Okay, so we're ready to kick off. This is the Fireside Chat with Penumbra. My name is Mike Sarcone. I'm one of the analysts on the U.S. Medical Supplies and Devices team. And with us from the company today, we have Adam Elsesser. He's Co-Founder, President, Chairman, and CEO. We've also got Jason Mills, Director of Strategy, and Cecilia Furlong, who is a Director of Business Development, is also here with us. So, team, thank you for joining us today. Yeah, thanks for having us. Thanks. Great. So just to kick off, Adam, maybe we could start high level. Can you talk about Penumbra's mission and how that's influenced the company's strategy? You know, the pace of innovation at the company has been really impressive. We'd just like to get your take on where we stand in the innovation cycle and how you're thinking about key growth drivers. Yeah, that's—thank you. You know, the mission, just to remind everyone, we started the company really 21 years ago now, which every time I say that, it's a little shocking. With the simple idea that was fairly controversial at the time of making a product that could easily and safely remove blood clot from the arteries in the brain that have caused a stroke. It was a controversial time because that just wasn't done. People thought that that wasn't possible. It was somewhat of a fool's errand, even some of the folks in, you know, the operators or the interventionalists in our field. We did. We made our first product. It looked fundamentally similar in the sense that it was a catheter with an aspiration source. It worked. It just took a long time. It wasn't efficient. It didn't have the capacity, you know, to treat every possible, you know, consistency of clot and so on and so forth. We just kept iterating from there. We kept making better and better catheters, bigger catheters, more trackable catheters. We improved the aspiration source, went through three different pumps along the way, until we moved to other parts of the body, of course, because clot was everywhere. We didn't need to just focus on stroke, which obviously is now the much bigger part of our business. A few years ago, we launched the first wave of using a computer to sort of help control that aspiration source. Again, we're in the early stages of that. There's a lot more to come, but that's really been, I think, a major change in the trajectory of the company and really for patients going forward. I think that's where innovation, as I said, you know, there's still work to be done on catheters, but less pronounced than what I think we can continue to do on the computer side. Got it. That kind of gets to my next question. You know, when you think about the innovation roadmap, and again, you've been on this incredibly fast innovation pace, expanding to different areas of the body, how do you continue to push the limits on innovation? You know, what do you view as the next meaningful areas of improvement? First of all, if it's okay, I need a quick shout-out to our team at Penumbra who have been doing this. The folks around R&D are really as good as anybody has ever been as a team in this medtech field. Many of them have been there from the beginning. Some have added along the way. It is just an incredibly creative, sort of clever team, if you will, who really looks at problems with a different eye and ability to solve it. I'm really happy about that. The next frontier, what can we do? It really comes down to the basic, you know, four things. How do we continue to evolve the products so that they just become, you know, you never think about clot? You know, we've come a long way in 21 years, but you still think about clot as, "Oh, God, you have a clot." You know, what do we do? Sometimes it's, you know, okay, but a lot of times it can be life-threatening, not just in stroke, but obviously in PE. It can have a devastating effect in the arteries and so on, with loss of limbs and so on. We got to get to the point where we do not think that way because there's a solution that's relatively just, "Hey, we just do it. It's easy, safe, very efficient." I think we're headed there. I think we have a line of sight there. You know, that's what unites the whole team, the company, the R&D team to get to that point. You know, 21 years ago, did I think that would happen? Probably not. We were just trying to make the first one work. It is really incredible to be able to at least have some line of sight to that ultimate goal. All right, great. And, you know, Penumbra's in multiple different markets here, but as you mentioned, you started in Neuro. You know, we're on the precipice of another innovative product cycle with Thunderbolt. I was hoping you can just talk to us about the capabilities there and, you know, what you're planning to bring to market with the technology. Yeah. So the good news is, you know, Thunderbolt is our newest product in Neuro where we're bringing CAVT. But we've also had, you know, a year and a half of experience with that same fundamental technology in the arteries already in the rest of the body. So it's not novel to the field or to the world. That's a new indication. You know, we've done, you know, at last count, I've lost. Tens of thousands. Tens of thousands of cases already in the legs, plus, of course, the trial that we did. That technology, I think, will bring, it's sort of the next logical frontier. I think it's the start of that, of we've now evolved catheter technology in stroke a lot. You know, catheters, you know, I think we've now found the right size, you know, the trackability with our RED 72 SILVER LABEL with or without SENDit is now really, really good. I think that's sort of showing, you know, that's the right size. You get too big, of course, like with some of these 088s and stuff, it's just too big. Aspiration actually doesn't work as well. That's just the science behind aspiration. I think people are starting to realize that the data is confirming that. I think the catheter side is there's room to go, but it's going to be more incremental going forward. I think the next step is the other part of the procedure. You know, once you get the product there, then you still have to get the clot out. There at least has always been on in the last year and a half in the arterial side on the consistency of fast ingestion times of clot. You know, and it's not just one or two times, but just the consistency of clot ingestion times. That's not something that Neuro has had to look at yet. You know, so it's a new thought, but it's the next step of the procedure. You know, getting it there is one thing. How fast can you get the clot out is the next thing. There is sort of an obvious logic to what this innovation we think will bring to the field. All right, great. I guess just on that front, can you give us an update on where you stand in the path toward commercializing Thunderbolt and, you know, what are the milestones we should be looking out for? Yeah. We ran our trial. We finished, you know, collecting all the data, and we submitted it to the FDA. When we get approval, we will let you know. You've been very steadfast on not giving us the timelines. You know, I've been doing this a while. And, you know, predicting, working with the FDA on something like this is not something that, you know, makes sense to do. Understood. When you think about Thunderbolt, do you view this as just catalyzing a product cycle within the existing customer base, or is there an opportunity for meaningful share gain here? Yeah, I think there is an opportunity for share gain. I think, again, going back to the most fundamental thing, what does everyone want? They want an efficient case, you know, that gets all the clot out and is as short a time as possible. Time in any of these cases matters, whether it's on the arterial side or in stroke. In stroke, it matters a lot because, you know, there's been, you know, the statements, time is brain and how many neurons die every second. You know, those things matter. Efficiency matters a lot. Again, you don't always control that, but when you have technology that's been purposely designed and built to make that efficient, I can't wait to see that out in the field. You know, you've also talked about, you know, streamlining, you know, this procedure, making it a little bit simpler. That begs the question of democratization and, you know, maybe expanding penetration of the market, which I guess has kind of been stuck around the 30% range. Yeah. How do you think about that? I think it's complicated. I think neurophysicians, you know, have done an extraordinarily good job after the stroke trials came out of, as a group and organized, to do the work necessary to try to get patients moved around to the right place, you know, and triage the right way. There's only so much that can be done. I think that's the topic. I don't think a product changes that per se, you know, unless there's some magic way, you know, you don't move patients. The people who have tried that, you know, in the past, there was, you know, a company, you know, that a robotic company that was going to do, you know, remote stroke. Obviously, that didn't work. There are some serious issues around, you know, where the money flows and payments that make that probably not a viable solution. It really comes down to the question, you know, around, you know, where are the physicians, where are the patients? I think that's somewhat independent of Thunderbolt, albeit, you know, if it becomes a more efficient procedure, you know, is that going to result in more patients treated just because it's faster and easier? You know, you got to have a little hope out there. Let's hope that that happens. Outside of Thunderbolt, you know, understanding you're talking about one single product, not changing the trajectory here necessarily, like when you look out five to ten years, do you see a market that's 40% penetrated or? Yeah, I think, yeah, I think there's a natural course that can get you to that number. I think getting in stroke, now, I think it's different in the rest of the markets we're in. I will explain that in a second. In stroke, because the patients aren't all in the right place to start, that becomes the larger sort of question of, are there more and more doctors to do it, different kinds of doctors to do it? Those are the questions that the field is wrestling with that is not directly related to the product. The good news is on the other areas we do, whether it's arterial, DVT, or PE, we don't have that issue. Those patients are in hospitals that can treat them interventionally. You know, one of the things that I started to, you know, remind folks and mention is STORM-PE, which is our randomized trial against anticoagulation and our CAVT product Flash 2.0. I'm excited about that because they're like stroke, you know, that group of trials and our trials particularly are like the stroke trials, but without that burden or barrier of moving patients. I think that group of, you know, our data, you know, again, when the trial's done and we see what it all is, has the potential to dramatically change that market. I definitely want to get into VTE for sure. Just a few more questions on Neuro, and then we'll get there. I guess, what do you think about market growth and what that looks like today in the neurothrombectomy market? You know, Jason, I don't know if you don't want to share your perceptions of the numbers. I think it's really hard to have exact numbers, but I know you focus on. Yeah, I mean, so the stroke market is growing again. That's the good news. It's not growing at the pace that our other thrombectomy markets are growing, specifically VTE and arterial. There was a period of time, obviously, after the stroke trials, MR CLEAN, SWIFT PRIME, et cetera, that the market sort of went from 10% penetration to 30%. There was, you know, growth commensurate with what we're seeing now in PE and DVT. And then during COVID, as you remember, you know, stroke and heart attacks weren't being treated in hospitals. You actually saw the market go down a little bit. We've recovered from that. Mid-single digit growth is probably the best estimate we have for the stroke market at this particular moment. Got it. All right, that's helpful, Jason. Can you just level set us, you know, what's the latest and greatest on where you think Penumbra's share stands in the thrombectomy market? It's over 50%, certainly probably approaching 60%. Okay, great. That's helpful. I think you already alluded to this, Adam, when you said you think we've got the right size catheter and you talked about 088s. We did recently just see a competitive clearance for an 088 catheter for aspiration. Just wanted to get your thoughts on the competitive landscape, how we may see it evolve, and if there's anything we should be keeping an eye out for. Yeah, again, I don't want to cast aspersions or anything. You know, people can look at that data. I don't think that data was helpful for 088. No offset. Okay, and then on the thrombolytic drug front, is there anything that we should be, you know, on the lookout for? You know, I don't, if the question is like as a competitor, I don't think so. You know, I'm heartened to see that there's still work being done on that category. You know, just to, again, sort of level set, there are way more than the 200,000 strokes every year in the U.S. Those are just what are defined as sort of large vessel strokes where we're indicated to go after that. The rest, and it might be as much as a million people, have smaller strokes or lacunar strokes. And those are the strokes that, you know, need that constant innovation on thrombolytics. So I'm glad to see that's happening. I don't see them as, you know, competitive between us and them. Got it. Understood. I guess just on that topic tangentially, I mean, do you feel like Penumbra's positioned well to attack like the medium vessel occlusion, you know, outside of the LVOs? Yeah, so the, you know, just there's a lot of terms that get thrown around, distal, medium, you know, LVO. We're on label or indicated for, you know, up through the M2, you know, branch. There have been people who have tried to do, so that's sort of what is normally treated. There have been, you know, a very small percentage of the business for folks who have taken some of our smaller catheters. Our RED 43 is best known for that catheter to go a little further up. You know, started probably some years ago as I'm treating a lesion in M2, it bled into the M3, you know, and I can't just leave it because I'm almost done. So, oh, I got it out. Wow. You know, that's sort of how that evolved a little. It's, again, a small percentage. The trials that you're alluding to, you know, used, one used, you know, lots of different things. Some focused on, you know, just intravenous. You know, I think the data would have been different if they were using, you know, RED 43 alone. And so I don't think that's a negative on people thinking that's possible. I also, it's a small enough patient. I don't yet see physicians in a need like to, like let's study that specifically, but that might change. And we certainly have the product that seems to work really well there. So we'll see, but I don't see that yet. Great. Okay, that's helpful. Yeah, maybe we can shift to VTE. You've posted two really impressive quarters, 40% plus growth year- over- year. Just love your take on, you know, what's driving that growth. I know we have had some competitive disruption in the acquisitions. Not saying that's the, not attributing it to that, but yeah, your color. Yeah, that's, I appreciate the question. The growth, you know, the fourth quarter obviously had nothing to do with competitive or anything, you know, disruption because there was no disruption yet. It continued, you know, and that's because it was what I've said, not to be, you know, cute here, but we have a really good product and it's actually just better. You know, we continue to innovate. You know, this is Flash 2.0, which is obviously the second generation. We iterated that algorithm very quickly to get to a much different place. We are able to quickly and safely take out the clot in a way that doesn't compare to more analog technology. We are only going to make that better and better from here. You know, one can assume that Flash 3.0 will be better than Flash 2.0. That's not to say that 2.0 is not great, but that's been our model for a long time that you can make this faster and better and better and better. We are going to take share. I don't see that stopping, you know, because we certainly don't have a majority of the VTE business in PE particularly, but we've made some big headway over the last, you know, the last six months. Again, that doesn't come, and I say this as a generic comment, not a specific comment, but it comes in waves. It doesn't come, you know, in a linear fashion because you're convincing physicians sort of one by one, you know, to do something that they haven't done before. That just takes time. That takes, you know, people on the ground. That takes conversations. It takes doctors talking to their friends who have switched or tried things. That process is, I can assure you, well underway to continue that for quite some time. It's really satisfying work because you're talking to dedicated physicians who have helped build this space, who are willing, able, and going, wow, now it just got easier and easier. You know, it got better and better. Like that's how it's supposed to work. You know, to play a small part in that's very satisfying right now. That's helpful. I guess, what is your estimate of where your share stands today in pulmonary embolism? It's probably quadrupled. It's up four- to six-times in the last since Flash was launched. You know, somewhere probably approaching a third on its way to 50%, you know, going forward. We're over 50% now in DVT across that few quarters ago. Going in the right direction. Yeah, definitely. I mean, the 40%, I think if I'm kind of reading your comments right, like that doesn't seem to be sustainable longer term. Where do you think market growth is? I think, you know, people have estimated that in VTE it's been around, you know, high teens, 20% range for a bit. I think that's probably as good an estimate as one can have. Again, you know, our goal, in addition to continuing to innovate and make better and better products to take share, is also the work we've talked about with market access, where we're going to hospitals with this data from Vizient and sharing with them, you know, what it looks like to treat more of these patients, so DVT patients and PE patients. That work, you know, again, it's place by place. You know, it's time-consuming. I can tell you that, you know, from the ones that we have gone to that have decided to change how they're thinking about that patient group, you know, it changes the growth curve pretty dramatically. It is good for patients, good for the hospital in the long run. I am optimistic about that. On top of that, you know, again, going back to STORM-PE, that is another element that could change that growth rate with that data, again, when it comes out, because some of that is being held, you know, because we do not have that data. DVT is different. Most people already believe that at least on the iliofemoral DVT side, we should be doing this. It is just a question of when, how do you get those patients to the hospital? What is the protocol when they hit the, you know, how do you change some of those things? There is less of a need to have that kind of randomized data. We are not hearing doctors say they need that. In PE, that has been necessary. Right. You mentioned this before, particularly for PE, those patients are already in the hospital and very available to be mined. You know, the way you've designed STORM-PE, you know, if the trial hits on its endpoints, do you think this could be a pretty massive catalyst? I think the readout is next year for uptake. Yeah. So that's, you know, clinicaltrials.gov says that, obviously. Do I think, you know, I wouldn't, I was about to say yes when you said, will this be a, you know, help or whatever, and then you use the word massive. I am trying to be disciplined and not use terms like massive. For that term, I would have agreed with you. I could rewrite it. Could this be helpful in catalyzing more penetrations? I think it will help a lot. I it will help a lot. I mean, we saw, you know, there's so many parallels to stroke and PE in terms of the group of physicians who, you know, are involved and responsible for those patients when they get to the hospital. Interventionalist is one of those, but not the only one. How people sort of think about those patients historically. I think, and at least the conversations I've had with many of the leaders of the various groups and societies in Perth and so on, they have done a lot of work looking at what happened with stroke and what lessons are learned and how to, you know, they again don't have the biggest limitation, which is not having the patients. I think people are getting ready, you know, long, you know, not us as a company as much as, you know, the field is ready. And that's exciting. We've come a long way. It is. It is, especially given how underpenetrated the opportunity is. If we look at stroke as an analog, you talked about there are geographic limitations that kind of put a kind of a cap on where we can get penetration-wise. That does not seem to exist in pulmonary embolism. Where do you think penetration could ultimately go? Yeah. I mean, ultimately, if we're using the term ultimate, so there's no actual timeframe on it, 2050. 2050, yeah. You know, I would like to think that everyone who qualifies can get treated. That, you know, that seems logical. Again, I'm not putting, you know, the term, I'm using the term ultimate. You have data that says that the patients are all there. Like what causes that not to happen? You know, again, we have to first finish the trial, has to be successful. Assuming all those things, I think we're feeling pretty optimistic that we can help a lot of patients. PE, you know, has some of the same devastating aspects of stroke. You know, one, obviously, you know, it can be fatal. It also afflicts, you know, a group of patients, you know, sometimes younger patients. Pregnant moms particularly is a weird subset where we've seen a number of those kind of cases. You know, there's nothing more profound than being able to actually help patients like that. You started the talk today asking about our mission. If you'll indulge me, we had our national sales meeting in January, like we always do. We invited a patient who was pregnant with her fourth child, had a fairly significant PE, I believe coded when she got to the hospital, revived her successfully Flash 2.0. She came to the meeting to share her story with the whole sales team and talk about it. Utterly unprompted, and this part like still like, wow, this is a woman middle of the country. She'd never been on an airplane before, flew to our meeting with her husband. Her parents or his were taking care of the rest of the kids. Her baby was successfully born, by the way, you know, a couple a week later. At the end of sharing her story, she looked out at the whole sales force and said, you know, I have one request. I'm, you know, I'm like, what's it going to be? She goes, I want you guys to not stop until everybody like me is treated. I was like, you know, wow, we didn't even prompt that. It was just from the heart. Like, and you know what? If that doesn't remind us why we're doing this and what the important mission is, nothing can. God bless. Yeah. That's a great story. Appreciate that. We only have like 25 seconds left. I did want to make sure to touch on profitability. It's been, you know, you guys have outperformed and it's been a real bright spot among many. Maybe you could just talk about, you know, how you're viewing near-term margin trajectory and what the drivers are. Yeah. Yeah, I can start and then you can jump in. You know, on our last earnings call, we reiterated we expected to expand gross margins this year to over 67%, 100 basis points, and see more expansion in operating margins. The guidance we gave them was 13%-14%. And then additionally, over a little longer period of time, we did reiterate the comment that we thought we would be at 70% gross margins by the end of next year. It had consistently said that we think operating margin expansion will outpace gross margin expansion. That gives you a little bit longer framework. But in general, as we, you know, we're still really underpenetrated in our markets. And obviously, you know, as we penetrate those markets, the revenue should be even more profitable than the revenue we're currently generating. Awesome. Very helpful. That's all the time we have. Adam, Jason, Cecilia, thank you for your time.