AngioDynamics, Inc. (ANGO) Earnings Call Transcript & Summary

Good afternoon, everybody, and joining us here for our next session in the MedTech track of the UBS Global Healthcare Conference, I'm pleased to be joined by management from AngioDynamics. We have joining us today, Jim Clemmer, who's President and CEO of the company. So Jim, it's a real pleasure to have you. Thanks a lot for joining us, and welcome to this session.

Thanks, Matt, and thanks for UBS for inviting us. I look forward to taking the next session and talking to your investors about our company. So I look forward to it. Thank you, Matt.

Great. So we're going to do kind of a split fireside chat here. We're going to have Jim run us through a few slides for the first half of the session, and then I'll come back in and moderate some fireside chat Q&A. And so with that, why don't you take it away, Jim?

Thanks, Matt. And I'll point the investors this morning, we published an 8-K. If you've had a chance to take a look at that, I'll be leading us through some of those slides today. If you haven't, you can download those now, and we'll walk through those. So I'd like to remind each investor as well is that what you're going to hear from me today are forward-looking statements. Obviously, I can't guarantee you they'll come out the way we project it today, but these are our best looks into the future. The strategies we're following and our advice to you as to where we're going with our company. So now that being said, let me talk to you about AngioDynamics. We are a company in transformation, and we mean that in a few different formats. The most obvious part of our transformation is our portfolio transformation. We're trying to go from a company that's been a diverse player in many different vascular aspects. It's really a focused player. Another way to put it is we started over 30 years ago as a catheter company, and today, we're transforming to a medical technology company. I'll show you how we're doing that. Again, along the way, we're not just focusing on our portfolio, but making sure we apply the right resources to the right places to do what we do as well as we can. And finally, we're attracting talent to our company to help us drive our capabilities and our initiatives where we'd like to. Ultimately, what we're trying to do at AngioDynamics is focused on innovative technologies that drive measurable outcomes and patient wellness and those measurable outcomes drive physician behavior change. If we're successful in what we're doing, we think we can grow value for our company in that manner. So I'll take you through the next slide. And you look at another important part of our transformation on Slide 4. It shows that we're playing in larger total addressable markets than we had in the past. Already 2 years into our transformation, we've more than doubled the total addressable markets that we compete in. And oh, by the way, we're also growing at a more rapid pace. We're playing in markets that have more interest. The markets are growing more rapidly, and they're larger. As you see by 2025 with our current portfolio pipeline, we'll be playing in a market more than double the size in 2025 as it is today. And that, again, will grow more rapidly. And part of that transformation is driven by what you see in our pipeline today, followed by indication expansion and getting alignment with payment and other forms of market access capabilities. Moving now to Slide 5. We've been a complex companies. I've talked to a lot of investors that have told me, hey Jim, we try to follow AngioDynamics, but we've been a little confused as to where you're going. So as we've streamed out our portfolio and we've guided our company with focus, we thought we'd also try to make it easier for investors to follow us. So if you look at our portfolio today, if you look at Slide 5, on the left side of the slide, there's really 3 areas that we're focused on that we're going to invest in. Those 3 areas I'll cover in the next few minutes. Our Auryon PAD device, our Thrombus Management platform and a unique IRE, which is a nonthermal ablation tool for cancer. Those are the 3 areas that we're going to invest in. 2 of those 3 areas, our Auryon and our AngioVac franchises are really markets that are already developed, they're growing rapidly. We're going to compete for market share and market growth in those markets. Our third market, our NanoKnife market, is really a market development opportunity for us with our unique science and technology to develop this market and make it an opportunity for us to grow our company. You look to the right side of the page, you'll see our other products. We have a diverse portfolio, led by our Vascular Access division. Here are products that we know compete with BD Bard and Teleflex Vascular Access. And our company has historically been challenged here. But you'll see by the end of this fiscal year, we predict we'll have our third straight year of growth in this area, which has been primarily a challenge area for our company over time. So let me dive into the first of the 3 areas we'll talk about, which is our Auryon peripheral atherectomy device technology. We acquired Eximo Medical in 2019. Eximo Medical is an Israeli-based startup company that really focused unique science and technology on addressing a laser opportunity to address the problem of PAD. And although there is a laser currently in the market, our product works very, very differently. It's very unique in how it works. And on Slide 7, it gives you a little bit of the reason on the rationale as to why it's different. First, you can see we got 4 different sizes of catheters that we can use to deliver the energy from our laser. And 2 of the 4 sizes actually have aspiration capability built in as well. So this is a unique difference between our products and other ones in the market today. And really, the most important reason why we were attracted to this technology is the base science to the laser. It's a solid-state laser that uses a 355-nanometer wavelength, which is very different than the current gas-powered 308 laser that's been in the market for years. And why that matters is we're able to deliver pulses and wavelengths at different energy levels that are very effective at treating hard and soft calcification above and below the knee, while protecting the vessel wall, while we're delivering this powerful energy through our machine. So we were immediately attracted to this Auryon system. We launched the product officially last September. And we guided the marketplace to expect in our current fiscal year, which ends in a week, we have a May 31 end to our FY '21, we guided our investors to expect $7 million to $10 million of revenue in our first fiscal year, which is our launch phase. And as you saw at the end of our Q3, we announced we were up to $6.5 million at the end of Q3. So we feel comfortable with the range that we guided with. What's unique about this product, if you look at Slide 8, you'll see the other competitive products in the market. Well, this is a marketplace in the U.S. that's over $500 million. It's growing by mid- to high single digits as PAD is an area that needs to be treated and atherectomy is an area that's gaining more and more confidence by physicians to treat PAD. When you look at the scale on the left, you'll see our products align with other offerings. And our product, we think, is better, and it has to be better. We're coming into a marketplace that's not really welcoming change. But I think it will accept a change and we bring it, because the clinical outcomes that we produce are measurable. The data that was produced in gaining the 510(k) by Auryon was very impressive and enabled us to gain the claim structure that we can compete in the above and below the knee markets and getting the ISR designation as well for in-stent restenosis. We believe our customers are getting more confident in this technology as they use it, and I think we'll see over time them getting comfortable and confident in treating patients with different levels of PAD. If you move to Slide 9, you'll see where we are. We're still in our early launch phase. We've taken this unique science. We've now added 45 dedicated people to this division. Almost all of these people have come from 1 of the other 4 competitors and are very knowledgeable about the space. They know their customers, they know their markets, they know how to serve and treat those patients in need. So we've added a new division of really good people. We're going to continue to add to that commercial scale. In FY '22, which starts for us next week, we'll also continue to invest in our commercial scale, adding field sales reps and field-based clinical support technicians to support our customers as they perform cases. We now have over 45 people and over 110 lasers placed in the marketplace in less than 1 year. So we're very pleased with the acceptance and demand we're seeing from our customers for this product. We also know our customers believe in data. They want to use data collection opportunities when they can to show the effectiveness of a product. So we'll support the level of data that they'd like to collect. We've already announced the closure and completeness of our Pathfinder I registry, and now we'll look to report out the data as we get through the milestone aspects of the Pathfinder I registry. And finally, the Auryon system is very unique. We believe the base science in this unique laser technology will have opportunities for other applications over time. We'll look to where to apply our next level of application, whether we look at the coronary marketplace or maybe thrombectomy marketplace, but we believe this science is a platform and has opportunity for future growth. We believe that with those applications, combined with our knowledge of the space and probably our ability to add other peripheral products and parallel products to be used while you're doing our case, lab ASP to each case that we capture over time. So we're off to a really good start of this business. We look forward to having Auryon being a growth driver for AngioDynamics for many years to come. Let me take a moment now to shift gears to our Thrombus management platform. If you go to Slide 11, you can take a look at how we define the VTE marketplace. And venous thromboembolism to us, I will try to say that 3 times, it's really the combination of DVT and PE. And we agree with others in the marketplace, who have identified this market at nearly 400,000 cases annually here in the U.S. when you combine those 2 disease states. Initially, we're looking at the DVT space that interests us. But as you'll see over time, we're interested in gaining a PE indication, so we can serve customers in the treatment in the PE space as well. So today, there are different levels of treatment options. If you move to Slide 12, you can take a look at how the marketplace has evolved and adapt to different treatment modalities. Most of which are based upon the acuity of the patients and their need for treatment. On the left side of the slide, you see we're really starting with anticoagulation drugs, lytic-based options, and as you move through the scale of acuity to the far right, they're highly complex cases that we think our AngioVac device is really the leading product and the best way to treat people with severe complex acute cases. Our AngioVac product is really effective, but we also want to move to left a little bit, compete in that larger space where many, many patients have different levels of DVT or PE, that we believe we can treat. When you move to Slide 13, I can give you a little more detail as to how. We believe this overall is about a $3 billion market opportunity in the U.S. and we think when you look at it in the lens we have on this slide, on the bottom end of the complexity stage, in the simple complex, simple phase, you really look at our Uni-Fuse catheters that deliver different thrombolysis -- catheter-directed thrombolysis product to make sure we can treat the less acute cases. On the top side of the screen, you see our AngioVac, a very special purpose-built device for the highly complex devices and cases. And in the middle shows you the gap that we've identified, we've worked on for the past few years in our R&D. We'd like to fill that gap later this year with the launch of our Alphavac once we receive our 510(k) indication from the FDA. Moving to Slide 14. I'll take a moment to show you why AngioVac is different and why this unique device is the springboard for our Alphavac product. AngioVac is unique for 2 main areas: number one, it uses a perfusion system to allow for continuous reperfusion of the patient's blood during these risky and complex procedures, when we're trying to remove mass clot burden from the right atrium or the right heart. While we do that, we can have the patient be healthier during and post procedure by minimizing blood loss in these risky cases, part of the beauty of the AngioVac using the continuous reinfusion circuit. Now that's also a complex procedure, and it's used in very severe cases. Many of the physicians that we've talked to have asked us to see if we can take this unique science off circuit to be used in less complex procedures over time. And one of the reasons why they asked that is because they've gotten really comfortable with our vortex funnel tip, which enables us to pull mass clot burden within the vein at a much larger scale than other devices can do. So over time, we're going to take that aspect of the AngioVac device, the vortex funnel tip and the large bore catheter, and apply it to a new format. We can then move to an area to treat the less or moderately complex cases. When you move to Slide 15, you'll see our next-generation of AngioVac, which is what we're calling the Alphavac product. And as you may have seen in April, we filed for our 510(k) on the Alphavac, and we're now working with the FDA to work towards an approval at some point later this calendar year. What makes the Alphavac unique to us is the way we designed the product. As I mentioned a moment ago, taking some of the main design aspects of AngioVac, the large bore catheter and the unique vortex funnel tip, then designing a physician-controlled, physician-designed device on the other end. When we listen to their feedback, they told us they've used other products in the market, some of which are really unique and good products, but all of which have opportunities to be designed differently. So we listened to that feedback and designed a product that we think that they'll really feel comfortable with, because they asked us to give them a tool that they can utilize their knowledge and their expertise, and they want to control of how they could utilize this unique funnel tip and large bore catheter process to pull mass clot burden in these cases. And that's what we'll do when we launch AngioVac for these physicians. So we're really excited to look at what we can do with this product. If we move to Slide 16, you'll see a phased approach of us investing in this project over time. What we'd like to do is show you how each time we launch a new iteration of the product, whether it's a different size or a different curve, we're able to open up a larger potential market within the body and then add on and to try to treat clot burden as to where it lies in the body. So we're very interested over time having a full technology platform to open up this large market access opportunity that exists in front of us. So I'll refer through the slides to you, but leaving the slide behind, as we talk to you in more detail over time about our launch schedule of the Alphavac and the different iterations of Alphavac, you can refer back to this and see why we think we'll be a serious player in each aspect of VTE treatment with the Alphavac. Moving to Slide 17. We'll give you really a guidance document gives you our goal as to how we'll launch our pipeline projects over the next 4 to 5 years. And you'll see in late calendar year, this year or FY '22, we expect the Alphavac launch, the Alphavac approval coming from the FDA for our 510(k). Once we launched initially the 22 French product, we follow that with an 18 French product, allowing more access into the body, more treatment opportunities. We'll then work on -- working on the Alphavac smaller gauge of 13 French is what we're targeting. And ultimately, working with the FDA on an IDE to receive a PE indication over time. We think that when we do this, what you see in this chart, each time we iterate, and each time we invest in this technology, we're opening up a larger addressable market that we can compete in and play in. I think you'll find over time, as you listen to the other players in the marketplace, who've done a very good job in this space, each of us believe we're only scratching the surface into the amount of patients that we can treat with mechanical thrombectomy. And lower the use of lytics, lower the cost of care and lower the risk of ICU stays and longer burdens that are used sometimes in drug device combinations. So we feel really good about this technology, and AngioDynamics becoming a larger and larger, more important player, in this fast growing, important market, led by the combination of our AngioVac and our Alphavac. So let me take a moment now shift gears to our IRE platform, our nonthermal ablation technology and share with you for a moment why it's special. If you move to Slide 19 in our presentation, what IRE does is it uses electrical energy fields to create nano-sized particles into cell ports and allows the cell to die through a natural process. So we take really a complex piece of science, try to make it simple, but it really allows the cell to die, and we do that without thermal energy. AngioDynamics is a player in thermal ablation as well. We make RF and microwave products, which are used for many types of treatment of different types of organs and cancer. But there are some areas where treatment is hard to do. And pancreas has been shown to be probably the hardest to work and to treat. So what we've tried to do is take this unique science, give physicians what they need to have, which is control and how energy is applied and control of how they direct the energy to a tumor or to a mass to the tissue needs to be treated without damaging surrounding tissue or the vascular structure, which could be damaged using a thermal treatment option. That's why NanoKnife is so special. If you slide -- if you move to Slide 21, you can take a look at how we'll help treat patients in need. Our DIRECT study, which has been improved about 18 months ago by the FDA, is currently underway, is to guide and to collect data and how we can treat patients with Stage 3 pancreatic cancer. This is a very difficult organ to treat, and it's a very difficult cancer to treat. Unfortunately, usually, it's detected late, and someone is already at a stage 3. And maybe sometimes a whipple procedure is not going to be an option for these patients. So we believe that IRE and our NanoKnife can be a treatment option. That's what the DIRECT study is an approved. We also believe that due to the unique mechanism of action, we think that the prospect is the next area we think we can be successful in creating an option, physicians to have a new treatment device. We've seen many studies from data that was published outside of the U.S. by physicians, who've utilized our product to treat the prostate and seen really good outcomes. So we're currently working with the FDA, trying to open up the possibility for an IDE that we can then go to track data, collect data and to prove that we can be effective in treating prostate tissue as well. And if you move to the next slide, you'll see on Slide 22, how the DIRECT study works, you look at some of the medical centers, who signed on to be our partners with the DIRECT study, is very impressive. This is creating awareness about our science. People have learned about the mechanism of action and how it works. So as we move to Slide 23, you'll see, we intend to expand our clinical opportunities moving now into the IDE potential for the prostate study. We think that with focal therapy treatment options today, very limited in effectiveness, which has also limited its ability to grow the market share for focal as a treatment option, but we think focal therapy is a really great treatment option. We think we can become an important 1 there. We believe, based upon data that's been published by leading physicians outside of the U.S., that we can reduce the impact of incontinence and impotence that is seen in many other treatment options today for prostate cancer. So we're going to work hard in collaboration with the FDA to reach an IDE procedure in a protocol that we believe will enable us to collect data and to treat patients with this unique device. So I look forward to speaking to each of you over time, giving you guidance as to how well our collaboration with the FDA is working, when we can start talking about the IDE for prostate study. So finally, Matt, I close with just mentioning, as many people know AngioDynamics, they know that we are a diverse company. So outside of the 3 areas I've talked about, which we think will be the growth enablers for us over time. Each of these 3 are large market opportunities, each of which have our unique science and innovation that can be -- can drive measured outcomes and patient wellness. And those measured outcomes drive change in physician behavior, and that's what we're striving towards. If you look at our Vascular Access business, which is a great historic business for us. And from about 2013 to 2018, we were challenged for many reasons. And we had a hard time gaining market share. We lost revenue almost every year. Well, 3 years ago, we brought in a new management team. They turned this business around. We're now about to finish our third year of growth. We've launched a new pipeline of products led by these people. And we think we have a really strong good business. We're not investing heavily in this space, but we now have a good, solid platform to continue to keep our other growth going on within our company. So it's important to be note what we can do with just changing how we do what we do in a different manner. And I'll point my investors to Slide 26. Finally, Matt, we're getting near the end of our fiscal year. We have at May 31 end. And on Slide 26, you'll see just the highlight of the Q3 numbers we did post recently. You look at our year-over-year revenue growth. And the way our fiscal year works, it's kind of strange how our Q3 ended right before the COVID effect of last year. So really, we'll probably see more of a COVID effect, Matt, in Q4, when we show the comparables, but what we plan to do is show investors when our Q4 report comes out, we'll give you a guidance to what we expect our FY '22 numbers to be, how do we think we'll grow our business and also how we'll invest back into our business. As we see such opportunities for revenue growth and market expansion, the 3 products I talked about. I think you'll see that AngioDynamics is in an investment mode, not just investing in our portfolio and the science and technology, but investing in the people to carry that message to market. So I think you'll see investments from us continued in Auryon and continued investments in the Alphavac sales force over time. So Matt, with that, I'd like to thank you for the time to present those slides, and I'll turn it back to you for a discussion.

Great. Thanks a lot, Jim. All right. So a lot to discuss. I'm sure we want to go through some of that and the exciting pipeline guide post that you have in those different categories. I did want to start out a little bit more at a high level and maybe can set the stage for helping people think about how your business has been performing recently, talk a little bit about recovery trends. I know you probably can't let the whole cat out of the bag given where you are in your quarter, but maybe you could just review some of the trends last quarter and help us level set on how that's impacting AngioDynamics?

Sure. So Matt, we do a couple of things. Our Vascular Access business, the team that manages that does a really good job measuring kind of same-store sales, as we're calling. So we really measured the COVID effect throughout the past 3 or 4, now almost 5 quarters. And we're measuring the effect of our patients being treated, and we're also watching the effect of our customers and their engagement effect with us. How often they have told us to stay away or come back in. So what we've seen over the last 60 to 90 days is a higher level of engagement with our customers. Although they're asking us to stay back, the value analysis committees aren't happening at the same pace yet, not ready to look at products in those areas. They are allowing us to reengage with their physicians, support cases, support treatment and to talk about how we can get our new technologies in the hospitals. Matt, one of the side aspects of our Auryon business or PAD business, we knew when we acquired the Eximo product, we would have a potential to have a split sales, our revenue profile with Auryon, as a lot of PAD treatments take place in the hospital and also take place in the OBLs outside the hospital. And we kind of planned on about a 60-40 split, 60% OBL, 40% hospital when we bought Eximo. And now with COVID, we're seeing really over 80% of our cases have been performed in the OBL settings outside of the hospital. So while hospitals have been limited, the good side is, we've still been able to grow our business to help treat patients in the OBL aside of COVID. So we're seeing things normalize, Matt, but it's still not back to the level that we'd all expect yet.

Understood. Got it. Maybe just talk a little bit about post normalization. How do you expect some of these different markets to grow on an underlying basis? And then with the pipeline and the product launches that you have, talk about your ability to outgrow those baseline market growth rates?

Well, we start with the Auryon product, we talked about the PAD device. Again, we gave guidance to $7 million to $10 million this first year, which is our start-up year. And I think after Q3, the $6.5 million we posted, you'll see we'll probably finish comfortably in that range at the end of the year. And from there, Matt, we expect that growth obviously will outpace market growth for a small base of business. So if the market is growing at 6% to 8%, which seems to be a fair number, we're going to grow obviously much more rapidly. So we'd expect that $10 million or so base that we'll end this year with to grow really rapidly next year and the year after. Because a few things are happening, we are placing lasers into the marketplace. We have over 110 lasers placed already in less than 1 full fiscal year, we'll have much more placed next year. We'll focus on now getting those lasers used efficiently, making sure our users are comfortable now that they can treat different aspects of PAD with our unique device. So there'll definitely be market growth rapidly in PAD you see through our thrombectomy space. You look at what we posted already for AngioVac growth this year, strong double-digit growth. We'll see that continuing for a long time for AngioVac. And then as I said earlier, Matt, sometime later this calendar year, we expect the 510(k) approval for the Alphavac and we think then we will enter that space with an ARPA number and others who are doing a really great job in that space, but we think we'll have a chance for rapid growth there. And soon, we'll give you guys guidance as to what to expect for our first year when we launched the product. And then finally, with NanoKnife, there's really no direct competitor in the nonthermal space that we play in with IRE. The challenge AngioDynamics has had for years, it's not really being good stores of this science, not treating it right. But I think if investors look back to the past 2 or 3 years, Matt, you'll see our commitment to our science and making sure that we can do the right regulatory pathway procedures, which we've done already to get the DIRECT study online, and now working with the Prostate study. We're opening up those pathways. We're also working to open up payment structures, aligning to the treatment to make sure our physicians and our hospitals can be paid when they treat with NanoKnife. So really, Matt, we'll give you guys guidance there, but we're doing the right work necessary that a really great technology company would do, not just supporting a technology, but making sure the market accesses them properly and the payment structures are there to support the cases as well. So over time, Matt, we would expect those 3 products to outperform the markets they compete in.

Great. Understood. Maybe we could spend a little bit more time talking about peripheral atherectomy. And I know that you have a view that you can perform better across different tissue types based on the technology with the different wavelengths and ability to get greater amplitude in the shorter pulses. Can you talk about some of the data that you have there and how you might be able to convince physicians, who are used to using 1 of the competitors to switch over? And is there a sweet spot or sweet spots that you could really use as a hook to capture new customers there?

Yes. It's a great point, Matt. As we know, physicians are driven by data, driven by outcomes. That's why that's really important to us to collect data in a format that we hadn't always done in the past. So this is a gray area. I got to spend some time a few weeks ago at the ISET, at the conference, speaking to many of the KOLs that were attending. Some of those physicians are actively collecting data now on our product. I look forward to them publishing that data and getting it published. We can watch how people react to the results of our product when published. So we know that data collection is important. That's why we sponsored the Pathfinder I registry that I talked about earlier that we actually closed already in Q3. So we're really pleased with how that interest was established. We can't wait to start publishing data seeing results. We've talked about a Pathfinder II registry as well. We've talked to a lot of our users, who're also going to collect their own data. Because they see an opportunity to treat PAD with this unique device. They also feel that given some of the science that you talked about, the different wavelengths and the pulses, how that works, they can treat things differently. Now I had a physician tell me at the ISET conference, where in the past, they used laser in cases where they wanted the safety aspects of laser, but they knew they couldn't use everything. Now they're seeing the power that this laser can do. They're able to treat hard calcium below the knee, which has really been an area, really 1 of the companies could do well in. And now that I think as physicians gain more confidence on how our product generates the power that they can do, kind of go below the knee, kind of break up hard calcium and kind of clear all the arteries and bring health back to the foot. And I think we can do that, and the data will prove that out.

Yes. Understood. What are some of the guideposts that we should look out for in terms of measuring your success with the launch of Auryon in the continuing buildup of the data there in terms of progression into some of these other indication types as well?

Yes. So over time, we'll measure a couple of things, Matt. We'll measure and make it transparent to our investors. Again, the amount of physicians we have on board, the amount of lasers that are placed in the field and then the amount of customers we're getting, but also the amount of data that we are collecting. And I think over time, now that we're getting live conferences back, we believe, we're close to getting live conferences. We know we have physicians that want to collect that data. So we'll do a good job in letting you know if it's something we're sponsoring or physicians are doing their own data collections, because we think it's going to be really impactful and powerful. Again, this is -- the PAD market is a large market, which is growing. It's also got 4 really good competitors there. We're aware of that. So we know that as good as our device is, that is not going to sell the product. Physicians are going to be convinced when they see data. Data that will change their mind and change their behavior. So we're going to be aligned with our physician partners, ensure that we can collect a compelling data, because we know the device produces compelling results.

Got it. Understood. And then when you talk about the Pathfinder II, can you talk about what that's going to add to the current base of data that you have? And what's incremental there? How does that enhance your selling strategy?

Yes. As part of the conversations we had Matt a few weeks ago at the ISET meeting, was that some of our physicians are interested in that. And I think they want to watch some of the data coming out Pathfinder I first. We're going to get to see milestones. Each 6-month point, we'll get to see some milestones come out soon, some published data. So we are really talking to physicians, letting them know that we're interested in doing a Pathfinder II registry. We're going to fund it. We're actually looking to them for some guidance as to what areas are important to them. So we're listening right now through our physician partners. We're really kind of setting up how we'll do Pathfinder II. We haven't talked about the details yet, but I think it's important for us to listen to our physician partners to find out what's compelling to them and what does not exist today. That's what we're trying to find how can we fill that gap with data to convince the world of how this device is different, and try to close that gap in data that exists today. So today, I don't have a lot of specificity. We'll do that over time with you soon.

Got it. Let's transition and talk a little bit more about AngioVac and Alphavac. So guess I'll start by asking AngioVac has had really strong growth over the last year. I know it's been some time in the making in terms of getting traction there, getting people to understand the value proposition of the product. Could you talk about how much of that growth has been driven by COVID? And then maybe just help us understand the underlying trajectory of AngioVac, and then we'll turn to Alphavac.

Sure. Watching the COVID effect in AngioVac. We've watched it carefully. Now, I don't think there's been a lot of effect of COVID on a positive way in AngioVac. I know there's a lot of talk around increased clot or clot burden or thrombo -- thrombosis due to COVID. And we've been aware of that with our physician partners. But I don't think there's been an effect in our sales or the treatment due to COVID in a way that we could measure, that's dynamic. If anything, we've actually seen the opposite, with still -- with cares being postponed during COVID. There are some people with clot burden that should have been treated, they were postponed along the way. So I don't think there's a large COVID effect either way. And we'd probably say we'd be neutral, Matt, with some cases that were postponed with maybe some increased burden due to COVID. Now over time, what's important about AngioVac. It was about 1.5 years ago, it was fall of '19, November of '19, we launched this current version, our 3.0. We took design aspects into place when we launched it that physicians had given us along the way. And it was -- obviously, you look at the results since then. So we've had tremendous sales increases, a lot of pickup on new users. We're seeing it being used across a spectrum of potential users. So cardiac, thoracic surgeons, vascular surgeons are using that product, getting really, really comfortable with it. And they're the ones that have given us the guidance to try to take it off circuit to provide a handheld mechanical version, which is now going to become the Alphavac that we'll launch. And that, we think also the Alphavac when it doesn't have the complexity of the perfusion circuit on its side, we think we'll get back into more cases being done by the interventional radiologists. They've always been AngioDynamics' kind of #1 customer or partner. We know the IR docs well and they know us well. I think a lot of them will be excited to put their device in their hand knowing it was designed really primarily for them to treat these mid-level acute cases for thrombectomy. So we think the AngioVac is a great platform, the success we had will springboard us into the Alphavac design.

Got it. And then -- all right. There we go, I was managing the slides here. So -- and I wanted to just follow-up on with Alphavac question. So you're expecting potential approval here later in the year. And maybe talk about how that -- spend a minute more on how that meshes with the legacy offering. I like that slide that you had there, looking at the different French sizes in ways that physicians would choose. When there's some crossover, how do you expect people will compare and contrast the benefits of each?

Yes. It's a good point. I think, Matt, we've learned a lot along the way when we launched the version 3 of the Alphavac a while ago. We listened to our physicians. They helped us design actually the changes we made to the curved tips and the different sizes we have with our catheters. So we've been -- we focused on understanding what their needs were, what the unmet needs were. So we're confident now as we launched the Alphavac, and that's why we thought that slide was important to show our investors. This is a complex area. It's hard to understand. But as we come out with this pipeline, as our pipeline matures, you'll see then the different sizes and lengths and curve tip formats that we'll offer, really following our physicians' guidance when the physicians have told us, we can now treat other parts of the anatomy, different levels of DVT. Hopefully, treat before it becomes PE. So when it becomes a PE, we want to treat that as well. But we think that the iterations that we have, we feel confident they've been physician driven. We've listened and have them guide us. So we feel comfortable that we have a good set of products to enter this market with. Again, we're entering a market that's being -- growing as we speak. We think physicians are becoming more and more confident in mechanical thrombectomy as a treatment option. Some of that is due to some of the good devices that have been launched in the last few years. And Auryon for a number have done a really nice job with their devices and have gained physician confidence by using mechanical thrombectomy as a treatment tool using less lytic-based therapies. We believe that when Alphavac is seen, once we get approval and launch it later this calendar year, we think we'll add to that momentum as well. People will see our choice. And really, physicians can choose with our product or the others, as to whichever one they feel gives them the right level of control and the right level of power that's necessary to remove clot burden from any unique case that a patient may present. So we think we will grow the entire market over time.

Got you. Why don't we talk a little bit about NanoKnife out here. So I know the disposable growth has bounced around a little bit. Can you talk about how you see that smoothing out with recovery? And what's the market been like for different types of capital? And how are you seeing the capital environment come back?

That's a good point. So it's interesting. We had record capital sales last fiscal year, Matt, for the NanoKnife, which we think was directly aligned to our DIRECT study, no pun intended. But our DIRECT study, which is the IDE to measure the pancreatic cancer effect of our products. That led to record capital sales last fiscal, even prior right till COVID hit. So now we're seeing, especially in the U.S., the slide we presented at the end, Matt, is really that's our global sales numbers. They've been bouncing around a little bit. But in the U.S., we've been up quarter-over-quarter, up really strong this year on disposable sales in the U.S. even with treatment being reduced, we know due to COVID. So COVID has hit us and affected us, but what keeps guiding us back, why we're really confident is that even during COVID, we're seeing increased usage and adoption on the capital sales we had last year, because people want to treat people within DIRECT study. So we've seen increased -- sorry, increased capital sales leading now the increased disposable sales in the U.S. Over time, we'll work with our customers to be flexible. We think capital is going to be an area that's been under pressure for a while, obviously, this year with COVID. So hospitals are watching their capital budgets. So we'll work with our customers in different ways to make sure they have access to the capital they need, to treat the patients they need, and we love to see them participate in our DIRECT study, to treat patients, collect data and to measure their outcome and measure their health, once they're treated with our product. So Matt, we look forward to a return to normalcy soon, but in the meantime, we've already seen good momentum with our U.S.-base narrative.

Understood. And the foray that you have into the prostate area is interesting. I didn't actually realize that some of these adverse event rates were so high for the alternatives. Maybe you could talk about how you think you could cut down on some of those key adverse events by using the focal therapy? And upon approval, how do you think this would be positioned, what kind of share of the watchful waiting or the traditional therapy market, do you think you could garner?

Yes. It's a good point. It's a complex area, Matt. So we look forward to over time when we get -- hopefully, we're going to -- we're working with the FDA now to file for IDE, hopefully get approval soon. When we do so, we'll spend some time to walk our investors through this. So what we'll see is today, as we know, treatment options for prostate cancer are limited. And some of those treatment options have severe side effects with incontinence and impotence being 2 most unfortunate side effects in most treatment options. What we think focal offers, focal therapy treatment is different, because it doesn't treat the full gland. It treats specifically a part of the tissue that needs to be treated. So it can reduce some of the side effects. What we've seen with our product, Matt, outside of the U.S., there's been some physicians who've used it time and time, and published data. How they will to effectively treat the tissue and reduce those 2 side effects. Because you're not harming the structure or the full gland during the treatment. So we think NanoKnife is uniquely designed and is a Focal treatment option. And back to the part of your question, Focal, has a hard time collecting momentum. If you look at today, there's HIFU and cryo. They've each struggled, I think, to gain momentum. Less than 5% of all treatments in the U.S. today are Focal therapy options. We also think the FDA has realized that. And the FDA realized that last summer. They published a new guidance document as to how to treat Focal submissions. That's what we're following now on this pathway and process. We think, Matt, 3 things are combining at once. First, the FDA realizing that focal treatment options should be made more available and working with companies like us to make it available is important. Number two, increased guidance and imaging. So now our physicians have really good tools for guidance of the probes to treat the organ. And we also know that increased imaging is made looking at the prostate, looking at the disease area much more effective than it's been in the past. And number three, we've matured as a company. And our NanoKnife 3.0 is easier to use for physicians. We think it's really effective. So we think it's the right tool at the right time. So we look forward to sharing with you Matt more on that soon, but we are really interested in this area to expand the marketplace potential for NanoKnife and expand treatment options, people who need to be treated.

Great. Well, thanks, Jim a lot for the time today. We're about out of time. So you're probably in there, but a lot of exciting things going on in the pipeline in the background here, and we look forward to tracking your progress on all these growth areas, as you look to continue to transform the company. But I really appreciate you spending time with us, and good luck to you as you enter your next fiscal year.

Thanks, Matt. Thanks for the invitation. I'll talk to you soon.

All right. Take care.

Thanks.