Good morning, and welcome to day two of Jefferies London Healthcare Conference. My name is Mike Sarcone. I'm an Analyst on the U.S. Medical Supplies and Devices team. This is the fireside chat with Inari Medical. And from the company, we're happy to have with us today, Drew Hykes, CEO, Mitch Hill, CFO, and John Hsu, IR. Gentlemen, thank you for joining us today. Thank you. Great to be here. Thank you. Thank you. Great. So maybe, Drew, just to start, for those who are less familiar with Inari, can you give us just a brief overview of the company, its position in the market, and, you know, some of your key near-term strategic objectives? Sure, happy to. Thank you, guys, for joining us this morning. The first and most important thing to understand about Inari is that this is a mission-driven organization, and that mission is captured by three really simple but powerful ideas. The first is patients first. We've always, since the founding of the company back in 2011, focused first and foremost on what we could do to address unmet needs for patients. That's our primary goal. That's what we solve for in all of our decision-making. Second part of our ethos or mission is to make no small plans. We have been really aggressive over the last 10 or 12 years in pursuing that mission and growing as fast as we possibly could and treating as many patients as safely and as fast as we possibly could. Last part of that mission is take care of each other. We have over 1,200 people now in the business, all committed to this mission, all committed to working collaboratively for better outcomes for these patients. So that's been the foundation. Today, we're most focused on the VTE market, venous thromboembolism. These are clots on the venous side of the body. Two primary manifestations of that: iliofemoral DVT in your pelvis and upper leg, and then secondly, a pulmonary embolism. If a DVT embolizes and causes a clot in the lungs, the second part of VTE we're focused on is PE. Five growth drivers focused on moving that mission forward in VTE. The first of those five is commercial expansion in the U.S. and continuing to build out the commercial footprint in the U.S. Secondly, an effort we have that we call VTE Excellence, designed to drive penetration adoption at existing accounts. We're in about 1,700 accounts in the U.S. Third, growth driver is clinical evidence. So we've committed significant resources to building high-quality clinical evidence that supports the safety and effectiveness of our devices. We started with registries and have now moved into three randomized controlled trials. Fourth growth driver is on innovation. We've got a robust product pipeline. We're continuing to iterate and refine the existing platforms with PE and DVT, but increasingly also branching out into new patient populations with new toolkits. And then finally, fifth growth driver is on new markets. Two different angles of that: international expansion. We're about 5% of our revenue today comes from international, and the second, expansion into new target addressable markets outside of VTE. And we've got four additional target addressable markets outside of VTE that we can talk about, in parallel to PE and DVT. Great. Thank you for the overview. I guess just to start with one on, you know, the core VTE markets, can you talk about recent trends and just your confidence in the growth trajectory for Inari and for those markets? Yeah, so to level set, this is a massive patient population. 700,000 patients is the annual U.S. incidence between DVT and PE. You look over the last 12 months, we think we've treated maybe 7% of those patients. So it is a massive market, and we're just barely scratching the surface and penetrating with our mechanical thrombectomy products as frontline therapy. The vast majority of these patients today continue to be treated with conservative medical management with anticoagulation alone that prevents a new clot from forming but does nothing to address the existing clot. That's been the standard of care for decades. That's the standard of care that we're trying to shift away from conservative medical management to definitive catheter-based intervention. And we've had some success to date, but lots of runway out ahead of us. Our growth is really being driven by converting patients from that conservative medical management. We're also getting some growth from converting patients that would have been treated with with lytic-based approaches, legacy lytic-based interventions. That's the second source of growth for us. If you look at the first nine months of the year, we grew about 31% through the first three quarters of this year. So lots of robust growth coming from continuing to penetrate this large patient population. Great. And, you know, it seems it's, it's pretty obvious the market's growing well north of 20%. You know, how do you think about the sustainability of growth in the market? And maybe talk about what you're thinking for 2024. Yeah. So we see tons of runway out ahead of us to continue to drive robust growth on the top line and continue to drive penetration, focusing on those five growth areas that we described. We've not issued formal 2024 guidance, nor do we comment on out-year consensus. What we have said is that we are the clear market leader in VTE, probably by a factor of four to one in PE and two or three to one on the DVT side. And we are highly confident in continuing to maintain and extend that leadership position today and into the future. The market, as you said, Mike, is growing. If you define the market as mechanical thrombectomy for VTE, that market, we believe, is growing in the neighborhood of 20%, and as the market leader, our expectation is we will grow at or above that market growth rate. ... Understood. And, you know, you mentioned your leadership in the space. There's been a lot of competitive noise this year in the wake of, you know, competitor with new product launches. You've got some of the large strategics that have made acquisitions in the pure mechanical thrombectomy space. You know, to that end, with the competition, can you talk about how Inari's positioned from a product perspective and, you know, color that you get from accounts? Sure. So, you know, I think from a competitive standpoint, the first thing I'd point out is that, again, this is a $6 billion market that is just barely penetrated with our technologies. Our focus, if you think about those five growth drivers, is focused on expanding the market, on making the investments and the initiatives that are gonna be required to expand that market and change the standard of care. That's where the real opportunity is to impact patients. That's where the real opportunity is to create value. There are new entrants coming to this market, and to some extent, they can be helpful in developing the market. A point of market growth at this stage is worth 10x a point of market share. So I think it's worth noting, just as you've seen in other markets, stroke, for instance, new entrants can help develop the market and expand access to these patients. To the extent we do compete head-to-head, we feel really confident in our ability to continue to protect and extend our leadership position. I think that confidence comes first and foremost from the performance of our products. We're in third, fourth generation technologies. These do a really good job of removing all the clot, the acute clot and the chronic clot, in a simple, efficient, straightforward procedure without the need for thrombolytics. We take confidence in the quality clinical data that we've generated to date. We began with two of the largest prospective registries ever done in VTE, and have built on that foundation and are now undertaking not one, not two, but three randomized controlled trials, all of that designed to support the safety and effectiveness data of our products. We take confidence in the commercial team that we've built and established that are experts not only in our technologies, but also in the disease states. I think all of those factors give us confidence despite new entrants coming, who can help develop the market that we're gonna continue to extend and protect our leadership position. Just lastly, on the competitive front, like you mentioned, 30%+ growth this year, through several quarters of competitive trialing. Where do you think we stand in that competitive trialing process? Yeah, so we've been pretty clear consistently that in our view the initial phase of a product launch is where you tend to see the most traction. Call it the first six months of a new product launch, that's where you see engagement with your most interested champion physicians. That's where you're going to your strongest accounts. As you move past that initial six-month phase, I think the competitive trialing begins to taper off, and that's certainly exactly what we've seen take place this year. We did see competitive trialing, particularly early in the year, from this product launch, competitive product launch, Q1 and Q2 in particular. That began to taper. We saw some impact in Q3, and I'm sure there'll be some that'll slop over here, even in Q4. But keep in mind, we grew 31% in Q3, 31% through the first three quarters. Hopefully, that's evidence that despite competitive entrants, despite competitive trialing, we're nonetheless continuing to maintain a robust top-line growth. Got it. You mentioned 7% penetration in VTE today. If you look out five years from now, where do you think that penetration could stand? And, you know, what do you view as the key drivers? Yeah, so there's 2, kinda analog proxy markets that I think can give us some sense of where the VTE market may evolve over time. If you look at PCI, right? That was a market that was also historically dominated by conservative medical management, filtration with lytic-based interventions, and then the emergence of definitive catheter-based intervention, what we all know today, in PCI. That market, anywhere in the Western world, probably 95% penetrated with mechanical thrombectomy as for mechanical, percutaneous approaches as frontline therapy. If you look at stroke, a story that's played out really over the last 10 years or so, same kind of idea, the emergence of definitive catheter-based intervention. That market is maybe 40%, 50% penetrated today, with catheter-based frontline therapy. We think over time, VTE is likely gonna land someplace between those two bookends, and probably closer to the PCI end of the spectrum. We're at 7% today. We think we're gonna continue to drive penetration. That's gonna happen because of the evidence that we're generating, because of the innovation and the refinement of the toolkits, because of the increasing awareness and training and education that we're doing with our commercial team. I think all of those things over time will continue to drive penetration. I think notably in 2024, we're gonna have the first readout of randomized controlled data. I think that offers the potential for an increase or an inflection point of that penetration rate. That's great. And I do wanna switch gears and talk about the LimFlow acquisition, but I guess first, maybe Mitch, for you, just given I've received some inbounds on this, and, you know, the company has telegraphed this pretty well. There's been some insider sales. I think there's going to be some occurring today. Do you think you can give just some brief background and the reasons behind that? Yeah, happy to. The named executive officers of the company, and actually a broader group of people, have 10b5-1 plans. And so that's kind of a thing that they were filed in 2020... I guess they were filed in 2022, so a full year ago... when those plans have been kind of executing month by month. In fact, I believe I had some options that executed earlier this week, so it's probably a Form 4 for me today, I believe. Separate from that, there were some RSUs that were granted actually back in 2019, so quite a while ago, and those all vested at once, and then they were distributed in four tranches. And so the final tranche of those RSUs is actually the distribution of the final shares is today. Those are gonna go to Drew and to Tom, our Chief Medical Officer. And so there's going to be some sell-to-cover activity for Drew and Tom, basically tomorrow, and then a Form 4 for those guys, probably on Friday or maybe on Monday of next week. And all the money from the sale of the shares tomorrow is basically going to go to the IRS and to the state of California. So none of it's going to Drew and Tom at this point in time, just kinda cover our tax obligations there. Got it. Yeah. That's helpful. So- Yeah, it's concluded in the 10-Q as well. This has kinda happened 4x, but the November fifteenth kind of distribution is the last time for those shares. Great, thank you for the explanation. And then, I guess, you know, moving to LimFlow in conjunction with your Q3 results, you announced this deal, and, you know, investors have reacted pretty negatively to the deal. So I guess just to start, can you talk about the strategic rationale behind the LimFlow acquisition and talk about the timing of the deal? Sure, happy to. So LimFlow, we began our involvement with the company back in 2022. We invested in their last round of private financing and took a board observer seat at that point in time. And over the intervening 18 months, have had a front row seat and have been tracking the progress very closely as the company navigated their way through their PMA study and then began to navigate through the full FDA approval process. As they approached approval this summer, they had a fork in the road. They needed to either raise another round of private financing to commercialize the product in the U.S. or undertake an M&A process. That's obviously what they chose to do, and we were thrilled to prevail from that process with the asset. Over the intervening period of time that we've been involved with the company, we began to really appreciate what a compelling strategic asset this was and what a complementary fit it was to our existing strategy and focus. If you look at where they are today, a full PMA approval product, a $1.5 billion TAM, and an immediately adjacent patient population with spectacular unmet needs. A purpose-built toolkit that addresses that unmet needs and brings a game-changing new option to these patients. Established reimbursement with line of sight to enhanced reimbursement. Initial commercial team trained and beginning to execute the U.S. launch. A commercial target that's much more narrow in scope to what we've had to undertake in VTE. This is maybe 200, a high volume, dedicated limb salvage centers of excellence here in the U.S. And the work from this point forward, highly complementary and aligned with our core competencies, the stuff that we're really good at, right? Refining a first-generation technology, building awareness, refining procedural techniques, market development, changing the standard of care for a group of patients. Those are all things that we're very good at and are close in, and we thought being able to control this next phase of work and really drive the initial launch was an opportunity we just couldn't let pass up. Maybe the last thing I'd point out is that there are a lot of compelling synergies we believe with LimFlow and our existing activities. The account targets are a complete overlap with the 1,700 accounts that we're in today, overlap at the site of service, overlap with the physician call point. We're working today already in the chronic venous disease market from a market development standpoint that overlaps entirely with the kind of market development work that's gonna be required for these CLTI patients as well. So there's a lot of compelling synergies from that standpoint as well. Right. And you talked about, I think you sized the U.S. opportunity at $1.5 billion. On the VTE side, you penetrated 7%. I think that's taken five or six years. Can you talk about how penetration into this new TAM, you know, might differ in timing-wise versus the core VTE market? Yeah, we're optimistic that we're gonna be able to penetrate this TAM, the CLTI, $1.5 billion TAM, more quickly than the work we've had to do in VTE, and there's a few reasons behind that optimism. The first is, these are literally no-option patients. These patients have exhausted all other endovascular options, and their only remaining option is amputation, which for the majority of them is the beginning of a downward spiral. We have high-quality evidence that we're gonna be able to leverage in CLTI, published in the New England Journal of Medicine, that we certainly did not have access to that kind of evidence when we began in the VTE market. On top of that, as I described, it's a much more focused, commercial effort, and target than what we've had to undertake and build, on the VTE side of our business. And then lastly, we're better at this, right? We have learned some really important lessons and built some competencies and capabilities over the last six or seven years as we've commercialized in the U.S., that I think we're gonna be able to leverage much more effectively, as we set out and do work, in this new target addressable market. ... Right, that makes sense. And, you know, maybe looping Mitch in here, you know, with the announcement of this deal, there will be some dilution on the profitability front, 'cause, you know, you're supporting the commercial ramp. You pushed out your operating profitability targets by over a year. And I guess there is some investor concern about ability to fund the deal. So maybe you could speak to those different aspects. Sure, I'll start quickly with the funding side of it. So from a cash resources point of view, the company closed Q3 with just over $350 million of cash, and we've also been cash flow positive for the past four quarters, so about $30 million in cash there. And then we finally have a couple of credit facilities with BofA, an ABL facility, and also an equipment sale-leaseback facility. Those. The total, kind of, dollar value of those two facilities is about $100 million. So that's kind of on the sources side of this thing. On the uses side, the initial downstroke payment for the transaction is a little less than $250 million, because we already own part of the company from 2022, as Drew mentioned. And then we have this $2 million-$3 million of kinda monthly cash support that we've talked about. That's basically think about payroll and third-party spend and things of that kind that are going on, on the LimFlow side of things. And then we expect that will drop down as we start to move through the year 2024, as we begin to generate some sales, and there's some gross profit dollars basically to offset those monthly operating expenses from a LimFlow point of view. We have the milestone payments that are coming up, so the first one is based on 2024 revenue. And then also there's two reimbursement milestones that are potentially... One of them is done already, another one's coming up in 2024 for inpatient and for outpatient reimbursement, sort of enhancements for the hospitals. We expect that both of those will be granted. And the total of all that, the two reimbursement milestones and the revenue milestone, and payable in the first quarter of 2025, essentially would potentially be $30 million, you know, kind of in that territory. So, from that point of view, when you look at the cash flow generation capability of the company and the cash resources we're talking about, we feel very comfortable that the company has the resources to cover that one. And then the final two milestone payments, one based on 2025 revenue of 0.85x. That sounds a lot like our gross margin, so that one kind of self-funds itself. And then the final one in 2026 is 0.5 x revenue. So taken as a whole, we feel very comfortable with our ability to cover the various obligations of the acquisition. And then the profitability question is really one of continuing to hopefully find ways of being helpful, Michael, to everybody from an investment marketplace. You know, the core business was profitable in Q3, so we're really pleased with the progress that we made and kind of well ahead of schedule, 'cause we'd previously messaged that would be in the kind of the first half of 2024. The core business, we are committed to continuing that profitability sort of march there, and it's gonna be dragged down a little bit, obviously, by the sort of the operating expenses of the acquisition. But the combination of the growth of the core business and the kind of improving financial profile of the acquisition, you know, we think we can get there by the second half of 2025. We're hoping to provide some kind of quarterly updates on our progress there, and if we can certainly pull that back in and get that done more quickly, we would love to do that. That's great. Thank you. And if I can follow up there, you know, do you have any initial thoughts on, you know, what that helpfulness or incremental color could look like? We're still working- Still working ... on that, to tell you the truth. And part of it is we are—you know, the acquisition is gonna close in the very near future, and so we're still learning a lot about the specific kind of cash requirements of the business. And then, as we put our 2024 operating plan together for Inari, and then pair that with an operating plan, essentially for LimFlow, I think we'll have a better picture for, for example, what's the operating loss gonna look like in Q1 of 2024? And I think, because most of the operating loss for the target company is due to depreciation and amortization, we may have some non-GAAP sort of discussion that we'll put into our press release starting in 2024, to help everybody sort of follow the bouncing ball a little bit on the profitability question. Okay. That's kind of our thinking so far. Got it. Yeah, that, that would be helpful. You know, it, to your point, the core business had been tracking better than expected on profitability. I'd say it was pretty impressive. You know, pushing the sustained operating profitability back from 1H 2024 to 2H 2025, I mean, would you characterize that as a pretty conservative assumption with, with room for upside there? Yeah, I think in general, anytime we make commitments, we try and be highly confident in delivering on those commitments, and I think that philosophy was certainly reflected in that initial target for profitability shifting out to the second half of 2025. I think as we get a little further along into the integration and get a better handle on how the trajectory of the initial launch is progressing, I think we may be in a position to update that timeline. But we thought, you know, second half of 2025 was a commitment that we were highly confident in being able to deliver on. Got it. Maybe switching gears again, you know, in the core business, OUS sales have been ramping pretty nicely, and I think you've got some new markets that you'll likely recognize some revenue in, in 2024. So maybe you could talk about the trends you're seeing in your OUS markets and, you know, what we could look forward to in 2024? Sure. So, the VTE unmet need is just as spectacular internationally as it is in the U.S. There's nothing unique about the U.S. patient population. We began international work about three years ago. Still a relatively small part of our revenue mix. In Q3, for instance, it was about 5% of our revenue, but showing some very nice traction. We grew 26% sequentially in the international business in Q3. So lots of runway out ahead of us. The majority of that growth today is still coming from Western Europe. That was where we initially began our international efforts. In addition to that, we've got 12 or 15 other markets outside of Western Europe, where we've got approval, we've got a commercial footprint established and are beginning to treat patients. Those markets are ramping alongside Europe, and I think certainly next year will contribute more meaningfully than they were in 2023. Over the horizon, we have been working really the last two years to gain access to China and Japan, two of the large mega Asian markets. In 2024, we will be in a position finally, after all that pre-work, to begin treating patients in China and Japan in 2024. That's another exciting new chapter that will contribute to add growth to the international franchise. We think over time, taken together, international can comprise 20% of the revenue mix in the foreseeable future. So we've got lots of runway out ahead, and I think the growth rate's gonna continue in that direction. All right. That's great, and I think we're at time. So Drew, Mitch, John, thank you for your time, and thanks for joining us. And for everyone who attended, thanks for your interest. Thank you, guys. Thanks. Appreciate it. Thank you, everybody.