Merit Medical Systems, Inc. (MMSI) Earnings Call Transcript & Summary

Welcome to the Merit Medical Systems WRAPSODY investor conference call. [Operator Instructions] Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. I would now like to turn the call over to Fred Lampropoulos, Merit Medical Systems' Founder, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, operator, and welcome, everyone. I'm joined on the call today with multiple members of the Merit team, including John Hall, our Executive Vice President of Research and Development; Caleb Konstanski, our Vice President of Sales and Marketing for the Renal Therapies Group; Raul Parra, our Chief Financial Officer and Treasurer; and Brian Lloyd, our Chief Legal Officer and Corporate Secretary. I'm also pleased to welcome Dr. Danny Patel, the Medical Director for Interventional Nephrology at the Volusia-Flagler Vascular Center in Daytona Beach, Florida and a Paid Consultant at Merit. Dr. Patel has graciously agreed to participate today and share his valuable insights and experiences related to stent graft use in dialysis access. This has been an area of clinical interest for him during his more than 15-year career, as a practicing interventional nephrologists. Also, I am suffering from a head cold. So if I sound less than enthusiastic, I'm very enthusiastic about all that we're going to talk today. Now before we begin, Brian, would you mind taking us through the safe harbor statements, please.

Thank you, Fred. I would like to remind everyone that this presentation contains forward-looking statements that receive safe harbor protection under federal securities laws. Although we believe these forward-looking statements are based upon the assumptions, they are subject to risks and uncertainties. The realization of any of these risks or uncertainties, as well as extraordinary events or transactions impacting our company could cause actual results to differ materially from the expectations and projections expressed or implied by our forward-looking statements. In addition, any forward-looking statements represent our views only as of today, January 28, 2025 and should not be relied upon as representing our views as of any other date. We specifically disclaim any obligation to update such statements, except as required by applicable law. Please refer to discussions entitled Cautionary Statement regarding forward-looking statements in our filings with the SEC for important information regarding such statements. For a discussion of factors that could cause actual results to differ from these forward-looking statements. Please also refer to our most recent filings with the SEC, which are available on our website. I will now turn the call back to Fred.

Thank you, Brian. Let me start with a brief agenda of what we will cover during our prepared remarks. Before diving in on the WRAPSODY Cell-Impermeable Endoprosthesis or CIE, I wanted to start with a brief history of what started as a big idea in 2010 to help investors appreciate that WRAPSODY CIE is really just the beginning. After my opening remarks, John Hall will discuss the key design and development features of the WRAPSODY CIE, and then we will hear a clinician's perspective with respect to the device from Dr. Patel. Then Caleb will provide an overview of the estimated addressable market for the WRAPSODY CIE and our U.S. commercial strategy. Raul will then talk about key financial and nonfinancial milestones for our U.S. WRAPSODY CIE program for 2025. Then we will open the call for your questions. As we announced via a press release on December 20, the WRAPSODY Cell-Impermeable Endoprosthesis received premarket approval from the FDA. We received orders shortly thereafter, and we're pleased to hear physicians began using the device to treat patients in the United States in early January. By securing premarket approval and initiating the U.S. commercial launch of this novel therapeutic technology, we are pleased to have achieved 2 important milestones for Merit. These accomplishments are a result of many years of hard work and dedication to a strategic initiative that started as a big idea back in 2010. Importantly, we believe the achievement of these WRAPSODY CIE milestones should not be viewed as the culmination but rather more likely represent the first of what we believe will be a series of outcomes of multiyear strategic initiatives. We look forward to leveraging the impressive foundation for future therapeutic product innovation that we have built as part of the strategic initiative in the years to come. Looking back to early 2010, the genesis of this strategic initiative was an evaluation that we undertook of Merit's business and competitive position in the med-tech industry. At that time, we had grown our business to approximately $260 million in annual revenue. Merit was viewed as a trusted manufacturer of products serving key markets and is a company that had a strong customer relationship, primarily with hospital administrators and cathlab supervisors. We realize that in order to fuel the company's next stage of growth, we needed to transition the business towards developing higher-value more therapeutic medical devices, which we believe will strengthen our relationship with physician customers. With this big idea in mind, I set out to build a team to lead this effort. John Hall was my first hire for this strategic initiative. He had significant experience leading the product development at medical device companies. John built a team of experts with skills that were largely unique to Merit. Together, they identified multiple areas with attractive market potential, unmet clinical needs and the opportunity for Merit to compete. We ultimately chose Dialysis Upflow Circuits, as the initial market on which to focus our development efforts. John will share more color on what led to this choice and the genesis of the WRAPSODY CIE product specifically in a few moments. But I want to share a brief history of this important strategic initiative to help the investment community appreciate, that we have been planting the seeds of potential future therapeutic product development for many years now. We've allocated capital to organic investments, not just in the product development, but also in the manufacturing and supply chain. We believe it was imperative that we continue to invest in a vertically integrated infrastructure to facilitate the long-term foundation for future growth. To that end, as part of this strategic initiative, we also direct investments to establish or enhance our capabilities in additional areas, including clinical affairs, marketing, reimbursement, regulatory and intellectual property protection. Clearly, these important organic investments were intended to support our growth of our Global Medical Device business over the last 10 to 15 years, but they were also a direct result of our strategic initiative to transition the business to developing higher-value devices that are more therapeutic in nature and more effectively meet the needs of physicians. We have also allocated capital to inorganic opportunities as part of this strategic initiative. In 2012, we acquired assets from Medigroup add impaired peritoneal dialysis catheters to our existing offering of chronic dialysis catheters, guidewires and access devices. In 2016, we acquired the HeRO Graft Hemodialysis Access System, further enhanced our Dialysis portfolio and our presence with both vascular surgeons and interventional radiologists. Finally, in 2023, we acquired a portfolio of dialysis catheter products from AngioDynamics and the surfacer inside-out access catheter system from Bluegrass Vascular Technologies. These inorganic investments were made with 3 clear goals in mind: broaden our therapeutic platform; strengthen our commercial position in dialysis market, and expand our specialty dialysis device offering. As a result of these investments, our Renal Therapies Group is now armed with a broad portfolio of Interventional Solutions, strong physician relationships and a focused commercial infrastructure. We believe we are well positioned to increase our share of the global dialysis market in years to come. I'm proud of the team's strong execution and commitment to this strategic initiative, and we are excited to see initial fruits of this labor as we introduce the WRAPSODY CIE to the U.S. market this year. While the U.S. commercial launch of the WRAPSODY CIE represents an important inflection point in our company's history, I hope the investment community now has a better appreciation for our strong belief that the WRAPSODY CIE should not be viewed as the culmination, but rather, as I have said before, more likely represents the first -- of what we believe will be a series of outcomes of this multiyear strategic initiative. I would like now to turn the call over to John Hall, who will discuss the WRAPSODY CIE in more detail. John?

Thank you, Fred. The WRAPSODY CIE project was inspired in part by feedback from a physician who approached Merit about an unmet clinical need for dialysis patients with stenosis in the outflow circuit. The physician was frustrated with the significant challenges associated with existing covered stent grafts on the market. As an engineer, I embrace the opportunity to evaluate actual patient cases where then existing covered stent devices were not effective. Looking at human tissue explants and histological analysis of failed covered stent grafts, we identified numerous examples where stent grafts kinked and occluded, fractured, developed tissue on the lumen or experienced edge stenosis and restenosis. Our evaluation of failed covered stent grafts rebuild that not only were the existing products not preventing restenosis in the vessel as intended. Our evaluation also revealed something we found really, really interesting. Specifically, the histological analysis highlighted that there was tissue growing through the ePTFE graft covering. That was a key determinant in identifying the first of 4 initiatives -- innovative features upon technology would be based. Let me take a moment to discuss these 4 features, all of which we believe represent significant advances versus the existing alternatives in the market, and most importantly, we believe, will result in improving patient outcomes. The first innovative feature was a stent graft design that could actually prevent tissue from growing through the graft. The WRAPSODY CIE has a complete internal cell-impermeable layer to prevent luminal tissue proliferation. WRAPSODY CIE is not just another covered stent. It is truly a cell-impermeable Endoprosthesis designed to stop permeable cell growth. The second innovative feature was focused on addressing another key driver of failed stent-grafts, thrombosis. We pursued the concept of modifying biocompatible PTFE to reduce fiber and thrombosis formation without the use of heparin in drugs like the existing alternatives on the market. We took the same polymer that was commonly used in stent grafts ePTFE, and created a new microstructure using a proprietary spinning process that resulted in more random microstructure, mimicking the architecture of blood vessels, it ended up resembling the random nature of a bowl of linguine. Our differentiated technology was initially validated clinically in our animal studies, which demonstrated that this novel microstructure, reduced fiber in deposition and thrombosis formation. The third innovative feature was designed to manage the challenges related to mechanical forces and radio forces present in the anatomy of dialysis patients. WRAPSODY CIE has optimized compression resistance in outward radio force along with softer end rows to help manage the transition back into the healthy vessel more naturally. The fourth innovative feature is that the WRAPSODY CIE technology is packaged into an elegant catheter delivery system. We developed a ratcheted deployment handle for one-handed accurate and controlled Endoprosthesis placement, a handle that really allows the clinician to land the device with a high level of precision. The delivery system also features a hydrphilic coating, which enables smooth Endoprosthesis insertion and withdrawal through the delivery sheet and exceptional trackability to tortuous vasculature. Our development efforts were initially validated in bench and animal testing, but we were really excited by the strong clinical results from our prospective observational first-in-human study, WRAPSODY FIRST. Where the WRAPSODY CIE delivered 84.6% target lesion primary patency at 12 months and 65.9% access circuit primary patency at 12 months. We were even more excited by the 6-month clinical results from the randomized arteriovenous or AV Fistula arm and AV graft arm of our WRAPSODY WAVE study, pivotal trial announced in September 2024. Clinical results like those reported in these pivotal trials reflect changes in patient lives period, less time in the chair, less time and risk from interventions and overall improvement in quality of life for patients. Patients are not the only ones who benefit from the improvements offered by WRAPSODY CIE. Less time treating existing patients means clinicians can treat additional patients suffering from this disease and fewer interventions offers the potential for significant cost savings for health care system. The clinical validation supporting WRAPSODY CIE is impressive. We have studied 423 patients in the U.S. and international markets in our WRAPSODY FIRST and our WRAPSODY WAVE study clinical trials, demonstrating safety and significantly stronger efficacy versus the standard of care. We intend to enroll up to 500 patients in a post-market study currently underway called WRAP O.U.S Global Registry and we'll be initiating a new post-market study of up to 250 patients in the U.S. and Canada called WRAP North America Registry in June of this year. We believe this impressive body of clinical evidence evaluating the safety and efficacy of our WRAPSODY CIE across a global patient population of nearly 1,200 patients represents not only an invaluable tool in our discussion with physicians, hospital administrators and payers but also a key differentiator versus the existing competitors. Ultimately, we believe this robust body of evidence will clearly demonstrate how the WRAPSODY CIE can improve patient lives.

Thanks, John. I would now like to introduce Dr. Daniel Patel, who has agreed to spend a few minutes with us today to share a clinician's perspective, insights and experiences related to stent graft use in dialysis access and feedback on the WRAPSODY CIE. Dr. Patel is an interventional nephrologist who is board-certified in internal medicine with subspecialty specification in Nephrology. His clinical interest includes stent graft use in dialysis access, intravascular ultrasound and central-venous stenosis. He founded the Volusia-Flagler Vascular Center in Daytona Beach, Florida in 2010 and still currently practices there. Dr. Patel has presented his work at more than 60 conferences in Symposia, including the Chairing Cross International Symposium in London, The Vascular Access Intervention Therapy Meeting in Japan and the Annual Meeting of the American Society of Diagnostic and Intervention Nephrology. In addition, he has published extensively in an editorial board member of the Journal of Vascular Access and has reviewed more than 30 manuscripts for publication. Dr. Patel has received several awards for teaching, research and ethics, an active industry consultant he serves on the Medical Advisory Board, and as a trainer and lecturer international for several medical technology companies and is a fellow of the American Society of Diagnostic and Interventional Nephrology. Dr. Patel?

Thank you, Fred. I appreciate the opportunity to join in today's discussion on the WRAPSODY CIE. Merit asked me to discuss a few topics of my background, profile of my practice, general patient pathway and treatment the dialysis access market today, my views on key differentiators of the WRAPSODY and key factors that may impact adoption of this novel technology. I'm a Medical Director of the Volusia-Flagler Vascular Center in Daytona Beach. I've been fully dedicated to dialysis access since founding the practice in 2010. In the interest of full disclosure, I'm currently serving in the first year of a contracted relationship with Merit as a consultant focused on training new users. My practice is 100% outpatient dialysis access. We are transitioning from an office-based lab to an ambulatory surgery center in 2025, but functionally using the single-site practice in the outpatient setting, will focus on dialysis access for hemodialysis patients. Procedure mix includes dialysis access and geography, stent placement coiling of accessory branches, tunnel catheter placements and exchanges as well as vascular mapping and percutaneous fistula creation. We are considered a higher volume practice with a high percentage of patients receiving dialysis access stent grafts. In terms of patient pathway, patients are followed clinically and referred from the dialysis units. Angioplasty is usually the first line of treatment for clinically significant AV access lesions. The typical pathway involves assessment of the success of angioplasty. Immediate recoiler rupture generally calls for stent graft placement. Short-term recurrence may also call for stent graft placement. Most AV access studies show a 6-month angioplasty patency rate between 20% to 50%. Clinicians do vary in their management of recurrent stenosis. Some choose repeated angioplasty while others may choose drug-coated balloons. However drug-coated balloons are cost prohibitive in the outpatient setting. Others may choose stents or stent grafts for treatment of recurrent stenosis. We generally choose to place stent grafts if there's clinical recurrence of issues within 90 days or less or the development of complete access thrombosis. However, the choice of stent graft placement is also contingent on the clinical significance of the stenosis and the location of the lesion. Some anatomical lesions respond better to stent graft placement as primary treatment versus angioplasty alone, and this is being supported more and more in the literature. With respect to my views on WRAPSODY, and I'll note for consideration that I was not an investigator in the clinical study, only have been using the device for several weeks. These views represent only my initial thoughts and opinions as a new adopter of the technology. The biggest differentiation of the WRAPSODY over other devices is Cell-Impermeable membrane. The other leading stent-graft devices on the market lack this layer. However, the clinical advantages in routine practice of this membrane are still unknown. WRAPSODY is fairly easy to use and deployment is similar to other stent graft devices on the market, which does allow for a minimal learning curve for use. The existing initial clinical data is strong and longer-term studies could have further support to the efficacy and the device. I believe the biggest challenge of wide spread adoption of the WRAPSODY will be pricing on the device compared to its competitors. Additionally, a large percentage of dialysis access management in the United States is in the outpatient setting, where choice of device is extremely price sensitive. Pricing strategies at the WRAPSODY and its competitors may strongly influence outpatient adoption. Another limitation is a larger diameter sheets necessary to use WRAPSODY compared to its competitors. Some clinicians may not feel as comfortable using the larger sheet sizes compared to market competitors. I don't believe more experienced clinicians will have as much of an issue with the larger sheet size, however learning curve may be there for others. WRAPSODY does have some potential to become a first-line treatment at specific locations over angioplasty given strong outcomes. However, the competing stent grafts in the market have also been used as first-line treatments over angioplasty as well. Further usage and adoption of the device will give clinicians more experience of stent graft usage and outcomes will influence uptake of device. Another potential limitation is the absence of clinical use and treatment across the elbow joints. It's unknown how much this may adopt -- this impact adoption of the project over time.

Thank you, Dr. Patel. I would like to turn the call over to Caleb Konstanski, our Vice President, Sales and Marketing of the Renal Therapies Group to provide a high-level overview of both the addressable market opportunity for the WRAPSODY CIE and our U.S. commercial strategy. Caleb?

Thank you, Fred. Beginning with an overview of the dialysis access maintenance market, from a patient incidence perspective, data from 2024 annual data report from the NIH U.S. renal data system reported for the year ended 2022 and indicated that more than 660,000 people in the U.S. are living with end-stage renal diseases. 84% of which or nearly 560,000 were undergoing in-center hemodialysis. This is an important number from our perspective, because these patients have undergone a dialysis access creation procedure to enable the dialysis treatment and our candidates to receive a dialysis access maintenance procedure or procedures. Given the complications related to access and outflow circuits that patients on dialysis face. Of the nearly 560,000 U.S. patients undergoing in-center hemodialysis, approximately 331,000 or 69% are using an AV Fistula for access and approximately 91,000 or 16% are using an AV graft for access. Combined, we believe there are more than 420,000 U.S. patients ongoing in-center hemodialysis with an AV fistula or AV graft. We believe this represents the total addressable patient population in the U.S. for the WRAPSODY CIE based on the indications for use in the RPMA approval. We believe Clarivate provides good data on the current market for dialysis access maintenance in the U.S. According to Clarivate's Dialysis Access Treatment Devices, Market Insights U.S. Report published in September of 2024, there were 665,000 dialysis access maintenance procedures in 2023. 654,000 or 98% of which were endovascular. 77% of these endovascular access maintenance procedures were plain old balloon angioplasty or POBA procedures. The remaining 23% of these endovascular access maintenance procedures were comprised of stents, thrombectomy or combinations of both. Importantly, Clarivate reports there were 95,000 stent units implanted for dialysis access maintenance in 2023. Merit views this as the initial addressable market opportunity in the U.S. for the WRAPSODY CIE. With respect to our U.S. commercial strategy, as Fred mentioned earlier, we began taking orders shortly after our PMA approval in late December and we are pleased to see that customers began treating patients earlier this month. As discussed on our October 30, 2024 earnings call, the plan for the U.S. commercialization of the WRAPSODY CIE post-PMA approval was part of a broader comprehensive commercial strategy for our Renal Therapies Group. RTG is an experienced, dedicated team of sales and clinical partners offering a strong portfolio of dialysis products that address the entire end-stage renal disease continuum of care, including our HeROGraft, our Surfacer Inside-Out Access Catheter System and our portfolio of Acute Chronic and Peritoneal Dialysis Catheters. As we move through 2024, our Renal Therapies Group was understandably excited to add the WRAPSODY CIE to our dialysis product offering following PMA approval, and we are increasingly focused on ensuring we'll be ready to enter the U.S. market following PMA approval. The team completed intensive WRAPSODY CIE training covering a range of important areas, including the technical story, anatomy, physiology and deployment technique, clinical data trainings and live hands-on trainings were also conducted. Sales team readiness activities were bolstered by the role of comprehensive marketing plan to support the U.S. launch. The early successes we are seeing to date are due in part to this thoughtful multichannel marketing approach focused on reaching awareness through social media postings, partnership channels and advertising in both digital and print, as well as strong physician relationships and clinical partnerships that have been cultivated over the last 12 to 18 months supporting the current RTG product offerings. The sales team has a targeted plan to engage with new and existing customers and is working through the vast approval processes across the country. We're working with the largest group purchasing organizations in the U.S. to get this product loaded into their systems, including HPG, Vizient and Ascension, among others, as well as some of the largest IDNs across the country, including Atrium, MUSC, University of Texas and the V.A. We believe these efforts will help drive the adoption of the WRAPSODY CIE. These processes vary by facility, and can take a differing amount of time. We have a strong support team with our strategic accounts, marketing and product management that are supporting the different requests that come through the VAC process. And we believe that we will be able to get the WRAPSODY CIE approved in key hospitals around the country in a timely fashion. Regarding physician awareness and engagement specifically, we plan to host physician training events at centers of excellence. These Merit branded events will be led by a group of physicians that will work as our clinical experts serving in a valuable peer-to-peer role. The RTG team will be running in-service intros to physicians in their respective regions as well. All in, we project our efforts to result in more than 250 active physician advocates of the WRAPSODY CIE by the end of 2025. A number that we believe will grow over time as we continue to identify physician partners who are passionate about the product and educating their peers on the benefits of the WRAPSODY CIE. Importantly, while RTG's U.S. commercial strategy is focused on the launch of WRAPSODY CIE, the total strategy is comprehensive with the team outplacing seeds and working the process for WRAPSODY CIE conversion. We continue to open new doors and identify opportunities to drive adoption and utilization of the rest of our dialysis product portfolio. We are very pleased to see early evidence that this strategy is working. The team is adding new HeRO and peritoneal dialysis accounts, and we're seeing a notable uptick in new customer conversion for our dialysis catheter offering, including the BioFlo DuraMax catheter, acute hemodialysis catheters and central hemodialysis catheter. With respect to pricing, we believe the WRAPSODY CIE is a completely new treatment option for patients, as evidenced by our breakthrough designation from the FDA. Therefore, as part of our go-to-market strategy, we intend to sell WRAPSODY at a premium price relative to the competitive coverage sense offered in the U.S. today. The WRAPSODY CIE is a novel, differentiated product that improves dialysis maintenance procedure outcomes as demonstrated in a compelling body of clinical evidence evaluating safety and efficacy to date, and we offer unique size offerings from our 14- and 16-millimeter devices that represent potential treatment options for clinicians previously not available in the marketplace. The data suggests that WRAPSODY CIE requires fewer re-interventions to maintain patency at the lesion site and more importantly, the access circuit remain functional, which is key for any dialysis patient. Our pricing strategy of the WRAPSODY CIE is aligned with our long-term reimbursement strategy for securing add-on reimbursement payment in the hospital, and office-based sites of care. We believe the WRAPSODY CIE offers a compelling opportunity to not only improve patient outcomes but also to reduce the cost of treating this patient population. These factors together with demonstrated clinical outcomes and the fact that WRAPSODY CIE is the only device that has been designed specifically for dialysis access maintenance supports our belief that the WRAPSODY CIE should be a premium product in the market. We know that the economics within a hospital, outpatient ASC and OBL are very different. And with that, we have created pricing strategies that align with our NTAP and TPT reimbursement strategies but also are not a financial burden to the facilities that are treating these patients. Under the current reimbursement for covered stents in the dialysis circuit, we believe that our pricing strategy aligns with our long-term goals but also short term, it's not a financial burden for these facilities, and we've created a pricing program to best work with our customers and their individualized financial situations.

Thank you, Caleb. I'd like to turn the time over now to Raul Parra. Raul?

Thank you, Fred. I wanted to provide updates on our progress in a few key areas of our WRAPSODY CIE Program, specifically, reimbursement clinical validation and raising awareness of the compelling safety and efficacy profile of WRAPSODY CIE among clinicians and 2025 revenue expectations for WRAPSODY CIE in the U.S. Beginning with reimbursement. The team has continued to execute on our reimbursement strategy for the WRAPSODY CIE since our last update to the investment community. By way of reminder, on October 7, we submitted our application requested a new technology APC assignment for Medicare's Acute Inpatient Prospective Payment System. The new technology add-on payment, or NTAP, designation enables new medical service or technology meeting certain eligibility criteria to receive additional reimbursement payment for a period up to 3 years. We believe that the WRAPSODY CIE meets the eligibility criteria, particularly as it relates to the requirement that the technology represents an advance that substantially improves relative to technologies previously available the treatment of Medicare beneficiaries. We notified CMS that we received PMA approval in December, and our applications for NTAP remains under review. We continue to expect to hear CMS' decision in June 2025 and pursuant to their stated time line for the NTAP program. We are also pursuing and on reimbursement for the WRAPSODY CIE in the office-based site of care or OBL. The OBL add-on reimbursement process is different than NTAP in a few ways. Most notably, it is a 90-day application assessment period, and companies can only submit applications once PMA approval is secured. As a reminder, for office-based add-on reimbursement, we are applying for transitional pass-through payment or TPT, under the Medicare Hospital Outpatient Prospective Payment System, or OPPS. The TPT program is intended to facilitate access for Medicare beneficiaries to the advantages of new and innovative devices by allowing for adequate payment for these new devices while the requisite cost data is collected. We believe the WRAPSODY CIE meets the substantially clinical -- the substantial clinical improvement threshold for new category eligibility for pass-through payments. We are targeting submission of our application by the March 1, 2025 deadline and anticipate receiving a decision with respect to the award of pass-through status in June 2025. If we are awarded pass-through status, the WRAPSODY CIE would be eligible for add-on reimbursement as early as Q3 of 2025, which we believe would continue for at least 2 years thereafter. We intend to update the investment committee -- community with any material progress in our efforts to secure NTAP and TPT add-on reimbursement. With respect to clinical validation and our efforts to raise awareness of the compelling safety and efficacy profile of the WRAPSODY CIE among clinicians, simply stated, we project a steady stream of progress in the areas throughout 2025. We believe the WRAPSODY CIE will be featured in presentations at multiple medical meetings and industry events in 2025. That said, there are 4 meetings that I would like to call to -- special attention to, first, the Society of Interventional Radiology, March 28 to April 2 in Nashville, Tennessee. Dr. Rajan is scheduled to present the 12-month AVF data from our WRAPSODY WAVE trial on Sunday, March 30 at 3:27 p.m., as a late break-in session. Second, the American Society of Diagnostics and Interventional Nephrology Aston meeting in February 7 to 9 and in Grapevine, Texas. Dr. Bala is scheduled to present 6-month re-intervention rate data from our WRAPSODY WAVE trial. Third, the Chairing Cross Meeting, April 23 through the 25 in the U.K. Dr. Rob Jones is scheduled to present the 12-month AVG data from our WRAPSODY WAVE trial on Wednesday, April 23, during the Access revision session. And fourth, the Society of Vascular Surgeons Vascular Annual Meeting, June 4 to June 7 in New Orleans, Louisiana, Dr. Dexter is scheduled to present 12-month re-intervention rates data from our WRAPSODY WAVE trial. In addition to the WRAPSODY CIE being featured at medical meetings, we believe there will be multiple publications featuring the device's safety and efficacy. We intend to update The Street on publications become available this year. Turning to a discussion of our 2025 revenue expectations for the WRAPSODY CIE in the U.S. Historically, Merit has not provided revenue disclosure for specific products on a reported basis or forward-looking expectations. That said, given the unique nature of the WRAPSODY CIE, specifically, being the company's first PMA-approved product and the related multipronged reimbursement strategy, we have elected to provide forward-looking revenue forecast for U.S. WRAPSODY CIE revenue in 2025. Although we are providing this forecast in this unique situation, we expressly disclaim any obligation to update or disclose revisions to this forecast or to provide similar forecasts in the future. To that end, for the full year 2025 period, we forecast U.S. revenue from the sales of WRAPSODY CIE in the range of $7 million to $9 million. In addition to this forecasted revenue guidance range for the sales of WRAPSODY CIE in the U.S. we would like to offer the following information for consideration when evaluating forecasted guidance. First, as discussed earlier, we are pursuing a multipronged strategy to add-on reimbursement payments for the WRAPSODY CIE in the hospital and office space sites of care. We currently expect to receive decisions on both NTAP and TPT add-on payments on June -- in June 2025. Note, our full year 2025 revenue range reflects multiple potential scenarios and assumptions for adoption, utilization and commercial strategies that are influenced by the outcome of each add-on reimbursement process. We continue to believe that we meet the requirements to secure both NTAP and TPT add-on reimbursement payments. That said, until we have secured those add-on payments, there is a level of related uncertainty. For avoidance of doubt, we have not deviated from our core philosophy on providing forward-looking financial expectations over the past 4 years. The investment community should appreciate that we continue to provide forward-looking financial expectations in a range where the low end of the range reflects a realistic view of what we expect to deliver if we execute our plan. While nothing is certain, we believe we have a high level of confidence in our team's ability to deliver at least the low end of the range of guidance. Second, for modeling purposes. Our full year 2025 U.S. WRAPSODY CIE revenue range assumes a larger weighting of revenue in the second half of 2025 versus the first half and a larger weighting of revenue in the fourth quarter versus the third quarter. These assumptions are driven primarily by the midyear timing expectation for add-on reimbursement payments in the hospital and office-based sites of care. We are also sensitive to the potential impact on adoption and utilization as we navigate the VAC approval process. Third and finally, we do not intend to provide incremental financial or material nonfinancial details on our U.S. WRAPSODY CIE commercial strategy given the potential competitive impact in the marketplace. For avoidance of doubt, while we intend to provide updated expectations for U.S. WRAPSODY CIE revenue on each of our quarterly earnings calls this year, we do not plan to disclose revenue results on a quarterly basis. With that, I'll turn the call back to Fred for closing remarks. Fred?

Raul, thank you, Caleb, John, thank you very much, ladies and gentlemen. I'm -- I hope you're briefed today on the things we promised we would deliver. We look forward to talking to you in February, we wish you all the very best from Salt Lake City. Good evening. Thank you very much.

[Operator Instructions] At this time, Raul has some remarks for you. Please go ahead, Raul.

Good evening, everybody. Thank you for joining us. I just wanted to give you guys a brief update. As you heard at the -- in our prerecorded remarks, Fred was fighting a cold yesterday that's turned into a flu, and so he's not with us. But in the room, I have John with me, Caleb, and so we'll be answering your Q&A questions here and look forward to it. As you guys can imagine, Fred is pretty upset that he can't be here with you guys. He was excited to be here and present. There's no other place he'd rather be than here on this call talking to you guys. But he's going to fight that flu and he'll get better. And we'll go ahead and take it from here.

And our first question for today will be coming from the line of Jason Bednar of Piper Sandler.

And Fred, I know you're listening in, wish you were here as well, but congrats on everything so far and hope you're doing better here soon. Raul, I wanted to start with the '25 sales guidance for WRAPSODY the $7 million to $9 million. Totally appreciate there's a lot of factors here influencing the timing of uptake with respect to reimbursement, the VAC approval process. A couple of questions here. I guess, do you anticipate the VAC approval process to be largely addressed by the time we get through to the end of the year, and then we can all do our own math around what the revenue exit rate might look like for WRAPSODY in the fourth quarter, but are you comfortable with the expectation today is something like $15 million to $20 million run rate exiting this year?

That's a great question, Jason. As you can imagine, we're not going to get into 2026 revenue forecasting or anything like that. I think we've provided enough detail for you guys to be able to kind of do the math. I think we continue to be excited. We talked about the waiting and the VAC committing process in our opening remarks. And so as always, we have a range of outcomes from reimbursement to pricing strategic initiatives that we're dealing with. And we'll make sure that as you look at the guidance that we've provided, I think we've given you the cadence that should help you understand how we see us getting through the VAC committees and also understanding what the pricing dynamic is going to be as we get some of those reimbursement questions answered later in the year.

Okay. All right. Fair enough. I guess maybe if I pivot over to the other part of the P&L here, the rest of the P&L, I didn't hear any commentary around margin assumptions. I think in the past, you've characterized WRAPSODY as being very much margin accretive. You don't have to hire a new sales force, but also we're also understanding your manufacturing might not yet be optimized. You might have some necessary spending around initial marketing, account on-boarding and things like that. Should we think of WRAPSODY as immediately accretive to margin and earnings this year? And are you willing to offer color on what the margin contribution from WRAPSODY looks like when it does get to greater scale?

Yes. We're not going to be providing specific op margin details related to the U.S. WRAPSODY launch. As we were pretty clear at the beginning of our CGI initiatives. Obviously, the revenue is not included in that CGI models that we have. And so some of the expense, as you can imagine, is already included, given that we made some acquisitions, and we built out our RTG group in order to be prepared for the launch of WRAPSODY. So I think we've given enough details there. The revenue is obviously in addition to our CGI initiatives, we've always said that the gross margin is accretive to our corporate gross margin. And I think we've made the investments that we think we need to make at this initial kind of phase of the launch. We'll reevaluate everything as we kind of gear up for the rest of the year. But for now, I think we feel pretty confident in our investments and that has been baked into our model.

And our next question will be coming from the line of Larry Biegelsen of Wells Fargo.

This is Simran on for Larry. Very helpful presentation. Maybe just a follow-up on Jason's question around the 2025 WRAPSODY revenue assumptions. Appreciate kind of all the color that you guys have laid out. I didn't hear an ASP, so is there an underlying ASP or range that you can point us to? I know you said that it is a premium to the competitors, but any finer point there?

Yes. Look, as we said in our prepared remarks, we will sell WRAPSODY at a premium price relative to the competitive coverage stents that are offered in the U.S. I think our technology calls for that, and it's part of our reimbursement strategy. So having said that, our NTAP and TPT -- the pricing that we've set up for that is a targeted ASP of $5,800. And that's what we're chasing.

Got it. That's very helpful.

And just maybe one more bullet point that I think is important, too. As you can imagine, our pricing varies depending on site of care and region of the country. I just want to make that clear, right? So again, we're targeting that ASP of $5,800, but as you can imagine, there's a lot of variables in that.

Got it. That's very helpful. And maybe just to parse out the launch cadence throughout the year. I know there's moving parts with the price, the Pass-Through Payment coming online, VAC committee processes. But I believe for office-based labs and ASCs, it's a much simpler process to get access to devices like these. I think it would be helpful to maybe just walk through how the launch could be different in different sites of care. And could we see potential upside from a faster launch in office-based labs and ASCs?

Yes. We're not going to -- we've talked about the cadence that we expect. As you can imagine, it includes a lot of variables there. We're not going to get into that level of detail. I appreciate the question, though.

And our next question will be coming from the line of Steve Lichtman of Oppenheimer.

Thanks for the call. Caleb, you mentioned the initial market opportunity, the 95,000-or-so stent units going in today. What do you think are going to be the key steps to getting at the larger TAM beyond that currently treated population?

Yes. I mean, for the sake of this conversation, I think we're really focused on that 95,000 stent units. That is our initial addressable market. Obviously, that's kind of what we're focusing on of the gate here. And that's kind of obviously the indications that we have for you. So that's the 95,000 stent is the addressable market out the gate that we're targeting.

Okay. Got it. And relative to pricing, how much should we think about that being variable based upon the success you have with NTAP, et cetera, in the middle of this year?

Yes. I mean, again, Steve, I think we've given enough detail there, right? We've talked about the targeted ASP that we have. We have all sorts of assumptions baked into our guidance, as you can imagine. But again, I think the thing that you should take away from this is that, as always, we feel really comfortable with the low end of our guidance at the $7 million. And we feel comfortable with our range of $7 million to $9 million.

Great. One last quick one. Based upon the approval now and the increased visibility on WRAPSODY, what impact do you think it could have on your -- outside of the U.S. WRAPSODY business?

We're going to focus on the U.S. market, but I think we've always said that the data that would come out of our PMA study would be critical to some of the to pushing the sales of OUS WRAPSODY CIE and we still feel that way. And so we've got the 6-month data that's out. Soon enough, we'll have the 12-month data and our sales force internationally will be able to leverage that.

And our next question will be coming from the line of Jim Sidoti of Sidoti & Company.

Can you hear me?

Got you, loud and clear, Jim. Good to hear you.

Great. So you started off the call talking about -- saying that this is the first of the line of products. What other products can you develop using this technology? And will future products require PMA? Or now that you have this approved, will you be able to use 510(k)s?

We're not going to get into that level of detail. As you can imagine, we've got a lot of people listening in on this call, and I think we'll keep that close to the vest. But I will say that the technology that we came up with WRAPSODY can serve in multiple purposes. And we're excited about the roadmap of products that we have for that. But for now, we're solely focused on executing on WRAPSODY CIE, making sure that this gets off to a great start, which we feel like it has. And we'll share more color on things we can do at a later date, but we are excited about the technology that we've built, the infrastructure we have, the manufacturing capabilities and the supply chain that we've built out. So more to come there, but just not quite yet.

And then can you give any detail on your sales outside the United States, how this approval affects those sales and the size of those markets?

Yes. We're not going to talk about that outside of what I already said on the previous question, other than to say that the PMA approval and the data that gets released with that will help our international sales. We feel really strongly about that. And so we've learned a lot of things from our international sales markets. And I think that's why our U.S. sales force. It's one -- reason on top of all the other reasons that Caleb talked about that our sales force will be ready to go here in the U.S.

And the next question will be coming from the line of Craig Bijou of Bank of America.