Thanks everyone. I'm Robbie Marcus, the Med Tech Analyst at JP Morgan. Thanks for joining. Happy to have our next session, Penumbra. I'm gonna introduce Adam Elsesser, the CEO, and then we'll do a little Q&A after. Adam. Thank you. Good morning. It is actually great to be back in person, this year's 41st annual JP Morgan Healthcare Conference, navigating the hallways. I want to thank JP Morgan for inviting us, and of course, Robbie, for your coverage of Penumbra. Toward the end of the presentation today, I'll be playing some videos. If you're listening to this presentation via the webcast, you can view the slide deck and play the videos by going to our website under the Investor Relations heading, since they won't be able to be seen through the webcast. I appreciate your understanding on that. I'm just trying to see here where the buttons are for the slide thing. Here we go. That's our safe harbor statement. Let's kick off. Penumbra's a healthcare company focused on interventional products that treat a variety of medical conditions throughout the body. We're best known for our thrombectomy business. These are products that remove blood clots from the brain, from the arteries in the body, from the veins, the pulmonary artery, and the heart. We started the company in 2004, and currently have approximately 4,000 employees worldwide, with half female and a majority of U.S.-based employees are non-white. We're headquartered in Alameda, right here across the Bay, and we project that our revenues in 2023 will exceed $1 billion. I wanna review the number of patients that we think we can ultimately help with our products. First, let's look at the thrombectomy patients. For consistency's sake, we'll look at the numbers from the United States. Obviously, we sell many of our products in international markets. We estimate that there are roughly 157,000 patients who have a pulmonary embolism in the U.S. each year that might benefit from our products. We estimate that there are roughly 351,000 patients with a deep vein thrombosis or DVT, albeit other sources suggest it could be as high as 450,000 patients. 259,000 patients with acute limb ischemia or clot in their arteries. 289,000 patients with clot in their coronary arteries, and 200,000 patients with clot in their brain that can be treated with mechanical thrombectomy. The total of all these patients is 1.25 million people every year. The current rate of treatment with mechanical thrombectomy in each of these areas varies from under 10% to about 25%. There's a significant opportunity to help a great many more people in the years ahead. Let me review our embolization and access portfolio. These are very important clinical areas that have been established, though, for quite some time. The use of our technology continues to grow in large part because of our constant innovation in both these areas. We expect additional product launches to continue to grow the use of Penumbra's products in access and embolization. Let me briefly discuss our immersive healthcare business. As we have stated in the past, we have restructured our work in this field to better fit with the current market. The opportunity to help a significant number of people, potentially more than 50 million people, is very much the driving force behind this effort. We believe that the work we're doing with the U.S. Department of Veterans Affairs, as well as other healthcare organizations, will demonstrate how to properly introduce these products into the therapeutic workflow for patients who need rehabilitation, as well as patients struggling with aging and many other conditions, including mental health issues. Let's focus on 2023. We are set to launch two extremely consequential products in our vascular business. Lightning Flash received clearance from the FDA in late December, and we have already successfully completed our evaluation cases. The product has performed exactly as we had hoped, and we will be moving into the launch of Lightning Flash this week. We expect Lightning Bolt to be cleared this quarter, and following our required evaluation cases, we expect it to launch in late March. Thunderbolt, our product to treat patients with ischemic strokes, is continuing to perform as expected in the Thunder trial. We have several other products that we expect will launch in 2023 that will add to our growth. We're also focusing on generating significant clinical data. We are running the Thunder regulatory trial. We have announced that we will be starting the STORM-PE study, the first-ever randomized trial comparing Lightning to medical management in the treatment of pulmonary embolism. We are also starting the CHEETAH ACS study, which compares our CAT RX coronary rapid exchange system to the current standard of care to treat clot in the coronary arteries. When you add it all up, 2023 is poised to be the most consequential year in our company's history. Let's look at how these three groundbreaking products all perform. I'm gonna show videos of Thunderbolt, Lightning Bolt, and Lightning Flash to give everyone a sense of how computer-orchestrated aspiration works in the various vascular beds. First, I'll show you the video of Thunderbolt. We have shown this video before. These videos are on automatic loops. The top video shows an aspiration catheter with an inner diameter larger than 0.074 inches, which is larger than our RED 72 together with our engine pump. You will see the clot move, but it is not ingested. Take a look at the top video. It's gonna stay stuck at the tip of that catheter. On the bottom video, it's RED 68, so a smaller catheter with Thunderbolt. As you can see, the smaller catheter with Thunderbolt ingests the clot quite quickly. The next videos. This is the first time we've shown these videos of Lightning Bolt and Lightning Flash. First, Lightning Bolt. This first video is Lightning 7 alone in a model of the superficial femoral artery in the leg. The system is turned on. You can see it's a large piece of fairly fibrous clot. You can see it's holding onto it, but it's not gonna ingest it easily. In cases like this, where you have that large piece of clot, you'll have to hold onto it, secure it, and wrestle it out by pulling it up, and you'll see that happen here. Eventually, you'll pull that into a guide catheter. It works, but it doesn't ingest the clot quickly. It takes some time to get out of the body. I'm gonna show you the video for Lightning Bolt. You can see in that image, there's a flashing button, green button, it says Go. Once you push it, I think that's a little easier than the current way we remove clot in the body on the arterial side. For the demonstration of Lightning Flash. In this video, we are showing Lightning Flash removing clot from the main pulmonary artery, as well as the left and right side of the pulmonary artery. As background, most physicians say that the aspiration portion of a case like this with their current mechanical thrombectomy product of choice takes around 15 minutes. Some say 10 minutes. A few say as little as seven to eight minutes. We confirm the 10-15-minute time period in this exact same model with this type of clot. With that in mind, here is Lightning Flash. Turn on. All right, when? Keep going. You can see the aspiration time is about 45 seconds for the main artery and the right and the left side with minimal blood loss, which you can see in the bottom of that canister. I'm not gonna take the full amount of time. We'll get right to questions. Those are the Penumbra's cornerstone products for 2023. Robbie, love to have you lead the questions. Sure. Sit down. Great. I appreciate you showing the videos. It's impressive to see how fast it's gonna go. Correct me if I'm wrong, you've already gotten approval for Lightning Flash the end of the year? Mm-hmm. You know, my understanding is you typically do a small limited launch. Yes. With some cases, and then a full launch. Maybe just the initial reaction from physicians upon doing some of these first cases and what the feedback's been like. Yeah, it's a great question. The first cases have gone really well. We did our required under our design control system. We have a certain number of evaluation cases. We did those pretty quickly. As I said, we're moving to a full launch this week. The cases so far have gone exactly as we'd hoped. The system does what we want. It removes an awful lot of clot, as you can see in that video, really quickly, it minimizes the blood loss at the same time. You're finding that sort of balance that we really need to do. You can see you have an incredibly trackable catheter. In that video, you can see how it moved between the sides of the vessels. Not easy to do with the much larger catheter. The reaction both in DVT cases and in PE cases has been pretty extraordinary. There's more than two competitors, but there's. Mm-hmm. Two that hold the vast majority of market share. Two very different approaches in terms of size of. Yeah. Vacuum pressure. you know, I would say a lot of doctors use both devices, but not all. Yeah. Do you think this is gonna be an easier device for doctors that are more accustomed to Penumbra's technology? Do you think this is more of a everyone can use it? Yeah. Last thing I'm gonna do in the beginning of the year here at your conference is get into a, you know, us versus them type discussion. I'm not gonna do that. I will say, though, when you think about this catheter, what do you want in a product that removes blood clot? You want something that is easily trackable to wherever the blood clot is, and very quickly takes the clot out without any other downside, i.e., blood loss or some other issue. Get a little closer. I'm sorry. We're pretty close to that. You saw in those videos that we can do that both on the arterial side with Lightning Bolt, which is coming soon, and also with Lightning Flash. You know, when people talk about and you call and ask doctors about, for example, PE, you know, and they say, "I want a bigger catheter." They don't actually want a bigger catheter. They want the perception that they can get more clot out faster. Mm-hmm. Obviously, bigger catheters are actually harder to track, less mobile, but they have the correct perception that sometimes it means the clot comes out faster. When you have a system that can get that clot out faster and have a smaller catheter, kind of the best of both worlds. I think we're in a pretty good spot. This is a market on the venous side where there's less data than in stroke. Mm-hmm. A lot of the market development has been around ease of use, better results, but it's been based on smaller data sets and successful so far. As you think about what a product like this can do for market development, expanding the market, and getting doctors to start using thrombectomy more and more, you know, what's your level of optimism around that? Is it something that we see right away, or is this something that takes a bit of time for doctors to digest? I think it really depends on which vascular bed we're talking about. you know, DVT is a little different than PE, a little different than coronary, and of course, different than the arterial side. The biggest difference in all of those compared to stroke is where the patient is. The hurdle that has always been there with stroke is notwithstanding the data that we have that says we should do this. We still had to move the patient from the place where they first showed up, which hospital they went to. Many times they don't show up to a stroke center, and they have to be moved to one. Here, that's really not the case. It will be the rare place that won't be able to do this. The type of doctors that do these procedures are either interventional radiologists, cardiologists, or vascular surgeons. Almost every hospital has, you know, one or more of those subspecialties. When you take that issue out, then it comes down to the variety of reasons why, you know, they're doing something else today. Those are easier to handle. In PE, for example, that's why we're running the STORM-PE trial because there the biggest issue is getting those patients that are currently showing up and not yet being referred to for interventional treatment, but getting medical management. We think that we're at a point with the product development to show that it is better to be treated with Lightning than with medical management. If we can show that in this randomized trial, I think we'll open up that field pretty dramatically. We'll take on the other issues. Arterial, it's a little different. There, you're really competing with either open surgery or catheter-directed lysis, both not really proven as, you know, in a randomized trial. Their ease of use becomes the biggest issue. If it's just easier. Mm-hmm. Faster, you know, likely you'll see a conversion pretty quickly. If you saw the video with Lightning Bolt, you know, it pretty fast. Fast. Pretty fast. For STORM-PE, how do we think about timelines on when we might see data on that? Yeah. We're, you know, we just got Flash approved. We're just, you know, rolling out there, so, you know, we'll probably have an update maybe, in February on our. Okay. Our fourth quarter call. You know, obviously, we announced the study. We, we know what it looks like. We're anxious to get started on it. We obviously wanna put our best product forward, so we wanted to have Flash available. We'll probably give more. Have you moved into a full launch yet, or is it still in limited? With Flash? Yeah. In the prepared remarks, I said that we will be moving to a full launch this week. Shame on me. No, no, it's okay. Maybe I'll just pause quickly and see if there are questions in the room. No? The videos were that good. I'll keep going then. COVID definitely did have a benefit in the peripheral business for you, helping move patients out of ICUs. Mm-hmm Getting, treatment. Have you seen those trends continue, and do you think that will only move in one direction forward post-COVID? Yeah, it's a good question. You know, last year we saw a few countervailing forces. You know, we saw. That trend definitely hasn't gone backwards, people saying, "Oh, now I wanna, you know, put people back into the ICU and drip tPA." We just saw and dealt with in the first part of the year, less in the second half of the year, the, you know, sort of real acute staffing issues. We had sort of a countervailing issue then, ICU space, more procedural capacity, and techs and nurses and so on. I think things feel more stable. You know, there's a sense of, I think, real excitement and sort of, you know, I won't say back to normal 'cause it doesn't feel like what's normal anymore. It does feel like some of those issues, you know, are no longer sort of the highlighting issue. I don't see going backwards from people who did start mechanical thrombectomy because of ICU beds going the other way. That, I haven't heard of that, you know, let's go backwards. Since you bring up staffing, have you seen any improvements over the past few months? Yeah. The way we can tell, you know, our reps are in hospitals all the time, and so they can feel it, you know, and we try to get some qualitative reaction at. The best way to say is we don't hear about it a lot. You know, in that second quarter of 2022, that's all you heard about. You know, it was sort of this bane of everyone's existence. We just don't hear about that anymore. Is it solved? I don't think so. You know, if you look at the paper, there's been some articles about staffing and particularly on the nursing side, you know, that. It's clearly still there, but I don't think, at least we're in our business seeing, you know, a decrease in business because of it in the same way we saw in that one, second quarter of 2022. Got it. If we switch over to the other side of the business. Yeah The neurovascular. Later this year, you'll have Thunderbolt coming out second half. Mm-hmm. Also an impressive video there. Different dynamics, different market, different patient populations. You know, whereas in peripheral it's been about treating the patients that are in the hospital, as you said, in neuro it's about getting the patients from point A to point B in the right amount of time, and then treating them with the right technology. The market's stalled a bit. Yep The past few years. Maybe before we dive into technology, how are you thinking about the neuro market going forward and can it return to the growth rates that we'd seen pre-COVID? Yeah. I'm always optimistic. I've grown up in the neuro space, you know, as you know, for almost 20+ years now. I've seen the space and I've seen the group of physicians and the nurses and techs and stroke coordinators really take on huge challenges. I have a lot of optimism that we can do this and they can do this. In fact, we had a conversation, I didn't directly, but one of our team members with a physician who's back to going to the fire department and the, you know, the various ambulance services like they used to do, which really gave me some hope because we had seen that really fall off during COVID. They're out there now doing that again, and their volume is coming back pretty significantly. I think it's gonna happen. I also do think that technology will help. You know, we have a lot more physicians now doing stroke than they did back, you know, in the day, you know, when the stroke trials first came out. The field has trained a huge number of people in this sort of seven, eight years. I think having technology that is, sort of simple and easy, as you can see from that, those videos, will help, you know, the procedures easier if it's just more routine. I think it sort of brings a different level of enthusiasm to treating those patients, and that will help. Pre-COVID, there was some movement state by state to get legislation in place to help improve. Yeah. The logistics. Yeah. Do you think we can start to see any movement there? Yeah. It's a good question. I think about that occasionally. You know, COVID sort of, everyone, every state was focusing on other things. Yeah obviously not that. you know, it's such a logical, good idea that I remain optimistic. You know. This is run by the SNIS Society. They've done a, I think, a great job. I think they have the passion and desire to pick this up again and really try to see it come. yeah, I'll remain optimistic on it. Okay. I don't think it's something that we'll see in the short term. I do think that over time, it will happen. You know, one of the things that if I can just comment, as we talk about, you know, stroke, we particularly commented on our thrombectomy business, you know, as a whole, you know, and I think as opposed to neuro versus vascular because as we get closer, to seeing computer-orchestrated technology in all of these areas, there is a little bit more of a logic to thinking about the business as a thrombectomy business versus neuro versus vascular. When you do it that way, you realize, you know, stroke matters a lot for people who are having stroke, and I don't want anyone to think I don't obviously care about making sure we treat everybody. It, it is numerically, you know, less on the scale than some of the other areas that we have to penetrate. We're gonna go after all five vascular beds with the kind of passion and energy that we've always done. I think when you start thinking about, again, computer-orchestrated aspiration, whether it's Lightning Bolt, Thunderbolt or Lightning Flash, you're gonna start seeing, I think, a, you know, a convergence on, you know, how one thinks about removing clot in the body, and I think that'll be helpful. With Thunderbolt. Yes. Do you think you'll be able to help reinvigorate the market with the technology like this? Do you think it's meaningful enough? Yeah. I don't wanna overstate that. I do, but I don't wanna overstate it. You know, I'm responding to, you know, the comments that physicians who have used it for the first time in our trial, you know, what they think and they feel, which is pretty positive and there's a lot of like, "Wow, that was so cool." Like, you know, that. Yeah, I think that strikes me as something that could bring some renewed energy to the field. It's pretty fun, you know, to see physicians react to our innovations like that. It works, you know, as you can see from the videos. Question? Yeah. Thanks for taking the question. Yeah. You mentioned that you've done, preliminary cases already with Lightning Flash. Yeah. Could you speak to kinda time to clot removal for those cases specifically and kind of what we've seen in real world? Yeah. In the real world, it varies depending on, you know, the case that you saw, you know, is a model obviously, and it has clot in both sides, plus the main artery. The timeframes, in the cases that we've done, again, we've done DVT and PE have been absolutely, you know, within our expectations of what those real world cases are. There's some real extraordinary cases, you know, where if you just look at the amount of clot taken out in the short timeframe and very, very little blood loss, at the same time. Like, you know, we don't do this work. You know, we've been doing this now, just to remind everyone, for 20 years. You know, almost 20 years. We've developed the models, and we've developed all of the way to measure, you know, the new versions of products against the old versions and what those improvements are. We didn't go into this blindly, and I know there were a lot of questions after our last quarterly call about, you know, how do we know? You know, we haven't even done it, you know. That comes from just us doing this a lot and sort of having a pretty good feel on it. The real cases have been, you know, certainly as good. One physician said it was better than they had experienced in the model, that they were, you know, they had a great case. You know, so far we haven't had anyone say it was worse. I think we're gonna have a lot of fun. We're gonna do a lot of good work over the next year to bring this out there. If I could ask one more, just as you thought about, you know, design work and what size catheter you wanted, could you just compare pros and cons of, you know, the 12 French catheter that's in Flash today and what that would look like versus an 18 French catheter that are using the same system, and why you chose 12? The catheter that we're using with Flash is not 12. We have a new catheter. It's definitely, it's sort of the right size. It's highly trackable. In fact, it's a little bigger than 12, but it's more trackable even. We used our hypotube sort of technology that we've started to use in some of our catheters to make. You could see it in that video, being able to torque pretty easily from one side to the other. That trackability, I think, is really of value. What's really the most noticeable thing, that's sort of the bonus, you know, is that you get this great, you know, sort of properly sized catheter to, you know, go in and out easily. The real benefit is how fast you can get all that clot out without taking out blood unnecessarily. That's the primary thing. The catheter, which is really a beautiful catheter, you know, one of the things, you know, if you talk to most physicians, and if you just look at history in interventional fields, whatever that is, you never end up, you know, where bigger is better in intervention. You know, I just wanna say that, you know, we were party to appropriately to making bigger and bigger catheters on the neuro side so we can get clot out faster, you know? Now we're going a different direction because the technology and the innovation has allowed us to be sort of properly sized. That's really important, because that's where you get this, the right answer, is to be properly sized. Adam, if I look in neuro and I look in peripheral, there are a lot of therapies priced higher. Mm-hmm. Than your therapies. Yes. Coming out with potentially transformative technologies, how do we think about where Penumbra could take price? Price is a great question. One we get a lot, and we answer it. The answer is yes, there's always gonna, in this technology, there's gonna be a bit of a price premium from where we currently are. Our goal is never to be the highest priced product in a field. You know, a lot of times, if you look back, when we first went public in 2015, there were a lot of questions around the fact that we were gonna have more and more competitors coming with catheters and aspiration pumps. There was a perception appropriately that, you know, maybe we would see a huge price erosion, which is what happens sometimes in other medical device areas. We've never seen that at all. We've never lowered our price in stroke. That's because we never priced it too high in the first place. We priced it in a way that hospitals felt fair, it was fairly priced. I think we're gonna continue to do that with technology like this. Doesn't mean we're not gonna do well, and we are gonna see a bit of a price increase, but we're gonna price it in a way that hospitals feel is fair to their long-term business. We know what the DRG is. We know what the, you know, the ability is. We know where that price is and I think that puts us in a really good position for the long haul. if I think about, your 2023 guidance for $1 billion plus. Yes. How do I think about the contribution of pricing in there versus volumes? Pricing, we think, will be, you know, if you take the three elements that will drive that, if you just take out regular other products, if you take, you know, Lightning Flash, Lightning Bolt as the primary drivers of new products, the three drivers are market share, market growth, and price. I think price will be the third of those three. Okay. Not the, not the first or second. Question? If you wanna defer this until your call in February, I understand. Just going back to the study of your technology versus medical management. Mm-hmm. Can you just comment on the primary endpoint and the key secondary endpoint and just a sense of what the field would see as materially. Yeah. Clinically relevant? What a nd, and just- I'll say the question again. Yeah. Sorry. That people on the webcast can hear. The question is, On the STORM- PE trial, that is our randomized trial against Lightning versus medical management, what are the primary and secondary endpoints, and then so on? Chris was gracious enough to say I might be able to defer it, which I appreciate. I'll defer the actual endpoints. I will give you some color on that as well. The actual endpoints, I would rather have the principal investigators announce sort of when, you know, they're getting the study going. I don't wanna steal their thunder. That being said, we spent over a year, Dr. Benenati primarily working with leaders of not just the interventional subspecialties in IR cardiology and vascular surgery, but pulmonologists and hospitalists and so on, to really bring everyone together to figure out what those endpoints should be. This study has never been done, and there wasn't a logical sense of agreement to start. We saw that in stroke, where studies were rushed out before the definitive studies with endpoints that might not have been the right endpoints. It took time to get that organized. We did that work over a year of, you know, meetings and conversations and groups, really flushing that out. Because it's tricky, because there are acute clinical endpoints, there's quality of life endpoints, there's all kinds of things that we need to sort of get together. I think we've done that work and pretty seriously. It's pretty impressive, and I, we'll roll it out specifically. I think it will be listened to by everyone because they were all part of designing it. Any other questions in the audience? Maybe one last one. Yeah. To wrap it up. margins. Mm-hmm. Penumbra was moving upwards on margins. Yeah. To the high single digits. COVID hit, like a lot of other companies, margins came down. Mm-hmm. I think you've talked to positive margins in 2023. Yeah. You know, how should we think about the leverage or the ability of Penumbra next year? A couple things. On gross margins, I think we're, you know, doing what we said we were gonna do. There's a number of different things, you know, the COVID restrictions are, you know, going away. We had added a graveyard shift, which is more expensive. We're moving away from that. We've been able to expand Roseville and make it more efficient, so we'll start to get some leverage. It takes some time to run through the system. It doesn't happen overnight. Just general, you know, focus on efficiency. The last couple of years, we've focused on, you know, sort of just keeping going and dealing with all the things. I think we'll see that. We talked about, you know, getting up to the, you know, low 70s in a couple of years. That seems very doable. On the operating margin side, you know, we feel, again, some of that is gross margin, but some of it is just how we think about and run the business. We think that we'll continue to do well and show that we can run a profitable business. It's something I care a lot about and feel pretty strong about as you know from back in the day when we went public. I think we're on a really good path around our spend to do that. I think a launch like this and the excitement around it will only help. Great. Well, it should be a real exciting year. Looking forward to it. Yeah. Thanks, Adam. Thank you. Thanks, everyone. All right. Thanks, guys.