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

Good afternoon. My name is Bill Plovanic. I'm a senior medical device analyst here with Canaccord. Welcome to the Canaccord 45th Growth Conference. With this up next, we have Penumbra. And for Penumbra, we have Shruthi Narayan, who's President of Interventional. And with that, we are going to just go straight to a fireside chat with Shruthi. All right. Well, thank you for joining today.

Thank you, for having me.

All right. Let's kick this off. So usually, we do a quick PowerPoint presentation, so I feel like we're diving right in here. Let's talk about the commercial organization. You've made some changes. I think we get a lot of questions on that. But you highlighted on the Q2 call that you've added a separate sales force for a peripheral embolization. Why did you make this change? It's a pretty big shift for you. When did you kind of start it? When have you completed it? How should we just kind of organize this for me?

Yes, absolutely. Great question. So Penumbra is the global leader in thrombectomy, as you know, from head to toe. And the last few quarters, we've introduced the CAVT technology, computer assisted vacuum thrombectomy. What you are seen from that is really significant sort of demand from our physicians to adopt the CAVT technology. And so we've seen over the last 3 quarters, 40-plus percent growth in the VTE segment which the largest of that CAVT segment. So with that share shift and the continued demand of our physicians, we said, let's look at how we can have our existing team be 100% focused on that larger CAVT opportunity. Now what we also have is great embolization coils that are loved by our physicians customers. And so for us, we just said, well, let's bring this sales team on, but have them now focus on the embolization coils, so that our existing team can be 100% focused on the larger CAVT opportunity. On the process, almost we got lucky, we got this new product, XL that just got cleared from FDA. And so for us, we've been in the mode of getting the new team up and running, trained, so that they can then go and introduce this new product to our customers. We saw -- we are still in the very early innings, we had about 1.5 weeks or so of XL activity in Q2, but this is the first sort of full quarter of the launch of that new coil.

Okay.

Sorry about that. Is that too loud?

Okay. Great...

Should we start all over? No, just kidding.

We'll recap that quickly. So was it something you were seeing with the sales force? Were they just not selling the embolization products? Was it just because you have the new product coming on? How -- is it just you felt like it's too big. We need to split the opportunity. I mean you mentioned it, but you didn't kind of dig deep, just...

Yes. It's more of a proactive effort because we see the CAVT opportunity. On the arterial, venous and pulmonary side, there are 800,000 patients that have blood clots each year in the U.S. Only about 10% to 15% of them are getting access to any sort of advanced therapy. The share shift has certainly been happening. So that tells us from a technology standpoint that our physician customers are responding well to it. There are other catalysts like clinical trials that, if read out positive, will be additional sort of momentum for the field. And so at the same time, though, I guess it's a good problem to have. We have these really amazing coils that our physicians love. And so we said, let's bring on a new team to support the embolization franchise. The timing of XL certainly proved to be an additional kind of benefit there?

Okay.

Yes. Now the caliber of the team we brought on, I mean, we've been absolutely blown away and sort of front-loaded our investment because of that, because of the talent pool, really high-caliber reps that come from spaces like aortic and the TAVR spaces, sort of career reps, they're looking for a stable place where they know there's good reputation for product innovation, trial work, and so on. And that's really what we're seeing in this round of hires that we...

And when did you start hiring and complete that process?

Just in the first half of 2025.

So throughout the first half?

Yes.

So by the end of June, you were all set. Everybody is trained, hit the ground running. So...

Yes. We just had our last class that completed training last week.

Okay. And so we should -- just from a contribution standpoint, this is maybe a little third quarter, more so fourth quarter and beyond as you typical ramp up...

Yes. I would say that the team is just getting up and running, going out and meeting customers and doing all that and also, of course, launching the new products. So we do expect that to sort of ramp here in the back half of the year.

And I think you said from the Q2 call, you had about 50 embolization reps and 40 vascular clinical specialists. Kind of embo, I think kind of makes sense, but the vascular, what's the...

The clinical specialist.

The desperation you have kind of a...

Yes. So that is just -- we've had clinical specialists within our organization over the years. So this was just the continued sort of growth of that team, the team that's involved in supporting the cases, they're involved in servicing our physician customers and kind of answering some of the questions the staff may be having for these procedures. And so we just organically always add appropriate support staff as the need arises. And so this call out here was that in the first half of the year, we brought on this group of the 50 embolization reps as well as 40 clinicals that will be supporting both teams.

And is an account managed by like one senior rep and then all these people report up into that kind of rep manager? Or how does the structure works?

Great question. So actually, when we did this, we had the sales management team or the leadership team, we call them the regional managers and the area directors. They're going to continue to manage both the embolization team as well as the thrombectomy team. So that continues to foster the culture, the positive environment and so on as the new team gets onboarded. But outside of that, usually, a rep or a couple of reps have 1 to 2 clinicals. It really sort of depends on the territory and the volumes and the geography that it spans.

Okay. I'm going to switch over to thrombectomy. Just how do we think about the first half performance overall and then the different segments, vascular, arterial, coronary, peripheral and then stroke neuro. And as we think about the drivers kind of going forward, I'm going to kick it off with stroke. We've heard that post the MeVO data like for the stentrievers that kind of slowed the market down. What have you seen? And what do you think as we think about moving into just Thunderbolt and timing there and thoughts on the impact?

Yes. So in stroke, we've seen continued sort of just share shift towards Penumbra that's certainly played out in Q2 as well, and it was ahead of market growth. So we're seeing sort of continued interest from the physician community with our RED 72 SENDit SILVER Label, which is sort of the first full quarter of its launch was Q2. Outside of that, some of the MeVO trials certainly, I guess, confirmed for physicians, what stentrievers end up doing. And so that was sort of what the results showed. But that being said, a lot of physicians have already moved more to an aspiration frontline approach for these procedures. They are either single institution-based data sets or other sort of meta-analysis kind of data sets that are showing that aspiration is helpful for these patients. And so we haven't really seen much of that playing out on the aspiration side, it may be more of a sort of stentriever dynamic. And then beyond that, I think the stroke field in general is all eagerly awaiting modulated aspiration because you've seen some of the results from some of these large-bore trials that maybe haven't really shown much of a benefit. And so based on all that, the physician community is eagerly awaiting modulated aspiration with Thunderbolt.

Yes. Let's talk about that. I think it's -- for those that know you, we understand the benefits of the CAV technology -- CAVT technology. As we've seen what it can do in peripheral, what are going -- what are the key, like 1, 2, 3 top benefits we should look for coming out of the Thunderbolt trial, the THUNDER trial? And kind of what is going to be the driver of adoption for that product? Why are they going to pull your product off the shelf versus anything else for a stroke market?

Yes, absolutely. So I think what the modulated aspiration concept is geared towards is when it's interacting -- when the catheter is interacting with the clot, how consistently can we pull the clot out, ingest it in a matter of a short time and ultimately have that sort of predictability over a wide range of clot morphologies, right? So the THUNDER trial will look to answer some of the normal questions you would expect from any of the stroke trials. But beyond that, I think a factor that will start to play into the concept of modulated aspiration is what it does when it's interfacing with the clot itself, right? So that predictability, the consistency as well as the time will be factors that the physician community will want to know about. And then in terms of why they would pull this versus something else. I mean if you look at the stroke field in general, there were the stentrievers from back in the day, aspiration which has proven to be sort of the market-leading option, the option that physicians gravitate to because of the time and the simplicity of it with some of these other modalities ending up becoming more adjunct in a minority of cases. The next sort of phase of the field was this exploration, if you will, of all these large-bore devices that became available. And ultimately, I think the results have shown that they maybe haven't really been able to prove much of a benefit. And so the next innovation that physicians are all looking for is modulated aspiration. They've seen what it's done for their counterparts that are dealing with patients in the rest of the body, and they've seen what it can do in terms of the safety profile, the speed, the simplicity. And so that is sort of what they're excited about and eagerly waiting.

Is it -- do you also get like better first pass success and/or does this allow you to maybe go into other vessels like go deeper with a smaller catheter? Or what -- how should kind of the -- I'm a finance guy, not a doctor right? So as I think about this, like what else can I get out of this longer term? Does this have more TAM expanding opportunity beyond where we are today? What can it do just for the current market?

Yes. So if you take the current market in procedures where they're still using, let's say, adjunct devices like stentrievers, things like that. There is more share to be gained. Red 72 SILVER LABEL, like I mentioned earlier, is already been taking share. So we expect that to continue versus other aspiration catheters with Thunderbolt. And then beyond that, any time there's new innovation, there is growth in the market typically. So you would expect to see some of that. And I would say it's a combination of all of these. And how do you model that I think is maybe looking at some of past innovation and so on and how that's affected the fields. But overall, I think stroke is in a really great spot because as technology gets better, you can start to offer this therapy to more and more patients. Now specifically in the THUNDER trial, we looked at the RED 72, the 68 and the 62 were the devices used in the study. And so the data will all reflect the usage of those devices.

I'm going to switch over to the vascular market. So we'll start with the VTE now. Just by your own admission, you've done well in the US VTE market, I think it was up 42% in the last quarter. Not a lot of uptick from Q2 versus Q1. Just talk a little bit about market dynamics. And then how much can the VTE segment of the peripheral thrombectomy market grows, as you move from early majority in the late majority of adopters and especially without more data to change guidelines or we won't get that. I think STORM-PE is really the next thing coming, but not on the DVT, that's PE segment. So just kind of -- how do we -- it seems like there's been a big penetration, but can you keep growing? Or do we need another data set to kind of -- I mean, 42% growth, it's fantastic, but to keep that kind of party going.

Yes. It's been an interesting kind of just past the last few quarters as the physician community has been hearing about CAVT and what it's done for their -- the patients of their colleagues. It usually word of mouth or physician conferences that they hear and see the latest developments with CAVT, and that has led to the sort of share shift and the movement towards CAVT as we've seen it. As you called out, STORM-PE, if positive, will be a catalyst for PE. Beyond that, though, we've invested pretty heavily in our market access efforts. Because as we become the majority in VTE, which we are in DVT, the next sort of work is to make sure the remaining 90% of patients that are not getting access to advanced therapy, get access to advanced therapy. And so we've alluded to the work with large hospital systems to look at the impact that CAVT is having on their patients, both from a clinical standpoint as well as a health economic standpoint. And so as those data sets start to read out hospital systems are organizing their efforts to make sure more patients get access to advanced therapy. So I think that is generally favorable for CAVT. And then beyond that, constant innovation, that's something that has been core to Penumbra, and we will continue to innovate in the months and years ahead, and are pretty excited about what's to come.

So I think as I alluded to the STORM-PE, I think, at least on the investment community side, we're really focused on that just because it is against standard of care, right? We haven't seen that on the DVT side yet. And so do you think that you can get deeper penetration to the DVT? I mean, your strategy is market access, but do we need clinical data to change guidelines to change referrals, to change just the whole thought process, right? They can see what the technology does, but sometimes it just may not even get to the hands of the right doc. The patient may not have to get right person to get the thrombectomy procedure, right?

Yes. I think it's -- actually, the clinical data on the DVT side for iliofemoral DVTs, that's already been proven that ileofemoral DVTs would benefit from treatment. And so I don't know that there's necessarily clinical data still needed in that space. I think it is a function of what you alluded to, which is all the different physicians that are in the patient's care path, do they all know about the newer options that exist versus some of the more traditional options like just an oral anticoagulant. And I think that's where the market access efforts can actually play a role because that's the point, get the word out to the non-interventional community that's seen these patients because the interventionalists already know what the latest options are. But it's about that additional raising awareness.

That makes sense. And then obviously, there was the major acquisition last year, Stryker and Inari. Just market dynamics post that acquisition. Obviously, I mean, I think even Stryker mentioned on the earnings call that maybe they shouldn't have had them all signed non-competes, try to get them to all signed because some of them obviously didn't. Did you benefit from some of that? What's the market done, kind of how should we think about that? Was that settled down? It's because maybe you had an opportunity to take a little and then it kind of hits the baseline again. Just where are we dynamically in that whole process?

Yes. I think they commented on some of the things that they were seeing as part of it. I mean for us, we started seeing the shift towards CAVT even prior to the acquisition, right? So that sort of just innovation has led to the shift that we've seen happen, and that's continued into the course of the last 2 quarters here in 2025 as well. And we expect -- I mean, our team is continuing to do the work. So I think we're very excited about the trajectory ahead for Penumbra and CAVT.

And how should we think about incremental competition? I think Imperative Care has been very vocal about building a large sales force to launch with once they get their PE label. And then how do you think as we go from 3 to 4 to 5 to 6 to 7 players, how are you viewing future pricing? And I -- not to answer the question for you, but obviously, I think you're the only player with CAVT. So they're all coming in with kind of the standard products. But how do you just see the market dynamics and your internal view for the next couple of years with all that increased competitors?

Yes. Great question there. What I will say is that in terms of how we view the overall opportunity, CAVT is differentiated from all the other analog devices out there, right? Most of the other options that are either in trials or going to enter the space are all still looking at more of the basic approach to aspiration, which is either hooking up to a syringe or a pump. And at this point, CAVT has clearly shown an improved safety profile and improved procedure time, more simplistic. So based on all that is why physicians have started to move towards this sort of a therapy. So I think anybody else coming into the space is going to have to explain how they're better from a time and a safety profile standpoint. And at this point, that's I'm not going to say impossible, but it's going to be harder and harder to do as CAVT, and there's more and more constant innovation that we're going to bring into the fold. Beyond that, you look then at, for example, the stroke space, where we've dealt with fair share of other technologies that have come and gone. I think it's a function of continuing to innovate and continuing to make these procedures faster and safer is how we win the sort of longer-term opportunity.

We have a couple of minutes left. I sneak a question in on coronary. Just you had the CHEETAH data a couple of years back, you've got the CAT RX. Do you plan on a CAVT product there? And who do you really compete with in that space? And how the dynamics change post the CHEETAH data? Is that -- I think a decade ago, there were companies trying to do things that were high expectations. Is this something we can kind of see the CAVT come in and do something there?

Yes. We're always looking. We're always evaluating. It's about, I think, 200,000 or so patients that have blood clots in the coronaries. What is interesting in the original CHEETAH trial is that CAT RX, our technology that is used in the coronaries was in the body for 69 seconds, right? And it pulled out the kind of clot had the results that it did, which is why we end up being the default choice in the procedures that are being done. The other technologies that exist are back to the basic syringe-based catheters that have existed for 20-plus years. So it isn't really a function of like competition or anything like that. Does CAVT have a role? We'll always evaluate. But like I said, CAT RX was in the body for 69 seconds, right? That's, in general, what you're seeing in these procedures. So is there really a need for CAVT? We don't know yet. That being said, things always change, and we will respond as appropriate. Different physician societies are looking at data and things like that to compare against traditional methods and show that CAT RX is actually proving to be a benefit. And so those are all happening more through sort of the physician community themselves.

Okay. I'm actually going to switch over arterial real quick. Just how did that do in the first half? And how should we think about the future growth there, especially with 6X and hitting the market?

Yes. So with arterial, after VTE, arterial was the next sort of strong growth driver there in Q2. It continues to be a story there of us being the market-leading option. But with constant innovation, you're switching more of those customers that were previously using maybe open surgery for their patients. As technology has gotten better, and they get more familiar, we're seeing more procedures switch over to endovascular first, CAVT at that. Beyond that, devices like 6X help them access smaller vessels, other sort of vessels that maybe were previously Bolt 7 was too large to go and access. And so those are all the sort of drivers, I guess, on the arterial side is continuing to see that shift from open to endo and then making sure they have options for all the sort of vessel sizes that they're typically dealing with. Beyond that, I think the market access data, THRIVE was one study that was presented at BAM earlier in the year. Again, it's showing similar to STRIDE that patients do better clinically and it's cost effective. And so when you have that story to tell, it's a pretty compelling one, and that's what we're seeing in the reaction...

I think we're out of time, but I like 30 seconds more, if I could. Just on international. And then the European launch of the Flash and Bolt technology. Kind of how should we think -- what's the impact been? Or when do we start seeing the impact of it? And then just China, a lot of craziness going on there. Just how should we think about that?

Yes. I think international, in general, we spent the last couple of years focusing on the places where it made sense to bring the latest technology, getting out of places where it didn't make much sense. And so we're really seeing the fruits of all that labor pan out here. International has been a strong part of our story here this past quarter, and we expect that to continue. China, we have a great partner there. We work closely with them. I think the overall, the bigger economic backdrop is, we're looking to adjust as things change. But in our guidance, we haven't really factored China into the back half of the year or anything like that. That all being said, we have a really strong relationship with our partners there. And when things change, we can quickly sort of support them as they need. And that's sort of our view on China right now.

All right. I think we're going to wrap it up there. Thank you so much.

Great. Yes, of course. Thanks.