All right. Good afternoon, everyone. I'm Larry Biegelsen, the medical device analyst at Wells Fargo. It's my pleasure to host this session with Shockwave. With us, we have Doug Godshall, the CEO. Unfortunately, Debbie Kaster, Vice President of Investor Relations, couldn't be here because she was ill. Hopefully, she's on the mend. I know. I'm sure she'd like to be here. Better than yesterday. Yeah. Good, good to hear. Format is fireside chat. If anyone has a question, please raise your hand, we'll come around, and call on you. Doug, thanks for being here. Thank you. So, Doug, I wanted to start with a big picture question. In light of the recent raise, I'd love to hear kind of your high-level view, vision for the company. You've obviously had tremendous success with IVL, but how are you thinking about the company more broadly? Yeah, thanks. And thanks, everybody, for joining us today and on the web. We are very bullish about our prospects near term and frankly, long term. We think IVL is meaningfully underpenetrated, both coronary and peripheral, with really intriguing potential in the structural heart arena. We think the best way to capitalize on that sort of underpenetration is to continue enhancing the performance of our devices and generating clinical data to demonstrate why it is and should continue to be the standard of care for calcified cardiovascular disease. But we also realize that we don't have a monopoly on good ideas, as evidenced by acquiring the Reducer from Neovasc earlier this year. And so we wanted to put ourselves in a position where we could sort of do both. Continue to grow a robust, vibrant IVL portfolio, and if we found other meaningful differentiated technologies that can provide a significant upgrade in outcomes for patients, preferably cardiovascular disease, which is what we know. And ideally, like the Reducer would leverage our market development capabilities that we think we've demonstrated with IVL. We want to make sure we were in a position where we had sort of strategic flexibility and optionality, and we didn't quite have enough cash on hand where we thought we could move if we found something sort of too good to pass up. So we wanted to put ourselves in a position where we would have... We could augment with sort of end-of-decade kind of growth drivers. And that's sort of the horizon that we're looking at, is if we can find something that would add hundreds of millions dollars at the back end of the decade, you know, we should, we should say yes to that kind of opportunity. I heard you say cardiovascular, but I didn't hear you say the same call point. How important is that to leverage your call the current call point? So one very clear rule we have is we don't want anything that we would commercialize through our existing sales channel today. Anything we add would probably be, well, would certainly be dilutive to IVL penetration and growth. And so we don't want to add anything into our bag today. Maybe in five years, I'd be willing to add something to our bag because we'll have an even more sizable sales channel that may have capacity to sell more products through. But if you think about the really successful franchises, like, say, Watchman from BSC. BSC has a channel to the cardiologist. They have a channel to the electrophysiologist, and they chose to create a separate channel for Watchman because it's such a sizable opportunity, and it's a different kind of a sale than selling a stent or balloon. You're having to work on referral channels, and so some of the things we look at, and Reducer might be one of them, even though it's the exact same position, it's a very different sale process. So you might either have to add additional selling capabilities or market development capabilities, or you may choose a standalone channel. You'd certainly get synergies on things like trade shows, and other sort of broader company-wide marketing efforts. But the selling efforts, you may not get the same synergies if it's a big enough opportunity. There are a lot of things in cardiology, you might set up a separate sales channel. So that's not, it's a nice to have if it can leverage our sales channel in several years, but that's not a requirement. I got it. And how much dilution are you willing to accept to the margins, which, you know, are important to a lot of investors? Our intent, our plan is to be a high-growth company for the next decade, and we think shareholders will get rewarded more by if we are a well above peer group sort of growth company than they would if we are a well above peer group operating margin company. Luckily, we're a pretty healthy operating margin right now, so we think we'll be able to make remain profitable, even if we take in something else like Neovasc, that knocks down our operating margin a few points. We'd rather take a few points in margin hit if we have even greater growth trajectory. So, we don't have a must be above X number. Kind of a minimum threshold for operating margin, but we certainly are keenly aware that investors like our profitability, but we think we get valued more on growth than we get valued on margin. Got it. All right, so I wanted to switch gears, and I know you have an investor meeting coming up on October 23rd. So I know you don't want to front run that too much, but I know there's only so much you're going to say on the pipeline. But just remind us of kind of the key pipeline updates and launches you're expecting this year and next year that you've already kind of disclosed. Yeah, so we started the year launching L6, which is our large diameter peripheral catheter. We're really pleased with the clinical response to that. It has more concentrated power to accommodate for the larger diameter design. And as great as the clinical results were for M5 Plus, which goes up to an 8-millimeter design, and L6 starts at 8 mm. I'm surprised how enthusiastic physicians are with the angiographic results with L6. It just seems better to them, more like a stent-like response to L6 even than they saw with M5 Plus. So great launch so far. C2 Plus, we're in limited launch right now, and we're planning to fully launch in the U.S. We started the launch earlier this year in Europe. Very good response and the limited launch, so far, so good in the U.S. So far, great in the U.S. And then at TCT, we'll fully launch that across the U.S. Next year, we'll talk about these launches. We've got, we'll be concentrated on peripheral launches next year. At our investor day, we'll talk about those products specifically. And then getting into 2025, we start to add some coronary launches, and our investor day will be peripheral coronary launches for the next couple of years, a little bit into the later time horizon to give a vision for where we're heading. We haven't provided an update on our aortic valve project for some time. Which valve? Aortic valve. Yeah Project for some time. So we'll give an update on where we are with that complete redesign we did with that device, and what to expect in the near future on a product we call, we have traditionally called TAVL. And we'll talk about reducer. So peripheral, coronary, structural reducer, and we know that there's, at these investor days, we call it an innovation day because we want it to be focused on technology and pipeline, not focused on financials, but we also know that investors are eager to have some glimpse at sort of future outlook. So we'll, we're finalizing what we'll be talking about from a financial aspect. But there'll be some broad strokes financially. Yeah, well, we know some companies have been punished when they don't provide any financial outlook, and we don't want to get punished. So we'll provide some outlook. We just haven't finalized, and we need to make sure the board's comfortable with whatever we're going to say. So we're going through that process. What's the Mini, the one pipeline product that there is public information on in peripheral, which is this Mini S? What, what is that? That's below the knee, I assume, because of the S. There's a clinical trial, I think, required, which is unusual for a peripheral product. Yeah, so stay tuned for October twenty-third. We'll provide more granular detail. It is a product. We started a feasibility study in New Zealand and Australia, and we've added an IDE in the US. It's. We're enthusiastic so far. Okay. And there's an IDE? An IDE, yeah. Yeah, yeah, so. Which is unusual for the peripheral space or not? Well, we had to do an IDE. Well, we had to have clinical data for our first peripheral approval. And so, the FDA appears to have a view, the sort of more different a product is, the more they're going to lean towards requiring an IDE. Okay. And structural heart, I heard you mention upfront. Yep. You've talked about what you used to call TAVL, you mentioned. Yeah, we're, for now, we'll call it TAVL. Probably well, but. Aortic valve. For now, for now. Aortic stenosis. Yeah. And then you've also talked about MAC. Yeah Mitral aortic calcification, I believe. Yeah. Or mitral? No, annular calcification. Sorry, it can't be mitral. Yeah, you have mitral valves. I mean, everything in mitral is. I'm sure many of you have invested in mitral companies. Mitral is a complex, more complex valve than aortic, and they have leaflet calcification as well as annular calcification. And we've had some public, I think two publications on mitral use of one of our peripheral catheters off-label. And we have a habit of letting our customers pull us into places where they need something for calcium. They did that in aortic valve. They did that in iliac arteries for large bore access, and so they sort of point the way for us. And so just like aortic valve, we had lots of off-label uses, so it convinces us that there's a need for, in addition to TAVR, that there is a need for something to treat that calcium. We're evaluating mitral since customers have done the same thing in the mitral for us. And carotid? They've used carotid off-label as well. So yeah, luckily, there's lots of calcium, and not a lot of good options. Got it. All right. So let's, so we'll look forward to October 23. I am looking forward to it. So let's transition to 2023 and to start at a high level, you know, with the guidance of $725-$730, pretty narrow range for you guys. 48%-49% year-over-year growth. What are the kind of the key assumptions underpinning that guidance? We are seeing continued momentum, particularly picking up into the fourth quarter, as is sort of the norm in our space. C2 Plus limited launch now, full launch shortly. Uplift in inpatient reimbursement starting October first, you know, for coronary, although the payment to the hospital reimbursement tends to have a slow-growing effect on utilization. It's not a, as we've said before, it's not like a light switch, payment gets better, utilization responds immediately. Certainly the response we've had from clinicians we've spoken to is very positive. They, they're relieved that they sort of have a peace offering to administration. Hey, these guys are getting $8,000 more per DRG for inpatient use. They think that's going to really meaningfully reduce the downward pressure they feel from administration on IVL utilization. And then continued expansion of our selling organization. So that's sort of the U.S. component. Japan, Germany continued to clip along really handsomely to drive international growth rates. The rest of international is doing well. Those are doing particularly well. And lots of talk about China. We're watching China closely. It probably isn't going to be a growth driver in the fourth quarter. It doesn't affect our numbers for the quarter, our expectations, but we're sort of sorting out what's going to happen in China, if anything. Just to follow up on China, because we've had that, we've asked all our companies about that. Sure, sure. There's macro concerns and VBP, but I know that doesn't affect you. And then there's the anti-corruption policies. You know, it's interesting because, there was a time, you know, Doug, we've talked about this, you thought China would do better than Japan, the ramp, and it sounds like Japan's doing better than China. What's going on in China? Why is it maybe. It sounds like it's a little slower for you. Out of those issues, are any of them affecting you that I mentioned? Yeah, no, we're just watching. It's not slower, we just don't know yet what the effect is going to be. Physicians in China are just kind of keeping their heads down. They don't want to get in trouble. It helps. If they're, if you want to send a message, send a doctor to jail as they, as they did, and it makes everybody a little bit nervous. We're not sure it's going to have any effect on us, but we recognize that sort of the climate has changed, and so we're just trying to assess what, if any, impact it's going to have on us, really, probably next year more than this year. But we'll see. It's less than 5% of our business, so we don't want it to go away. We think it's long-term going to be a very, very sizable market for us, even if there's a little bit of a sort of uncertainty in the very near horizon. Japan didn't ramp faster than China, but we always question, when is Japan going to pass China? Japan's doing so well. It's probably going to pass China, even notwithstanding the anti-corruption stuff. We think Japan's going to clip past China sooner than we had anticipated. That's helpful. And again, another question, just that we're asking everybody, which is about summer seasonality. Is there anything, you know, unusual this year about pent-up demand for vacations or anything like that? I mean, certainly, times have changed versus when you and I started in this industry. That was a long time ago. It's a little few years ago. Back when physicians were all private pay and they got paid every procedure they did, they tended not to take long vacations in the U.S. so you saw more pronounced seasonality internationally. Really, since the Affordable Care Act, when everybody started working for hospitals, they take real vacations. But that was the case in 2018 and 2019. I think this year they probably took a little bit better vacations because post-COVID, they had pent-up vacation time. We've not tended to see... I mean, September's almost all. Well, September is always better than July, August, for obvious reasons. I don't know that there's meaningfully different pent-up procedure demand. I don't know what other people are telling you. We think that it's going to be a third quarter in the U.S. like it has been for the past several years. If you black out COVID, nothing's normal in COVID. Got it. But I mean, just to follow up on that, third quarter, is it like normal? What, what are you referring to? September is better than July and August. Yeah. Is what we expect. It's a September-biased quarter and has always been. It used to be two decades ago, it was biased because Europeans took vacation. Now Americans take vacations, too. Got it. Got it. I mean, I'll just get the kind of outlook questions out of the way. 2024 puts and takes, how you think about it? A ny reaction to consensus? Yeah, I mean, obviously, 2023, we feel very good about our consensus and our guide. And 2024, can you believe we're going to do over $900 million? Like, it's all grown up and everything. So I think, we feel comfortable with consensus in 2024. You've got C2+ launch, we've got other product launches. We think Japan and Germany will continue to drive international growth. We've gone direct in Spain and Canada this year. We'll go direct in Italy at the end of this year. Italy is one of our strongest international markets, so you'll get both continued strength on the top line, plus direct sales, so you get the ASP uplift that from going direct. So we feel continue to feel very good about our international growth trajectory, and you'll start to feel the real benefits of in-patient reimbursement and physician professional fees that'll kick in in January. That's helpful. So, no, that's very helpful. It was interesting on peripheral versus coronary. You know, I think you started the year, I think, thinking peripheral would go faster than coronary, but I'm not sure that's still the case. How are you thinking about peripheral versus coronary? Yeah, peripheral is probably pretty close to where we thought it was going to be. Coronary is just doing even better. So if you look at our, if I recall it correctly, we probably were at about $685 midpoint for our guide, something like that, in the start of the year, and now we're $727-$728 midpoint. A very large percent of that is U.S. coronary. It just continues to deliver. You know, we try to follow the competition closely, and my impression is it's been slower than expected, at least than expected, you know? Yeah. I think you and I both thought like, "Oh, yeah, 2024, you'll have competition," it doesn't look like it. Doesn't look like it. Yeah. 25 at the earliest, peripheral? I think we'll see peripheral sometime in 2025. One player and then maybe 2026 for a second one. Coronary, I don't know. I guess if you're conservative, maybe middle of 2026, but probably 2027 for coronary. Got it. Switching gears to coronary. I mean, in the U.S. we estimate you'll exit the year about one-third penetration of U.S. moderate to severe calcium. I don't know if that is consistent with your numbers, but where do you think that can go? Is that close to what you know? Yeah, we're south of 10% of PCIs. And so the number we used for our TAM is 30% severe or moderate. Right. If you look at papers that use intravascular imaging, it's 40% severe or moderate, so we're probably undercounting the opportunity. But if you stick with 30%, we always felt like we could start approaching 15% with existing economics, because that's the biggest sort of rate limiter on utilization. There's pressure on doctors to constrain use, even with a transitional pass-through and NTAP. Early feedback is with improved inpatient reimbursement, that there's going to be a pressure relief on that. We didn't anticipate we'd have such a positive physician fee in CPT, and we expect in 2025, we're going to get uplifted to the highest APC level. So now you've got really stimulative. Well, stimulative inpatient payment, stimulative physician fee, and neutral to good outpatient. Gives us pretty high confidence that we're going to be, we can easily be north of 15%. You'll probably never get all the way to 30%, but our sort of realizable TAM is, has improved with this reimbursement news. Got to make our catheter better. We'll continue to do that, which we'll talk about on October twenty-third, to continue giving customers a high level of satisfaction with the device. And ultimately, that- those are the two things, even better catheter performance and appropriate payment. We think, we're less than halfway to less than halfway there. So, so if you exit the year at about 10 or one-third of the 30%, you get to 15. So you're basically, you got another 50% more to go. We think we're more like less than halfway to where, 15 is where we would have been with CPT and NTAP, but with that, with. Regular reimbursement. Oh, yeah, for sure. Yeah, 20 is very realizable. Are there analogues, Doug, that you can point to that suggest that that's possible, 20% or 30%? A lot of our customers, yeah. Customers who take a, in fact, I'm going to be, gonna spend the day with one of them next week. If you take an IVL first strategy as opposed to an IVL last, so if you use a high-pressure balloon, or maybe atherectomy, or a cutting balloon, you trial a bunch of other stuff and then eventually go to IVL, you end up at about 10%. If you say, "You know, why skip all those steps and just go right to IVL?" You end up at 20%-25%. And so with the challenge that physicians have is when they take that IVL, IVL-first strategy, is then cath lab directors say, "Hey, cut back on IVL use, you're using it too much." With neutral to favorable economics that we're going to have going forward, then that... Our expectation is that that's going to greatly reduce the sort of constraints on use. And physicians would like an even better performing catheter, which we're working on. And so those are the two things that we're not going to get to 20% next year. I don't think. That would be remarkable, but whereas before that seemed aspirational, now it feels very realizable. That's helpful. Any chance, I only have one question on the outpatient TPT. Any chance it's in the final rule this year, the bump up in the APC? It's non-zero, but it's closer to zero than it is to 10%. And I guess one follow-up, you still feel good about next year? Very. Yes. Yeah. To us, it's gonna be a nuisance, more of a Wall Street anxiety nuisance. But we think it'll. TPT will expire June 30. A couple of weeks later, we'll see the proposed rule. There will be much gnashing of teeth in that two-week period, hoping that it lands in the 51.94, which is the highest APC. No matter how we slice the numbers, it always ends up in the higher APC. There's just no other way to do the math. So, in that intervening two-quarter period, you'll have had three years of habit forming of using IVL. The habit will be even stronger with physician buy-in and inpatient. You're not going to treat an outpatient differently than you treat an inpatient. We just don't think you're gonna cut back on IVL for a six-month period of time, particularly when there's light at the end of the tunnel, that you're gonna get to the higher APC. That's helpful. The one big, you know, untapped opportunity for you is the OBLs in the United States. Yeah, it's about 35% of the peripheral procedures. Several years ago, CMS asked the CPT panel to update their lower extremity, the legs and iliacs, the codes. So the three societies, the SVS, SCAI, ACC, and SIR, four societies, I guess, that govern the peripheral interventions, have been working, perhaps not very rapidly, at creating a new code set for all the peripheral procedures. So you need a CPT code for the physician fee, but it's also a CPT code that determines OBL reimbursement. Everybody's making a very nice income with the current CPT code set, even with some cuts, and OBLs continue to make money with the current code. So it's evident that there's not a lot of urgency from the societies to change the codes because the future is uncertain. Our current expectation is that there will be no, we feel pretty, we're fairly certain there's not going to be a proposed set of codes this year. So there's one more CPT panel meeting. We do feel like they're targeting next year to land the plane finally, and to have a new basket of lower extremity codes. We expect we will be in that basket of codes. And so that would mean January of 2026, you would then have however many new codes there are, which we think will include IVL, in which case, then we'll have a license on OBLs. The reimbursement is there, so, the coding is there? There's no code. We don't have a CPT code in the periphery. So until they reset the codes, they've proposed 32 codes twice and got rejected by the CPT panel. Well, they pulled it once, and it got rejected once. And so now they're in a working group to try to come up with some number of codes. And it'll obviously include stents, it'll obviously include atherectomy. We expect it will include Shockwave or IVL. Whereas with the coronary code, we were able to go and get our own code. We can't do that because they're already working on the codes, so we can't go to the CPT panel and say, "We're tired of waiting for these societies, give us our own code," because they'll just say, "Well, they're already working on it." So we have to wait for their process to work out. Okay. But if that happened January 2026, then you could sell into OBLs and get reimbursed? Yes. Okay. Doug, it's interesting, there was, I think we talked about a negative article on atherectomy in the New York Times a couple of months ago. It was over the weekend, so I feel like it didn't get that much coverage. Yeah. But I think the question I have is, does that create an opening for IVL to get new codes in the OBLs? Like, have you heard any. I mean, it's still. I t's interesting. There's a little bit of a discord between vascular surgeons, the STS, and the cardiology, because it was cardiologists that were the subjects of the article. And surgeons are saying: See, we're, like, we know how to treat patients 'cause we can cut or catheter, and, or we have a more, take a more holistic view. So that's an interesting sort of drama playing out. However, it's not gonna cause them to say, "Let's add an IVL code for OBLs," 'cause they're already. Right. Allegedly working on it. Everyone seems to be aware of that article. We're not seeing any procedure change. I mean, I don't know if you saw, but Aetna just indicated that they're looking for prior authorization on all peripheral cases now. We've been subject to prior authorization from day one, so it's the same for us. It's actually probably good now that it's leveling the playing field. We don't know if that was because of that article, though. It would make sense. They saw the article, and they're like, "Hey, we have an excuse to ask for prior authorization." And they will always take any excuse they can find to ask for prior authorization. So, that's my hunch why they suddenly changed that policy. Got it. And Abbott's gonna be presenting their below-the-knee data, LIFE-BTK for Esprit, which is their bioabsorbable stent. Remind us, how, if that's positive, would IVL be used in combination? Is that a driver for you guys, or what? Stents traditionally don't work well when there's a lot of calcium. Look at the coronaries. Stents don't get used much below the knee. So, when we looked at bioresorbable scaffolds in the coronaries, calcium was unhelpful for that. So it could be stimulative. They almost always exclude calcium in every stent trial because they know it doesn't work as well, so I don't know their protocol, but I'm guessing that they also excluded calcium. So it could be if it stimulates more BTK interventions and if we have, we've hinted that when you look at our pipeline, as you mentioned with Mini, it's gonna be BTK-biased because we think we are vastly underpenetrated BTK, underutilized BTK. So stimulating more BTK interventions with a resorbable scaffold, which is a good idea, probably augurs to our benefit. Got it. Anything else, Doug? We've actually got three minutes left, but I think we've covered a lot of ground. We did. Anything, anything else you want to say ahead of the October analyst meeting? I always get nervous when there's too much pent-up anticipation for something. So we're excited about having the opportunity to share at least the first phase of many phases of new product introductions that we're gonna have over the next five or six years. We're. Our team's worked really hard. We like the feedback we're getting from customers. Hopefully, the street likes our portfolio as much as our customers do. All right. Well, we're looking forward to it, and, thanks for being here. Appreciate it. Yeah. Thank you.