Penumbra, Inc. (PEN) Earnings Call Transcript & Summary

Yes. So that's more on the vascular side of our business, but it's a perfect place to answer the question, because they got their start as a company on the stroke side of the business. They're really the pioneers in using artificial intelligence to measure imaging and help decide who should be treated. But -- and that software that they developed was really instrumental in many of the, sort of, key trials that opened up the original -- what we call the original stroke trials that opened up the field. Not the first one, MR CLEAN, which was sort of an all comers, but some of the subsequent trials. And so with that, they took on sort of the more commercial part of measuring patients in hospitals, pushing that out to their sort of wonderful messaging sort of communication, mobile communication platform, so that joint decision-making can be made in stroke practices using all of their information. Hey, this is a viable patient, this should be treated and so on. And that really has helped. They're incredibly widely distributed in hospitals in the U.S. with that platform. So the partnership that we announced, really, is taking that model in stroke. They don't need our help. They're doing really well in that and quite broadly, as I said, distributed. And taking it to pulmonary embolism on the vascular side, where it's earlier, but how do we measure -- take those CT scans from PE patients and distribute those images through their application out to the whole PERT team, or PE response team, and really be able to make faster and more informed decisions around treatment. And over time, when trials are done and we sort of get an update to say who should be treated and can we determine that by imaging, that will add the next layer to that partnership. So we're really happy to be working with them. I think, together, we can help drive better decision-making earlier and potentially help patients that might not otherwise get it.

Thank you. And then -- so we've talked about it, in the last quarter, growth in the Peripheral Vascular was significant, both sequentially and year-over-year. And we look at that U.S. peripheral thrombectomy segment, it's your biggest business now, and it was up even faster than anything else. What specifically is driving this business? And can you delineate among new products and/or the new market segments?

Yes. Well, let me sort of start with the way we've sort of tried to define the market. It's how we think about it. So there are about 430,000 people in the U.S. -- I'm just focusing on U.S. numbers, but obviously, numbers grow globally, that have, today, some clot in their -- even in their arteries or their veins or PE that is intervened on today or surgically removed today. And that means by the type of customers we call on, so either interventional radiologists, vascular surgeons or interventional cardiologists, primarily is the 3 categories, and they're already touching those patients and removing clot, either through catheter-directed lysis, some other mechanical tool or surgery -- I'm sorry, direct intervention on surgery. So -- and they're doing that really without a lot out of data. They're doing it because they kind of have to, because the clot will either create a serious issue, a PE maybe, die, serious sort of long-term chronic issues in DVT or lose limbs or some in the arterial side. So they're sort of compelled to do that. It's kind of a rare thing that there's that many patients that are intervened on or surgically treated without really a lot of data. So that's our first group of patients. And we're -- we cover all of those, PE, DVT and the arterial side, different sizes, different mechanisms, different sort of needs in those areas, but that's the market for us. On top of that, you probably have around 300,000 patients, primarily on the venous side, sort of split between PE and DVT that maybe could be treated but that aren't intervened on today. For those, some of them will come along just by the nature of the success people are having treating patients. But to really probably open up that field, the next 300,000 will need to show some clinical data because they're getting sort of medical management today. And we have to sort of show that it's worth going into a more robust treatment. But we got our hands full just in the first 430,000. We're single-digit penetrated, and that's after growth for several years. So we have a big runway ahead of us for many years, just on that segment. And it's likely going to be pretty evenly split between the segments. Our newest product that we launched that really was a driving force of the quarter we just had was Lightning 12. Lightning 12 is, really, primarily for the venous side, both DVT, and I'm very proud to announce, as of a few hours ago, officially cleared by the FDA for PE. So I'm giving you breaking news, Bill. And we're pretty proud of it and really now can actively sort of go after that field as well. So that's Lightning 12. We've talked about on the earnings call, Lightning 7, which we think is a really wonderful product. We will launch it in the first quarter, and we'll give you more details and feedback as we sort of get into that launch. But we think that has the potential to open up a number of minds around, switching from catheter-directed lysis on their arterial side to a more mechanical approach as well. And the time is right. The field is evolving quickly. We have some great companies that have joined us in this field that are sort of carrying the same message, which, I think, is really, frankly, a benefit to all of us. But the moment is here. COVID has brought a different mindset, the idea of having multiple-day treatment. Sitting in ICU is really a luxury that most places don't have right now. So their minds are open to, sort of, moving away from catheter-directed lysis to single-session treatment, and we offer that with our new platform on Lightning in the various sizes.

So Adam, I think that was a great segue to my next question, which is, you mentioned you're very early in the penetration of the VTE space. Investors are sometimes like SET Awards, where it's all about absolutes. And considering we're this early in penetrating the market, is it really a Coke versus Pepsi story? Or is this a market building? And I guess the way to answer that could be, can you qualify or quantify how often you run into other players versus just the paradigm shift of what they're doing today?

Yes. It's a great question. I think folks have commented on this, so I do think people know already. There's a giant opportunity for lots of people. The goal here is to get that shift happening. So we're not out there fighting for share. That concept isn't really relevant and probably won't be for many, many years. I don't mean many quarters, but many years. Now look, we have very talented sales reps. Our competitors have talented sales reps. So don't -- it's not impossible and certainly has happened that we run into each other, and I think in a good natured way, try to make sure we get their business and vice versa. That happens sometimes. But at least, from our company standpoint, that is not the charge or the model at all. There's just a huge amount of opportunity, and that's what we're going after.

Okay. How -- no, I mean, by our models, you were up over 60% in that peripheral thrombectomy business. And how sustainable is that? Is this something given how early we are in penetration? And obviously, without giving guidance, but I mean, is this something that can see growth in that significant range for a long time? Or is this kind of the anomaly of just first out of the gate, and it's an easy conch or something like that? How should we think about it?

Yes. So I'm not going to give guidance, so I'm not going to comment on a particular number or even a band around it. Because that's, in effect, giving guidance. So I'm going to be careful. But that being said, I do believe -- if you just look at our vascular business, over the last few years, it's provided pretty significant growth for a while. It hasn't always gotten the same attention that our stroke business has, but it has been growing stronger for a bit. And it's now bigger or about to be bigger on an absolute basis. I think it will continue to grow pretty substantially. Again, without commenting on numbers, if you just think of what I said, we're single-digit penetrated in 430,000 patients that are already in hospitals with our customers being treated. And we have a really good product that there's an appetite for, given the need for moving to single-session treatment. So we should be pretty successful for a while in going after that. What the exact number, we'll wait and see. But we have a lot of confidence that in both the arterial and DVT, and now I can proudly say PE because of the clearance, I think we got a lot of room for many years. And that's before we have to deal with the next 300,000. And comparing it to stroke, it's just, again, I'm so proud of our stroke business. I'm so proud of the pioneering that we've done in the past, but also our current work that we are doing, how JET 7 XTRA FLEX performs. But it's a harder process because you got to get the patient to the right hospital, and we don't control that. And here, we control this a little more. We just have to go and show and improve and convince physicians that what we're suggesting makes a lot of sense. And so far, with the Lightning family, it's worked. You use it once, and you're sort of hooked. So that's given me a lot of confidence.

I think we're out of time, but I always like to ask, of course, we didn't get to REAL because we got cover in the other businesses. But is there any top 3 takeaways for investors regarding our chat today? Or 3 things you'd like to leave with people from this conversation?

Yes. I think that's a great question. I would frame it sort of this way. A lot of medical device companies, they sort of get defined by one segment or one flagship product or one sort of sales channel. And I think people, as they know us and see what we're doing, we don't think that way. So we look at large sort of untapped areas and then we go hard in that area. And we iterate and innovate and go over and over until we can really open that up. And then we add another one. And we've done that with neuro, now peripheral, now with the REAL System that we didn't get to talk about, and we still have to prove. But that process, that sort of mental way of thinking, I think, allows us to be set up for a lot of growth, really sustained growth, for many years if we keep succeeding. And I think, so far, we've done it. Obviously, we're humble enough to know this is not easy, but we have growing confidence that we can keep figuring out new areas and be successful and help a lot of patients. So I think -- expect more of that. That's how we see our mission.

Thank you for taking the time to chat with me today. I really appreciate it.

Yes. My pleasure. Thank you, Bill. Appreciate it. Okay. Take care.