases substantially the number of patients we can address. Number two, the cost of marketing is contained because when we do a direct-to-consumer advertisement campaign, we cannot only show the ad to patients with EF less than 35%. We end up showing the ad to all heart failure patients. So the same ad now will be seen by twice or more patients who can be treated with our therapy. And finally, if we show a mortality-morbidity there in this trial, hopefully no more COVID, then people can then make the case that, "Hey, we could have seen it as well in the EF less than 35%." So there'll be the halo effect that will cover the below 35%. Where, where- If I need to invest in a trial right now, I would put my money right now in above 35%. We have not decided yet to put more money on it. Not decided, okay. Not decided yet. Where are things at as far as I'm gonna bounce around a little bit, but where are things at in terms of the heart failure indication that you're pursuing? Or, sorry, the expanded heart failure indication that you're pursuing. Yeah. I mean, have we had any updates? Should we expect any by your end? Yeah, so let me give the background, but we have no news on this front, right? We're still talking about before the end of the year. Okay. So the background is the following: We did a trial with the first readout, which led to the PMA approval, was done in April 2019. We met the primary endpoint there with flying colors. FDA approved our product in 3.5 months, when usually it takes them about a year to approve a product, first of a kind with a PMA approval. But we continued following those patients for a sustained effect and a moonshot, which was, Can we demonstrate with the same patient population, a mortality and morbidity benefit with a composite endpoint? That is the expansion of this trial, that we unblinded the data in February. The data overall is good, but the primary endpoint as designed for that phase, which was the mortality, morbidity, we did not meet the primary endpoint, right? It's trending in the right direction, but it was not enough to allow us to say it has been successful. So therefore, we're talking about a neutrality of a trial. So the technical term is this trial is neutral, because we cannot say it's positive. Now, we submitted this data to FDA in early June, and the process is a six-month process. So FDA commits that 95% of all of their PMA filings with all companies would be addressed within six months, 180 days. We hope that we are in those 95%, so that's why I've been talking about the 180 days. And in our count, despite all of the stoppage that happened between FDA and us, you know, clarification, question, additional analysis, et cetera, we still can meet the December deadline. So we still are hopeful that we will get the final answer from FDA by the end of the year. Now, what could this answer be? Let's be clear here. We're not talking about approval of the product. The product is approved, the product is safe and effective, and the benefit of the product outweigh the risk. That is done. Took it to the bank. Yeah. We have not seen any safety concerns. Actually, I was talking about the mortality. A 34% reduction in mortality trending, not a primary endpoint, but as a trend, very positive data. So it's... If there was any trend, it's on the other side. So there is no safety concerns that could trigger the FDA to limit the indication or pull our product from approval. That, I think, was the major concern of the market when we announced that we did not meet the primary endpoint. I think some people might have assumed that now FDA will pull the approval. No, that is not the question. The question is: Is there enough data here for FDA to give us more latitude in what we can claim- Yeah ... in the indication for use, which is the first paragraph? Yep. Would the FDA allow us to share some of this data, for example, the morbidity and mortality data, in the labeling document itself that is given to every patient and every physician? And finally, would some of those parameters allow us then to target a bigger patient population on the periphery? Yeah. Those are the questions that we hope will answer before the end of the year. Okay. I don't want to ask you to give us the number. I mean, but can you frame up what the label kinda could look like, and how many more patients you potentially could be indicated for if, you know, best case or even worst case scenario were to happen? Maybe not worst case, best case or base case. Yeah. So, all I can refer back is to what we discussed publicly previously. I think it's safer. The IPO document, back in 2019, in the S-1, document, we mentioned the market research that showed that, our total addressable markets could move up from 55,000 new patients a year to almost $80,000 -- I'm sorry, 80,000 patients per year- Yeah if we get the mortality, morbidity. So that gives us a bracket where we could be between 55-80. Now, when we did the calculation back then, we assumed a long-term price of the device of $25,000- Yeah ... assuming we will be mapped to the $30,000. Now, we're a bit more optimistic about our ability to maintain our price points in the higher 20s. We should revise the TAM, even if we keep the $55,000, at least from a price point perspective, so that should- Yeah Make it up a little bit better. Nothing, nothing wrong with adding $750 million to your TAM if, if this were to go well. Exactly. Got it. Okay. Exactly. Jared, last few minutes here on the profitability side, and he's smiling over there because, I was telling him over and over again during the IPO that the profitability numbers that they were giving us, they were never gonna hit, and they've exceeded all of them, which is amazing to see it with a small company. Can we just talk about some of the leverage points you're seeing? I mean, first of all, on the gross margin side, how do we think about gross margins going forward- Yeah ... especially with, you know, a little bit better pricing than expected? Then also, where are we gonna get some of the leverage in the model as you're trying to move towards, you know, EBITDA positive and eventually cash flow positive? Yeah, good, good question. I mean, starting with the margins, ASP is obviously a huge driver for that for us. When we were expecting the U.S. average selling prices to be closer to $25,000-$26,000, we still believed we'd be able to hit gross margins near term of around 80%. And that's because we produce every single device ourselves at our manufacturing facility in Minnesota. We have a very clear understanding of all of the costs that go into each one of these devices, and there's still room for improvement with greater volume. As we produce more, the labor and overhead that's applied to each one of those devices will continue to drop. 80% would have been possible there. With the higher average selling price, closer to $29,000 or $30,000, I think we can get margins to kinda hover about where they are today to start, at around 83%-84%, and still seeing potential for improvement from there going forward as we continue to increase volume. For the leverage side of the equation, I think part of this is, it takes time building the infrastructure, right? When we first started the IPO, we were a small company, right? We've been adding a lot of people every single quarter to build up the marketing team, to, you know, start to figure out what does direct to consumer look like, to understand what this prior authorization support team should look like. Now it's about adding gas to the fire, right? So we don't have to go add all of that infrastructure and all of those additional headcount around the sales force. Now it's about adding just more sales reps to create more territories, which, you know, is a smaller portion of the overall cost of the business. So we're able to grow revenue at a faster pace than we'll grow sales and marketing from this point going forward. And again, we've talked about commercializing this indication. Nadim mentioned the opportunity to go after other indications. It's not baked in our plan at this point, but if we see great opportunities to design an efficient clinical trial that could go out and help hundreds of thousands of new patients, we'll have to make decisions on whether or not we make those investments. And the nice thing is, cash levels are at a pretty comfortable level. We have a debt facility that is our backstop, that if we decide to go and invest in one of these new clinical trials, we could use that facility rather than having to go out and raise some money in the market. Yeah. Okay. So I think it gives us a lot of good options going forward. So Nadim, in 15 seconds, what is the governor as far as doing the preserved ejection fraction study and or not? What is- what's the one or two things we're really... Oh, just cash, because of how it sounds to me. Timing. Timing of cash. Okay. When you look at the trial in cardiovascular, two-thirds of the patients are enrolled in the last one-third of the time. So even if we start today's trial, most of the expenses will be in two years from now. Okay. Today is not the right time to start it right now, as we speak, and we need to figure out, you know, how do we fund it? Yeah. Are we profitable by then or not? Okay, understood. All right. So we're out of time, so I have to cap it there. But gents, thanks so much for all the feedback. Really appreciate it. Thank you. Thank you.