Hi, my name is John Young, and I'm one of the senior med tech analysts here at Canaccord Genuity. Thank you all for joining us for our forty-fourth Annual Global Growth Conference. I have the pleasure today to start the meeting with introducing you to Pulmonx. With us today is CEO Steve Williamson and CFO Mihir Joshi. They'll start with the presentation, and we'll go into a fireside chat. Thanks. Steve? Hello, everybody. Welcome. Thanks, John, for having us. We appreciate the invite. We'll start with some forward-looking statements. I wanna talk about emphysema. Emphysema is a severe form of COPD that causes progressive lung destruction over time, which leads to air trapping and eventually persistent breathlessness. It's interesting when we talk about valves, it's kind of counterintuitive. What we're trying to do is let air out of the lungs so that people can breathe. It's not what people would normally think, and I'll walk you through exactly what happens here. But as people develop emphysema, they have progressive lung destruction. This air trapping gets worse over time. It makes it more and more difficult for them to exercise. Their activity decreases. It becomes increasingly difficult to get the mail. You can't go to the baseball games. It gets to the point where you can't walk upstairs to your bed, and it's just progressively debilitating to the point where people then have a highly compromised quality of life and a high risk of mortality. There's several treatments. There's a spectrum of treatment options here. On the left-hand side of this slide, you'll see that medical management like is a first-line treatment. Triple therapy with inhalers is common initial treatment for these patients. It doesn't really work on these patients that have progressed to severe disease. Obviously, it's non-invasive. These patients can also do pulmonary rehabilitation. Again, it's not a sustained benefit, typically, and these patients that have very progressive disease aren't good candidates here. On the right side of this slide, you'll see two much more invasive technologies. One is lung volume reduction surgery. That's where they actually surgically remove a lobe of the lung, and then lung transplant as well. If you look at both of those procedures, I would say there's about 500 procedures done a year. 500 between those two that are done for severe emphysema. So really not a big choice, not a lot of centers doing it. Not really an option for a lot of these patients, as there's a high risk of mortality following these procedures. In the middle of this is Zephyr valves, and that's where we come in. We have a similar surgical benefit, but a smaller invasive profile. Fully removable placed valves, and I'll walk you through exactly what that looks like. But allows that patient and lets the air escape in those patients that do have the hyperinflation. I'll call your attention up to the top left of slide 1 here. There you see some diseased lung. This is a diseased lobe of the lung. You'll see at the bottom, we've got an actually healthy part of the lung that's small. It's actually being compressed because the diseased area is taking up more of the cavity than it should be. Because this area is so much larger, it's pushing down on the diaphragm, which will cause difficulty for this patient to breathe. So we've got too much air up in here, the part of the lung that's destroyed, which is causing the healthy parts not to be able to get air and perfuse the blood. So what we do is we go in with a delivery catheter. It's done through a bronchoscope, so it's a very easy procedure. I would say on a very, very low level of difficulty to do this procedure. They go into the target lobe through the bronchoscope, valve's chosen, it's placed in a one-step procedure. They'll put several valves in, typically about four valves in a patient. And so you'll see what happens is it allows the air to escape from the lung, but it doesn't allow new from the lobe. It doesn't allow additional air to get into that lobe. So what develops is the larger, healthier tissue then grows, it can expand. We've shut down this larger portion of the lobe up here, and so now this patient, you'll see the diaphragm is straight. Much easier for the patient to breathe. They don't have the breathlessness, much healthier, better perfusion. You'll see their activity go up significantly. Does it work? Yes. We have four randomized controlled trials. We're a small company. This company really launched in 2019. COVID kind of put us on our heels a little bit, in that our COPD physicians and our interventional pulmonologists were the front line for these COVID patients that were coming through. So I think there was a bit of a backstep during COVID, but what we've done is we've created a significant amount of clinical data. We have four randomized controlled trials here, three of them in a highly reputable respiratory journal, the Respiratory and Critical Care Medicine Journal, and then the fourth in the New England Journal of Medicine. Each of these compares valves to medical management, and you'll see in each of the three areas that are measured, both lung function improvement, forced expiratory volume, exercise capacity, a six-minute walk distance, and then the quality of life scores. Each of them had a statistically significant improvement over medical management. What's the market opportunity look like? There's 12 million patients that suffer from COPD in the United States. 3.8 million of these patients are diagnosed with emphysema. Of that, 1.5 million have severe emphysema. Of the 1.5 million with severe emphysema, 1.2 million have severe hyperinflation, which we walked through. I showed you what that looks like. As you look through different comorbidities of those patients, if they continue to smoke, they're not a candidate for our procedure. If they have collateral ventilation, they're not a candidate for our procedure. So in the United States, we believe there's about 500,000 patients that are good candidates for the Zephyr Valve Procedure. On top of that, we've got 700,000 patients that are outside the United States, so 1.2 million patients are our target market here. At about $10,000 a case, that's about a $12 billion global opportunity. These are diagnosed patients. I believe that some of the data that are coming out now, these might be very, very conservative numbers. There's a very, very large opportunity here. As far as the company and Pulmonx, what we've been able to do, we've launched in 25 different countries. We're available across the globe and a number of the larger countries that you would expect. We have 56 sales reps in the United States, 35 outside the United States. We're direct in 95% of the areas where our sales are. I think there's just a number of market expansion opportunities over time here. As we look at our commercial strategy, it's really a three-legged stool. The first is bringing on the right accounts. This is. It's making sure that we've got accounts that when they come on board, they can grow, that they'll build a program. They're not hobbyists. They wanna build a program to treat large amounts of patients that are in their territories or in their geographies that would benefit from Zephyr Valves. The second leg of the stool is automation of workflow and facilitating sharing of best practices. I remember when I came in, I've been with the company about six months, I thought, sharing is an interesting strategy. We're gonna share. What I've seen is when we do share, people learn a lot, and they actually end up bringing in their own coordinators. They bring in their own patient management people, and as they do that, their programs grow from two to three a quarter to significantly higher than that. So automation of workflow is extremely important. I'll walk you through on the next slide what our workflow looks like. But as we make it easier for these physicians and easier for these patients to have the procedure, we'll see that more and more patients will get treated. And then finally, local awareness among COPD patients and physicians. 90% of COPD physicians know about valves. About 30% of them know what the qualifications for a good candidate for valves are. So there's a great opportunity to educate these COPD physicians. I would say about 20% of patients know about valves, but once they're told about valves, over 90% of them said they wished that their doctor had told them about it. So there's a big desire to have a treatment like this from this patient population. I talked about automating workflow. When I joined, I thought that this was gonna be just a marketing story. I thought it was gonna be all about sales and marketing, getting out, gonna educate COPD physicians and patients, and quickly learned that it's automation of workflow and making sure that we have a system in place that can manage these patients so that they have a good experience, so that the referring physicians have a good experience, is critical as we start to drive more and more patients through the funnel. So what is the process? If you look at the left, it's just one block here. It's a standard COPD workup. Well, there's a number of things that are involved in that. You've got CT scans, you've got pulmonary function testing, you've got spirometry, you've got six-minute walk, arterial blood gas, echo. So there's a number of COPD workup steps that need to be gone through. Managing those patients through the process typically takes a coordinator, a navigator from the hospital. Those hospitals that have a navigator or coordinator to get these patients through do significantly more volume than those that don't. We've recently launched a new product. It's called LungTrax Connect, and what it does is it helps automate the CT scanning process here, but also builds out the workflow that allows them to manage that patient through the process. So, they'll go through the workup. They get a StratX report. This is based on their CT scan. It lets the physician know where the ideal location for valves would be. From there, they do a Chartis system assessment. This is important. So what they'll do is put a balloon into one of the airways, and they'll check to see if that lobe can hold air. And if it can't, it's typically because there's collateral ventilation going between lobes. You've got an incomplete fissure, and so if you were to place valves in that patient, that patient would not have a good outcome because the air could go between fissures from one lobe to the other, and you would end up with this hyperinflated area because the valve couldn't shut down the air coming into that area. So this is important for a couple of reasons. 20% of the time when a patient shows up to have a procedure, they've gone through this workup. They've gone through... They've showed up at the hospital. They're excited. They're gonna wake up in the morning, and they're gonna be able to take their first breath when they get this procedure done. They wake up, and they're told that they can't have the procedure because they had collateral ventilation. That's found by the Chartis product in the middle here. But the other 80% of the time, they end up with the valves placed. They have a three-night hospital stay, and then they're typically released right after that. So what about those 20% of patients that are on the table that we really – they went through the whole process of workup? What about those patients that wake up, and they cry because they can't have the procedure? Well, we've got a product that's in our IDE clinical trial right now. We just started it this year, and we're doing 200 patients between the United States and Europe. This is a product that's called AeriSeal. It's a polymeric foam that's done under bronchoscopy. So imagine that patient fails the Chartis procedure that we showed before. That patient is actually consented for both AeriSeal as well as valves. So if they fail that procedure, they receive AeriSeal. They're brought back 45 days later, they receive valves, and they're on their way. Our initial data from our CONVERT-1 study, CONVERT-2 is our PMA trial, but our CONVERT-1 trial showed high rates of fissure completeness and strong benefits for valve placement in those patients subsequent to the AeriSeal procedure. What does the future look like for us? We've got this patient volume that I've talked about. We've got, let's say it's 1.2 million patients on the conservative side. There's about 15,000 community lung specialists in the United States. Put on top of that, you've got your primary care physicians. So there's these community lung physicians that these patients are going to. We need to make sure that they're educated, and then we'd like to send those patients from those lung specialists into expert hospitals that have developed emphysema screening and efficient workup programs to get those patients through, get the procedures planned, offer them the Zephyr Valves. If they need AeriSeal, they'll have AeriSeal, or if there's another procedure in the future that we're tied into, have that opportunity as well. So this is the future that we envision. Right now, our revenue, we reported $20.8 million in the second quarter of 2024. Our guidance this year is $81 million-$84 million. In the US, we do about 70% of our revenue in the United States. We have a strong margin on our product, 74%, and our cash position is strong as well at $114.5 million. In Q2, we burned $5.9 million in cash. So as you look at Pulmonx, our company, we've got a large market, $12 billion market opportunity, good, strong reimbursement, global footprint. We've treated over 40,000 patients. We'll treat 8,000 or so, 7,000-8,000 patients this year. A good pipeline of products. We've got a couple of clinical trials that we're working on in addition to AeriSeal. Our clinical results are unmatched. Our competition is we compete with Olympus, but have significantly higher market share than them. And it's our clinical data and our economic value propositions are extremely strong. And with that, I'll turn it over to you, John. Thanks, Steve. Thank you. How do you want to do this? You want to grab a seat here? Okay, great. Chat. Great. Yeah, that was a great overview of the company. Thank you for that. You know, Steve, you were really tasked when you came in as CEO in March, to, you know, start the next chapter of Pulmonx, really. The previous CEO was really the one that shepherded through the IPO process in the start. But, you know, as we start this new chapter for the company, you know, what have you liked? What have you not liked? What changes, you know, have you made? There's definitely been a new focus on automation that you've spoken about, but, you know, what else do you see as friction points that need to be, you know, overcome or things that you think need, you know, better implementation? Are there any more assets required at the senior level to drive the strategy that you have in mind in place? Yeah. You know, when you come into a new opportunity, you never really know. You think you know, you've done your diligence, but you never know what you don't know. And, I've been pleasantly surprised with what I've found all along the way. We are the standard of care. We have the best clinical data. Reimbursement's strong. The team's been around for a long time. The team that worked for me, I mean, collectively, decades, centuries of experience in pulmonary. So, I've been very, very pleasantly impressed there. I, like I said, I thought this was gonna come in and be a marketing play. I thought it was gonna be, "Hey, we're gonna need to put a lot of DTP out there," and that's not what I found at all. I found that we need to build these systems, and when you build these systems, you get accounts that go from 4, 5 a quarter to 30 a quarter. And it's so the TAM exists, that opportunity is there, and that's been that was a pleasant surprise as well. You know, you hear about a TAM, and then you go out and you see these physicians that are doing 4 a week, every week. That's when you say, "Okay, there, there's something really here. Now, how do we replicate what these people have done?" And so we're working on that with workflow automation. We launched LungTrax Connect, as I told you, and that's the first step in a multi-step process that we'll put out there to not only identify patients but make sure that we get them treated properly. Yeah. And then, you know, taking a step back here, as you came in, you know, what was your vision for Pulmonx in 5, 10 years from now? And, you know, what's still needed to achieve that vision? Yeah. We talk about, are you a emphysema company? Are you a COPD company, or are you a lung health company? I think that the emphysema opportunity is so big, and that patient population is so undertreated. I don't want to get too far ahead of ourselves. We've got the opportunity to go out and really open this up to a large number of patients, and then you put AeriSeal on top of that. We've got good growth there. I think our ability to help with screening patients long term is an area that we'll see for development over time. And if we can help build these, the workflows that need to be built, but also screening programs with these customers, I think we'll really add value there, and we can see our growth there in the future. And along those lines, too, you know, the call point you have in interventional pulmonology, it's, you know, a bit of a rarity in med tech, and, you know, definitely a big value asset. So how do you think about leveraging that in terms of, you know, adding future devices to the bag or anything like that? I know I've asked you about this in the past. John, you're consistent with this question. I know. I, I get it a lot, so it's definitely an important one. It's a great question- Yeah ... and it's one that we think about as well. You know, we've got an asset in not only our sales force, but our global marketing organization- Mm-hmm ... into this space is unmatched. So we've got a couple of different assets here. As I look at the opportunity for growth and what we want to do, we've, as I mentioned, this emphysema market is just really untapped. This is such a young company. It was a startup. I came from a much larger company. I was at Becton Dickinson and Bard. I ran two $2 billion-dollar businesses where we launched numerous products every year. So I'm used to taking smaller products and building them and building markets for them, and that's what this product needs right now. It needs the attention. We've got the focus. Now, that said- Mm-hmm ... if something came around the corner and it opportunistically fit what we needed, then sure, we would take a look at it. But it's just not. I don't wake up in the morning and say, "Hey, let's go work on that. Totally fair. And then, you know, from an investment perspective too, the go deep strategy has really been constant. It just what have you seen essentially to support that thesis? When you walked into Pulmonx on that first day, you know, instead of it, you have a very targeted call point. Can you remind me this even the number of hospitals, essentially, that are really, you know- Yeah ... good at this procedure? But then what supports that essentially, too? So there's 400-500 hospitals that would be good targets- Yeah ... for this procedure. That's, that's one reason- Yeah ... that we look at it. I mean, we've got 300+ hospitals that are buying from us now. So we'll continue to bring on opportunistically, we'll bring on new accounts, but that's not gonna- that's not a recipe for long-term success here. We need to take the hospitals that we have, these big hospitals, and really help them build out their workflow. I've said it in the past, I'd rather have 20 procedures a quarter from 100 hospitals than five procedures a quarter from 300. I just... I think that patient outcomes are better. I think the customer and patient experience is better, and so that's why we've gone deep there. We talk about it from a workflow perspective. One thing also is from a targeting perspective. In the past, I think our sales reps are really, really good at selling a clinical value proposition to an interventional pulmonologist, and the data all support it, so it's very... I would, it's not easy to do, but they do a good job of it. Mm. If we can sell to the C-suite and show them not only the clinical benefits, but also the economic benefits of building up a lung health program with the emphysema screening, and treatment, I think that's where we'll really start to see the investment go in from some of these other hospitals, to make sure that they do build out these service lines. Can you talk about those economic benefits? I know the, at the IPO, it was kind of described as somewhat profitable for some places, for this procedure, for some hospitals, but a lot of the economic benefits were actually the downstream capture profit when, because these patients would continue going to that hospital, and emphysema patients, you know, usually have a lot of other comorbidities as well, and so they would capture a lot of that revenue, too. But can you maybe just talk about just the profitability of the procedure itself, and then any economic data you have about that follow-up? Sure ... profit, too? Sure. So there's the work-up data, but there's also the follow-up. I mean, you talk about once you've treated that patient, they're gonna keep coming in, but- Mm ... you have to work up that patient through that whole process that I walked you through. So there's revenue associated with all that. I don't look at that as really the key revenue. We'll build that out in a model- Mm ... as hospitals are looking to build up a program. But if you look, I mean, the reimbursement on this procedure is strong. There's three different DRGs that pay different amounts depending on the comorbidities and complications associated with that patient. But on average, as you look, there's reimbursements in the, call it, mid-$20,000s for... You really have a surgical reimbursement for a bronchoscopic procedure here. So the procedure takes a physician a short period of time to do. Mm. Reimbursement's strong for the hospital. The physician gets reimbursed at the rates that they normally would for bronchoscopic procedure. So it's positive across the board. Got it. And then, you know, growing the utilization, too, you know, how much of the account base today would you say is at a high utilization or a utilization that you'd like? And maybe any, you know, key factors that you're seeing that kind of are across the board with those. I know you've talked about, coordinators- Yeah ... and those accounts and like that, but anything, anything else you've identified that really helps drive this high utilization? Yeah. I think it's coordinators, it's also relationships with the PFT screening labs, and if there's a good relationship there, where the PFT lab will actually identify patients and send them to the IP without having to go through this convoluted referral process, there's benefit there. As far as the numbers, it's difficult because several of our hospitals will have a coordinator, but they also have shared coordinators, too. So maybe there's one in the lung cancer nodule detection program that's doing both, and so it's hard for us to measure exactly how much each hospital is putting in. In some instances, you've got a physician that's out there, and they're doing. They're pounding the ground, talking to the referrers that are in the field, trying to drum up volume. And so it's different in different areas. I think probably there's probably a third or so that have a good strong program in place, and then obviously there's opportunity beyond that. You mentioned it today, and it was a big point in the Q2 call, you know, LungTrax Connect, and just the ability and the improvements it has there, especially on workflow. But, you know, my question to you is essentially just, you know, you've always had good visibility, 'cause of StratX, and, you know, that really helps, you know, set guidance for quarter over quarter. Does LungTrax Connect help with improving that visibility, as you're able to see patients complete step by step through the pre-procedure process? Yeah, it would help. It would give us more visibility to where the patients are in the process. Obviously, it's gonna take time to adopt, and we have to get through the... It's not just a plug and play with LungTrax. We actually have to go through and sign contracts with the hospitals and go through their IT approval programs, and so I think we're not gonna really see the benefit from LungTrax until next year. Mm-hmm. But that's why we wanted to get it out there while we could. Yeah. We're doing a pilot. We'll take the feedback we get, we'll make it better, and then we'll iterate off of that to make it more and more impressive for the customer. And then you guys reiterated the fiscal year 2024 revenue guidance on the Q2 call. And it sounded like you want to be conservative around, you know, unpredictable Q3 seasonality. You, like I said earlier, you do have, you know, good visibility versus through StratX today. So, you know, as we sit here in August, can you just talk about what you're seeing so far? I know you assumed that, like, July and August are a bit slower, and then procedures will pick up in September. Mm. Is that thesis kind of coming true? Yep. So you know, what I'd say, John, is we are very pleased with our first half performance- Mm ... and as we went through that... Sorry, I have a little bit of a frog in my throat. So, very pleased with that. US and OUS are doing really well, and executing on the commercial strategy that Steve talked about. We didn't know what exactly was going to happen in Q3. We've had, you know, different experiences over the last couple of years, specifically in the US, and so that's why we reiterated guidance and wanted to, you know, go through our first Q3 together and see how it would pan out. We're not seeing anything that would require us to change guidance at this point in time, so we're very comfortable with where we are. Got it. I know we have about a minute left, so I wanted to just ask, get this question. But, you know, just looking at the company and the stock today, you have a differentiated PMA technology, meets a significant unmet need, limited competition, good reimbursement. You know, it's growing 25%+ year-over-year in revenue, but, you know, it trades about 2x EV to sales. So it's a pretty significant discount to other med tech companies growing at similar rates. So just wanted to ask you both, you know, what do you think is a disconnect with investors today when it comes to the Pulmonx story? So, John, I'd start by saying we believe there are just macro issues that are underway right now. There's some industry issues and dynamics. Also, I would say that from a market cap perspective, that's probably limiting in investment in our stock. We are not looking at the stock on a day-to-day basis. We believe in the story, we believe in the TAM, and the product, and reimbursement, and all of that, and we believe all we have to do is execute, and we'll get there with the stock price and the market cap. Yeah, we've got 2025, 2026, and 2027, we have levers for growth. We've got good, strong momentum in every aspect of the business right now. So, we can sit there and pay attention to that all the time, or just go out and put the numbers up, and so, I think we've done that in the last couple of quarters, and we'll continue to focus on that. Okay. Well, great. Thank you both for being here today. Thanks for having me. There's a lot we didn't get to, but I appreciate the time. Thanks for having us, John. Thank you. I appreciate it. Yeah, definitely. Thanks, man. Thanks.