Hi, all. Welcome. My name is Caroline Borowski, and I'm a member here at the JPMorgan Healthcare Investment Banking Group. It is my pleasure to introduce Doug Godshall, President and CEO of Shockwave Medical. Welcome. Thanks very much. Thanks, everybody, for joining me, joining us early, at least California time, for a little update on Shockwave. I will, of course, be making forward-looking statements, so there'll be a quiz on this at the end of today, so please memorize our disclaimers. At Shockwave, we are on a mission to establish ourselves as the premier med tech growth company by transforming treatment of poorly served patient populations with paradigm-changing technologies. We have in front of us a $14 billion opportunity. We look to simplify procedures, optimize outcomes, and to validate our technologies through clinical evidence generation. So we're really enthusiastic about the future, obviously, and love the opportunity in front of us. The opportunity we're pursuing today in our business is treating calcified arteries. So everybody knows about atherosclerosis, coronary bypass, stenting procedures. Historically, tools were developed to treat uncalcified fibrotic disease. Yet the bigger challenge for physicians are treating calcium, particularly deep wall calcium or medial calcium. Because the tools, such as angioplasty balloons, were not really developed to treat calcified disease, they either had unacceptable or unsatisfactory outcomes, higher risk of dissections, or the small subset of tools, such as rotational atherectomy, pictured here, that were developed to treat calcified disease, often had low frequency, but high acuity and severe complications, such as severe dissections, perforations, and embolic complications. So, up until the advent of IVL, there was really no safe, reproducible technology to treat calcified disease. So the founders of the company, one of whom is just walked into the room a couple minutes ago, Dr. Brinton, they thought: Well, what if we... Like, what is used clinically to treat hard stuff in the body safely? And they arrived at lithotripsy. So for 40 years, urologists have been using shock wave lithotripsy to break up kidney stones. And yet that kind of high energy to treat a diffuse calcified vascular disease is not a good technical match. So they thought, they hypothesized: What if we miniaturize shock waves and could get it close to the calcified disease? Fortunately for the patients and physicians around the world, they were very successful. So our solution in this very low-profile generator that creates the energy that delivers through an angioplasty catheter, they were able to take shock waves, put it in a balloon, and deliver a system that integrates really easy into interventional procedures. Pretty much every interventional procedure uses two devices, a guide wire and a balloon. So putting shock waves inside of a balloon enabled this technology to be easily integrated into any procedure. Any physician can use it because they all know how to put a balloon over a guide wire and deliver it to a lesion. So our procedure is basically inflate a balloon in the calcified region, inflate it at low pressure, push a button. It's kind of that simple. That creates an energy pulse that goes into the catheter, delivers a small spark inside the balloon. That creates bubbles. The bubbles, when they expand and collapse, create sound waves. The sound waves pass through the soft tissue on the inside of the blood vessel, but it gets absorbed in the calcium and causes the calcium to crack. Because the balloon is at low pressure, the vessel expands basically without complication. It's all over a standard guide wire in a balloon catheter that they're all familiar with. So the beauty of Shockwave is it's safe, it's simple, integrates into procedure, and it's almost always effective. Even when it doesn't work, like a bad Shockwave procedure is like, "it was okay." If that's sort of the worst outcome, that's a pretty good day for a doctor and a patient. Our IVL or lithotripsy opportunity is nearly a $10 billion TAM. I won't go through each of these categories. Coronary is our biggest business, and it's also the most global business. Pretty much anywhere you go around the globe, you're gonna have physicians use angioplasty and stenting to treat coronary artery disease. It's because of... It is so ubiquitous that it's why our initial commercial launch in 2018 was so successful internationally, because everybody does angioplasty, which is different than a lot of medical device companies that kind of struggle to build an international business. We had no such struggles. In the peripheral arteries, from the iliacs down to the feet, it's a much more diffuse and different kind of a disease. And as a result, you have more sort of subsets of areas, iliac disease, below-the-knee disease, common femoral, et cetera, which also means we have a broader spectrum of devices. And then we've recently added carotid to this TAM because we've announced that we'll be starting a carotid program and commercializing in a few years. And then the one non-arterial application that we're pursuing and will be in feasibility later this year is to treat aortic valve stenosis. So a rich set of opportunities, both present today and big opportunities in the future. Today, we have three products in the periphery: L6, M5 Plus, and S4. And two basically in the coronaries, but one is the first generation C2, which we are still selling, but we are replacing that with C2 Plus. Very similar catheter or same catheter, just 50% more pulses. So think of it as like a 50% higher dose or energy that physicians can use to treat a broader spectrum of diseases or lesions, without having to pull a second catheter. We have generated more data on calcified disease than any other technology. For the Shockwave sponsored trials, we've completed six studies on the periphery, and four on the coronary, but there are dozens and dozens and dozens of other studies that have been done by physicians, registries and the like. So far more data to support IVL to treat calcified disease than any other technology. On the peripheral side, we're one of the few companies that have run a randomized trial. It's kind of scary in the periphery to run a randomized trial, 'cause there's not a lot of great evidence to support the control arm. So the founders took a risk, and I'm glad they did, because we were statistically significantly better on primary and secondary endpoints in this trial. And basically what it demonstrated is we reduce the stenosis significantly without complication, and that was really what drove the our primary endpoint success. We just didn't have the frequency of dissection and other complication that the angioplasty did. And if you've tracked interventional trials, angioplasty almost always does better in trials than it does in the real world, because physicians are just more careful. So actually beating angioplasty, which is the sort of gold standard, was quite a remarkable outcome. On the coronary front, I mentioned all the studies we've run. One of our sort of founding principal investigators, Dean Kereiakes, told his team when they first started using Shockwaves: "Shockwave, it just get used to zeros." And what he meant was just zero complications. And if you look across every study, we don't have dissections hardly ever, at least. We don't have perforations, we don't have abrupt closure, we don't have embolic phenomenon for low flow, slow flow. And in the coronaries, even if you have an occasional perforation and the patient dies on the table, and it was you using an atherectomy catheter that caused it, like, it sticks with you as a cardiologist. So getting these close to zero is, was a major accomplishment by the team, and it's why this technology resonates so profoundly around the world. And again, it works almost every time, even though these are the most complicated patients for the physicians to treat. So, we shared this slide at our Innovation Day that we had back in October. We've now treated over 400,000 patients since our inception, which is sort of why we all do this. And what you can see at the bottom is you're starting to see the cadence of product launches accelerate. We had a product launch in 2017, another one in 2018, and then a few years off before we got to C2 in the U.S. And now we're gonna be on a drumbeat of two-three product launches every year for the foreseeable future. And that's because we've been pouring so much money into our R&D program, and there's such rich opportunity in both coronary and peripheral, and structural, ultimately. So we went from seven development programs in 2021 and a $50 million budget to a $150 million budget and 27 programs, as of last year. And what I'm most excited about is we had no early-stage development, and our team has become really, is really working on some very interesting, innovative early-stage programs. So we've really spooled up the sort of early-stage incubator activity, that we think will, will lead to some very interesting new products. So we sort of go early stage and tech dev, and then drop into product development. So we went from five product development programs to 13 product development programs, which shows sort of getting closer to market. One of the things we've done in that process is now we have sort of we've trifurcated our platforms. We had a balloon-based platform, and that's what we're selling today. In the not-too-distant future, we'll have our first catheter-based platform, what we call Javelin, which sort of shifts the energy to the front of the catheter for really difficult to cross lesions, which is a subset of patients we just really can't treat today. If you can't get a balloon across, you can't use Shockwave. Now, we're gonna be able to get across with Shockwave, which is a very significant opportunity, and we're very excited about. And then we have this high-powered platform, which is to treat structural heart, so aortic first and potentially mitral later. And so we're enthusiastic about each of these. Obviously, one is present today, two in the future. So as you look at sort of end of 2026 timeframe, we'll have eight different purpose-built catheters to treat coronary and peripheral disease. So this is outside of the structural heart. And soon after 2026, we'll add another catheter to this generator and have a carotid program. So we're really loving the sort of throughput and efficiency of our R&D team and the considerable sort of improvement in uniquely solving the challenges physicians have in each of these different disease states. And if that weren't enough, we also thought, well, let's try to see if we can do what we did with IVL for another disease state. And so, refractory angina is not something that really ever gets talked about, but it's a, it's a persistent problem. There are about 300,000 patients every year in the U.S. where after they get revascularized, so bypass or a stent, they still have chest pain. And for the interventional physician, they're like: "Well, I did what I did. I found the lesion, and you still don't feel better, so I'll send you back to the general cardiologist, and they'll just put you on meds and try to make you feel better." And it doesn't really work all that well, for a lot of patients. So, this company, Neovasc, developed a product called Reducer and has been plugging along for some time trying to generate enough data to get approval. We acquired it last year and are incredibly enthusiastic based on what we're seeing, both anecdotally from our customers in Europe as well as the clinical data that has been generated. And about 80% of the time, the Reducer meaningfully reduces angina, enabling patients to come off meds and have substantially increased exercise tolerance and sort of meaningful improvement in quality of life. We're running a very rigorous, sham-controlled clinical trial right now in the U.S. called COSIRA-II and are impressed by what we're seeing internationally in terms of the sort of response the physicians are seeing from their patients. And we're using our international commercial experience now to sort of test the model. How do you get referrals from the general cardiologists to the interventional docs? Analogous to say to what sort of WATCHMAN has done at BSC, where how do you get these patients in for a left atrial appendage closure? And so as we learn that model internationally, we'll import that into the U.S. in the 2027 time frame, when we expect to be approved for this for Reducer. So stay tuned on that. We're looking forward to it. So if you aggregate all those opportunities, IVL, VTL, which is our valve therapy, carotid, and Reducer, it's close to a $15 billion TAM. Back not that long ago, when we went public in 2019, our TAM, we estimated, was about $6 billion. We've expanded that both by sort of procedures expanding, as well as expanding into new patient populations that we hadn't initially envisioned we'd be able to treat. So a huge opportunity in front of us. And one of the things that has enabled, is enabling us to penetrate that TAM is when we started, we had no reimbursement for anything, and so we were just sort of a cost to every procedure. And when I first thought about taking this job, I was told, "Don't take that job. You're never gonna get reimbursement." And I'm glad I ignored the people who told me that. And it was hard in the early years because you have this balloon that sort of has these little shocks in it, and I don't even know if it works, and I don't get paid for it. So luckily, we had some real visionary physicians who adopted us, used it enough, we got codes, CMS could see the costs, and then we ended up with reimbursement in the peripheral. We were able to get a transitional pass-through and an NTAP in coronary when we first launched, and that enabled us to launch very successfully, and that also enabled CMS to track costs. And now we have a CPT code that just went into effect for physicians starting last week, and we have a very impressive inpatient payment in coronary, and we anticipate next year we'll have full outpatient payment after the transitional pass-through expires later this year. So we're steadily building a very strong economic base, and it's... Back, way back when I would have said, "Give me reimbursement first." Now, I'm kind of glad we started with clinical validation first, reimbursement later. So reimbursement's upside, not... So we didn't build it based on reimbursement. We built it because we solved a problem physicians didn't have a better solution for. We're also global. We're in... We're able to treat about 60% of the world's population. And we're commercial in about 70 countries. We're direct in a subset of those countries. We just recently went direct in Italy. We launched in Japan last year, which is gonna be one of our key drivers for this year. We don't anticipate a lot of new direct countries until we get to a slightly larger scale in those countries, and then it makes sense. So some countries, it's just more cost-effective to stay with a distributor than to go direct and add the OpEx. We're headquartered not too far from here. If anybody's bored, you can come by tomorrow and say hi. And we have about 1,500 employees. We have an excellent manufacturing team. We are putting finishing touches on a substantial new facility in Costa Rica, so the future will be Santa Clara as innovation hub. You saw those development programs. They'll start R&D in Santa Clara. They'll do pilot in Santa Clara. We'll work out the kinks. We'll launch from Santa Clara, and then we'll move production to Costa Rica. And then we'll replace that with the next R&D program, and hopefully, we are constantly kicking things into pilot and then moving it down to Costa Rica. That's sort of the model we anticipate following. So some notable accomplishments which we shared last year. We have over 4,000 customers. I mentioned the clinical trials, what... They're important, but publications of those clinical trials and all the other evidence generated by physicians is critical in what's helped build the foundation. We love our patent portfolio. We've got over 8,000 generators in hospital. By that sort of 2026 time frame, we'll have more like 12,000 generators. And it's a happy day when I walk into a lab, and they say, "Oh, we've got five of your generators," 'cause, like you can use us on any patient, and you just become part of the fabric of the cath lab. Last year, we also indicated we expect revenues in the $725 million-$730 million for 2023. We're not updating guidance or giving flash results, so that's that was the guidance as of the end of last year. And if you look back, we've got a 2,210% growth rate leading up to the end of 2023, 2022, sorry. And we anticipate a 25% plus growth rate for the next three years, sort of starting this year, so leaping off of 2023. We are expecting about a 500 basis point expansion in operating margin, and we're gonna generate that revenue with the considerable R&D investment that we're gonna be making over the next three years. So $150 million is gonna grow, and we'll continue to kick out new products that will enable us to maintain growth through the end of the decade. So how are we gonna keep growing? We're gonna increase penetration with new products, expand the treatable pool of populations that I just described, continue to improve customer economics. We will invest in clinical data. I'm thrilled with the quality of the team members we have on board and the caliber of the folks that we have been adding as time has gone by. And when appropriate, we will acquire new differentiated platforms, as we did with Reducer. So with that, I think we're gonna do some questions, and I think if you guys have questions, you can tee them up as well. Thanks very much. Thank you. So maybe beginning with U.S. peripheral prior authorization policies, those from Aetna impacted your Q3 2023 procedures. What is the latest you are seeing on the prior authorizations with Aetna, and is this stabilizing, or is there any movement to alleviate this policy issue? Yeah. So for those who haven't followed the story, Aetna instituted a new policy on September first, where they required prior authorization for every peripheral procedure. They were doing that for their private patients and on some of their and on their Medicare Advantage patients. What that change resulted in was, we've always had prior authorization for IVL ever since we launched for peripheral. So physicians and had gotten used to: "I'm gonna do this procedure. I might use IVL, I might not use IVL," and they got approved almost every time. Aetna's change was, we don't... Based on all the noise around peripheral interventions, that if those of you who saw the New York Times article in the summer, we're not sure we want you to do peripheral interventions, full stop. Not, not IVL specifically, but we want, we want you to convince us you should intervene on this patient. So it moved the prior authorization upstream, instead of we want you to confirm which technolo-- we want to be able to confirm which technology we're gonna pay for. They were saying: "We don't want to pay for the procedure at all," which was-- we didn't realize the impact that was gonna have. And even though Aetna's not the largest payer, it's not Medicare, it still had enough of a downdraft where, where there was a... Physicians were forced to delay when they were gonna intervene on patients because they were stuck in this do loop with the medical directors at, at Aetna, like, trying to get the procedure approved. So we couldn't intervene because they weren't getting to the table to get treated. Aetna's come under a lot of pressure from medical societies, which is the appropriate place for the pressure to be delivered, versus a single company, 'cause it's the procedure not just IVL. It has not really changed a lot, although physicians, the bigger change is physicians who were not staffed to do all the appeals of prior authorization, many of them have sort of added capacity so that they can fight this delay. And so they're becoming sort of more effective at getting the approval to do the peripheral interventional procedure. So it seems like it's kind of stable to maybe a little bit better, but not, certainly not getting worse. And, I know there was some anxiety: "Well, if Aetna is doing it, why wouldn't everybody? Why wouldn't Cigna and United and everyone? Like, why wouldn't everyone adopt this?" There's no evidence that there's sort of a contagion of this prior authorization. I think it partly in part because the societies have been so noisy and putting so much pressure. I think the other payers probably just don't want to deal with that. And so we'll see if Aetna's gonna loosen their policy. So far, there's not really a change. But it so now it's sort of this sort of baseline status quo, probably with more upside than there is downside. That's very helpful. And I guess moving into Q4 and fiscal year 2023 results and 2024 guidance, you haven't pre-announced, but it looks like you have confirmed your guidance for fiscal year 2023. Can you confirm this, and are you still comfortable with the $920 million street number for 2024? Yep, that's correct. So we just, as I just mentioned, $725-$730 was our guide, and the consensus is about $719-$720, and we remain comfortable with that, and we'll update guidance when we get our earnings call in a few weeks. What are the key drivers that make you comfortable with that number, and where this puts you and takes you to get there? S o we've got two really strong new changes to reimbursement on the coronary side in the U.S., and a new product launch with coronary. So we've got three tailwinds leading into the year on our biggest franchise. C2 Plus has launched. Feedback has been incredibly positive. They love the extra power and capacity to treat more lesions. We have new DRG codes that went into effect in October, and it's been 20 years since CMS introduced new DRGs in the coronaries, and the fact that they introduced 3 for so new ones for IVL is that are at a substantially higher rate than the non-IVL DRGs is a real positive. And then the CPT code, which pays physicians about 27% more if you use IVL than if you don't use IVL, has just gone into effect on 1st January. So we certainly physicians like the idea of, "I get paid now to use IVL," versus, "I never got paid to use IVL." And the fact that they get paid kinda two times as much to use IVL as they would for atherectomy, we think is gonna be a real real stimulus. So coronary you got three drivers for that one driver. International Japan Germany Italy sort of our direct strong growers are gonna really deliver. And the one caveat on international is sort of China. Anti-corruption is still an overhang. But, sort of ex-China international, we think is gonna be a very strong, very strong contributor. Back end of the year, peripheral kicks back in as we start launching our purpose-built below-the-knee catheters. We've always... Sort of for us, S4 is a nice little product, but kind of too little. It's a little too short to be a workhorse below the knee. And so going from a 40-millimeter to an 80-millimeter treatment zone, like we will with the E8, followed soon thereafter with Javelin, which will be primarily used below the knee. So that is a, is a fertile, untapped, and heavily calcified lesion set. So, coronary, full year, international, full year, peripheral, back into the year are the drivers. Great. You touched upon this a little bit, but in regards to China, in Q3, the business had impact from the anti-corruption campaign, that you expected to continue to be a headwind for the remainder of 2023. What is the latest you're seeing now from the impacts of the campaign? Is it starting to recover, and how is this issue factored into your 2024 expectations? Same-store utilization was really showed some nice recovery through the fourth quarter. What we have yet to see is what we had assumed pre-corruption anti-corruption. We thought we were gonna be adding a lot more new sites, that sort of came to a grinding halt. We have not yet seen hospitals start to say: "Okay, now we can bring Shockwave in." So the same-store sales is strong, but we had modeled, and our JV had assumed they were gonna be sort of introducing a lot more sites and spooling up a lot more sites. So we're remaining very cautious on sort of trying to forecast when hospitals will feel comfortable that the anti-corruption overhang and risk is gone, so they can start taking on new sort of buying new product kits and introducing Shockwave. So better to be conservative and assume China's gonna be a smaller business for us this year than it was than we had modeled, 'cause we just aren't able to forecast when they're gonna start buying new product. So luckily, the rest of international is doing great. So we just have to sort of clear the deck on China, and hopefully, sometime this year, they start buying new product. Great. And yeah, I think I have a question in the audience. First question is, where in Costa Rica? Uh, Coyol. Cool. So just going back to the step edit that Aetna put back in. What is actually driving that? What is it... I mean, it's very. It's clear that the community sees the value. You guys, you know, what is it that you think that the payers don't understand? Like, why would they put in a step edit for you to prove that you need to intervene? Well, if you are a payer, your, your objective is to not pay. So- Well, I get that. And so if they have an excuse to throw a speed bump in, and so the excuse for Aetna, we think... I mean, they didn't say on September 1st, there were these bad actors that received publicity in New York Times, and they were kind of bad actor doctors doing it. Therefore, maybe we, Aetna, are paying for procedures that we shouldn't have to pay for, 'cause these docs are intervening on patients who probably shouldn't be intervened on. Gotcha. Well, let's make these physicians convince us that we actually should pay for these. And the U.S. treats patients differently than most countries internationally, 'cause we treat patients with leg pain, claudication. In many other countries, they will... Like, until you have severe claudication or critical limb ischemia, then we'll let you intervene. So most countries, the peripheral, unlike coronary, where everybody kind of does it the same way, peripheral is a U.S. sort of phenomenon.... And so in other countries, these patients that Aetna is trying to say no to, they wouldn't get treated in other countries, and Aetna's probably looking at that, too. Like, "Why am I treating leg pain? It's just leg pain." And so those are the patients that are taking longest to get through the prior auth process. Like, go exercise first, maybe that'll be good enough. And I, I'm sure Aetna runs a calculation without being cynical about it. They're probably like, "Some of those patients are just not gonna bother, and they're gonna fall out. And so if I get 5% or 10% of the patients never get treated, like, I, Aetna, win, because that's part of the, we get, we still get the premiums from those people. We're just not gonna, we're just not gonna spend money on them." It does appear, and it's all anecdotal, almost all the patients eventually come back through. It's hard. Our reps aren't spending time interviewing every doctor like, "Hey, was that an Aetna patient?" And we don't, we don't wanna make a bigger deal out of it than it really is. If we get them too fixated on what's already frustrating to them, this Aetna process, like, there's no upside for us as a company. We can't intervene with our reimbursement people until the doc convinces Aetna to, like, "Yes, I'm gonna treat this patient." Then we can jump in and help them get IVL approved. But until they get the procedure approved, we're sort of, our hands are tied. Is there any other questions in the audience? I guess just, you know, as closing remarks, like, how do you think about 2024, and what are you most excited about heading into this year? I'm very excited to be on a... Well, first, I'm gonna be a grandfather, so that, I'm adjusting to that reality. I'm not old enough to be a grandfather. And we're finding it to have, like, stable, strong, financial support on the coronary side, 'cause we've launched coronary despite the fact that if you ask most docs, they're like: "What's the main reason you don't use Shockwave more? Reimbursement." "Well, you've got transitional pass-through, and you've got NTAP." "Yeah, but it's not real." And so now, for us to be in a position where on the inpatient side, it's actually, the hospital get paid considerably more than the cost of our device, and the physician is gonna have a finally get appropriately paid for doing the work. While we'll still be in a transitional pass-through for half this year on the inpatient outpatient side, I'm excited to see how well that business can thrive when you don't have sort of the biggest headwind of sort of what they perceive to be inadequate reimbursement. So, I'm excited to be able to watch our team run without the sort of hands tied behind their back of the economics. Great! Well, that concludes today's presentation. Thank you so much. Thank you.