Treace Medical Concepts, Inc. (TMCI) Earnings Call Transcript & Summary

Okay. Good afternoon, everyone. I want to thank you all for being here today. Closing out -- we're approaching the close of Wednesday at the JPMorgan Healthcare Conference. I'm really excited to be introducing some members of Treace's management team, specifically CEO, John Treace; and CFO, Mark Hair. After the prepared remarks, I'll be running a Q&A. [Operator Instructions] And with that, John, I will leave the rest to you.

Well, good afternoon, everyone, and thanks for having us, [ Alan ]. We're excited at the opportunity to tell the Treace Medical story here at the 40th Annual JPMorgan Healthcare Conference. Here are standard disclosures. So Treace Medical is a high-growth med tech company with a unique market opportunity and business strategy. First, we're the only company 100% focused on the surgical management of bunions and related pathologies. And at $5 billion plus, our U.S. market opportunity represents one of the largest in orthopedics and given the poor outcomes with traditional surgical options, we believe one of the most underserved opportunities in all orthopedics as well. The company is Surgeon Advisory team have driven a paradigm shift over the past 6 years in the way that surgeons evaluate and surgically manage bunions, and that is as complex 3-dimensional deformities requiring a comprehensive surgical correction versus painful, bony bumps on the side of the big toe that can simply be shaved off. Our Lapiplasty 3D Bunion Correction represents disruptive technology supported by a robust portfolio of patents, differentiating clinical data sets and is promoted by a rapidly growing direct sales channel. Our business has demonstrated strong momentum, posting 46% growth in the COVID impact in 2020 and we preannounced revenue growth in the range of 64% to 65% for 2021, reflecting revenue of approximately $94 million. We've assembled an experienced executive team, all of whom joined Treace Medical with significant expertise in their respective functions and fully capable of scaling with the business as we grow. I'm really proud of the team that we've assembled here and their collective contributions to the success of the business. We also have a highly accomplished Board of Directors, all current or ex med tech operating executives with a track record of building great companies and generating excellent returns for shareholders. Additionally, many of these individuals have worked together previously at one or more successful companies. Our management team and Board worked extremely well together. They have a winning formula and then we're implementing it here at Treace Medical. Bunions are highly prevalent, and they affect 25% of the U.S. adult population. They're hereditary and progressive in nature, and they result about 4.5 million people in the U.S. seeking medical treatment each year to alleviate their bunion pain. And we estimate that over 1 million of these patients are symptomatic surgical candidates. This said, there are only around 450,000 bunion procedures performed each year in the U.S., and we believe that's largely due to the shortcomings of traditional surgical treatments. If you were to talk to somebody that's had traditional bunion, there's a pretty high likelihood that they're unhappy with their results, and they would likely advise appear against having it done. So it's this reputational black eye that bunion surgery suffers from that creates our $5 billion-plus U.S. opportunity for the Lapiplasty procedure as we educate patients that bunion surgery has changed for the better, get them off the fence and connect them with our Lapiplasty surgeons, and that's something we believe we've been very successful with to date. So there's a misconception that bunion is a bony growth of bone on the side of the big toe. In actuality, the bunion we see is the product of an outward shift or lean of the long metatarsal bone that produces the bump that we see on these images. This shift in the long metatarsal bone is caused by an instability in the tarsometatarsal or TMT joint. So while the symptom of the bunion presents at the big toe, the origin or the root cause of the bunion is much further back in the foot at the TMT joint. So in the vast majority of bunions, there are 3 dimensions or planes involved in the deformity as shown in these illustrations. The unstable TMT joint allows the metatarsal bone to lean outward, rotate in the frontal plane and then often elevate as well. When it comes to surgery, successfully correcting all 3 planes of the bunion deformity is incredibly important in order to ensure a durable outcome. A recent clinical literature has demonstrated up to a 10- to 12-fold increase in the likelihood of the bunion returning in cases where this rotational plane, in addition to the other 2 planes, isn't properly corrected. And it's this rotational part of the deformity that's been historically unrecognized and neglected until our Surgeon Advisory team focused on it back in 2014, and we partnered with them to find a way to develop a system to address it effectively, all 3 planes comprehensively with the Lapiplasty system. So although there are over 100 ways described to surgically treat a bunion, these 100 options generally fall into 1 of 2 categories. Approximately 75% of cases performed today are 2-dimensional, cut-and-shift osteotomies. This is mainly a cosmetic approach aimed to conceal the bump. For the surgeon, traditional osteotomies could be a relatively straightforward procedure. And for patients, in some cases, they can start wayfaring on the operative foot relatively quickly. The downside of these traditional osteotomies is that they only address 2 planes of the deformity, neglecting the important frontal plane, and they do not address the root cause of the bunion, the unstable TMT joint. As a result, there are some very high recurrence rates associated with osteotomies in the more recent clinical literature as high as 78%. The Lapidus Fusion approach, the 2D predecessor to Lapiplasty, is the other traditional procedure used in around 25% of bunion surgeries. Lapidus Fusion attempts to realign the whole metatarsal bone but addresses only 2 dimensions of the bunion deformity. It's also a very challenging operation for more surgeons to perform. Lapidus Fusion does, however, secure the unstable TMT joint, which is, again, the root cause of the bunion, either with fixation plates or screws. That said, Lapidus Fusion has traditionally been reserved for only the most severe bunions, those that an osteotomy can't fix because it is a more challenging operation to perform versus an osteotomy, and it also entails a longer, more restrictive recovery for the patient, up to 6 weeks or longer of nonweight-bearing on the operative foot and often in a cast. So it's not only challenging for surgeons to perform, but it can be a really hard sell for the patient. But with Lapiplasty, now surgeons and patients have a new option for all their bunions, 1 that provides a reproducible and reliable 3-dimensional fix for this 3-dimensional problem. A Lapiplasty corrects all 3 planes of the bunion and addresses its root cause, that unstable TMT joint, and allows early weight-bearing in a post-op boot in less than 2 weeks from surgery and with a very low risk of recurrence in the 1% to 3% range based on our clinical data sets. As shown in these illustrations, our Lapiplasty system offers enabling instrumentation that allows the surgeon to correct the alignment of the metatarsal bone in all 3 planes, hold it securely in the corrected position, then apply a cutting guide that allows for precision saw cuts to remove the cartilage from both sides of the TMT joint and then compress both of the bones together for a perfect 3D fit and then apply 2 low-profile titanium plates across the joint, 90 degrees separated from each other, which offers tremendous stability, allowing early weight-bearing in a post-op boot while these 2 bone surfaces heal together. Our correcting the deformity before cutting technique is a very powerful competitive advantage as it gives the surgeon the confidence that they're equipped with a technique and the tools to obtain the final correction that they expect. Our core Lapiplasty-related hardware and surgical techniques are protected by a robust portfolio of over 40 and -- granted patents and more than 50 pending patent applications. Talking a little bit about our product. Our product's comprised of 2 main components. On the left-hand side, we have a tray which houses our reusable instrumentation. This tray is about the size and weight of a MacBook Air laptop for reference, so it's very compact and very easy for sales reps to transport and for facilities to process prior to the case. On the right-hand side, we have our high-margin Lapiplasty sterile implant kits. These kits include our titanium plates, screws and other consumables used in the procedure. These are the products that we actually sell. Since they're sterile, they could be open on an as-needed basis in the OR and contain everything needed for the procedure. So the OR staff really likes these. This is a highly efficient model compared to traditional orthopedic extremity companies, where it's common to have trays containing both their instruments and implants, all of which must be cleaned and sterilized prior to and following each case. These traditional trays may hold $30,000, $50,000 or even $100,000 worth or more of instrument and implant inventory and these traditional ortho extremity companies often have thousands upon thousands of sellable SKUs, making scaling their business quite capital-intensive. In stark contrast, our usable instrument tray pays for itself with the margin generated on just one surgical case. And each of our trays can support around 50 surgeries per year at over $5,000 revenue per case. On top of this, our entire Lapiplasty business today is supported by less than 30 sellable implant SKUs. So ours is an extremely capital efficient and scalable model, where we're happy to build as many of these low-cost instrument trays as needed to support the rapid growth of our business. We have an active R&D program working on innovations on 2 fronts. The first is advancing our core Lapiplasty technology, focused on making Lapiplasty faster, easier to perform, less invasive. The second is our pipeline of ancillary products, which target additional procedures that occur within high frequency within a Lapiplasty surgical case. An example of 1 of our core innovations is our Lapiplasty Mini-Incision System, which allows a Lapiplasty procedure to be performed through a much smaller 3- to 4-centimeter incision, which is about half the size of the standard Lapiplasty incision for reference. We've been rolling the system out and training experienced Lapiplasty surgeons on the system since late 2020. The implant kit carries a higher selling price and provides a nice lift to our blended ASP as more surgeons adopt this Mini-Incision System into their practice over time. Surgeon and patient feedback for this system has been excellent, and you'll continually see us innovating our core Lapiplasty platform over time to bring even better solutions to our surgeons and their patients. Another exciting innovation is our Adductoplasty Midfoot Correction System that we launched in Q3 of 2021. This is another great first-to-market for Treace Medical. And like Lapiplasty, enables surgeons to perform a historically complex surgery with greater confidence and control. Midfoot deformities can coexist in up to 30% of patients with bunions. And studies show that bunion recurrence rates are higher in cases where the midfoot deformity is not corrected along with the bunion. We consider Adductoplasty to be an extension of our core Lapiplasty program as it's designed to work in concert with Lapiplasty to address this interrelated midfoot problem and improve the overall bunion correction outcome. We fundamentally believe that as we empower more surgeons to perform these challenging midfoot procedures with confidence and control, surgeons will recognize that a greater number of patients will benefit from Adductoplasty. So we see Adductoplasty as a real win for surgeons and their patients. And from a business standpoint, Adductoplasty implants add several thousand dollars to each Lapiplasty case. So it helps elevate our blended ASP over time, as we train more surgeons and they incorporate Adductoplasty into their practice. So it's rare that a bunion case involves just an isolated Lapiplasty procedure. The bunion deformity often drives other pathologies of the foot that are typically treated in the same Lapiplasty case. We estimate that over 70% of our Lapiplasty cases involve 1 or more additional procedures. And this is the second arm of our R&D program, developing products that address these concomitant pathologies. By offering sterile implant kits to address these ancillary procedures, our sales force can serve as a one-stop shop, increasing revenue per case and reducing the need for other vendors in the OR. We have active R&D efforts to launch more of these ancillary products over time and in doing so, capture a higher percentage of the total case revenue and keep supporting our blended ASP. Another differentiator for us in the market is our strong body of clinical evidence. Lapiplasty is supported by 16 peer-reviewed publications, which is a real standout as there are very few surgical bunion products backed by any published clinical studies. To further distance Lapiplasty outcomes from conventional procedures, in late 2018, we initiated the ALIGN3D clinical study, which we completed enrollment for in Q2 of 2021. ALIGN3D is a prospective post-market study involving 7 centers and 13 surgeons with a 2-year primary endpoint evaluating maintenance of 3D correction and 173 total treated patients. ALIGN3D also monitors radiographic data up to 5 years and incorporates multiple patient reported outcome scores that evaluate how the patient is improving from a pain and quality of life standpoint. While we expect the final report out in the second half of 2023, we've already benefited from early data updates at key society meetings in 2020 and 2021. Our most recent interim ALIGN3D data was reported on at the 2021 AOFAS Conference and demonstrated a 1% recurrence rate at the 12-month time point, 8.3 days to start weight-bearing in a post-op boot and significant improvement in pain and all patient-reported outcome scores over baseline for the patients that reach the 12- and 24-month time point. Additionally, we are recently notified that we've been selected to report outcomes on a larger number of patients reaching the 12- and 24-month time points in a podium presentation at the upcoming ACFAS Conference this February. ALIGN3D is a powerful study and represents the company's commitment to provide market-leading clinical evidence for our products to benefit our surgeons, facilities and patients. Shifting gears now to talk about our commercial strategy. In addition to our innovative products and strong clinical data sets, we are executing a highly effective commercial program comprised of certain training, direct-to-patient education and the industry's only direct sales channel focused solely on bunion surgery. Medical education has been a key component of our commercial strategy from the start. As the team that pioneered the Lapiplasty procedure and related research around bunions as 3-dimensional deformities, our surgeon faculty are recognized thought leaders and are highly effective at educating other surgeons on this new paradigm, the 3D paradigm and the Lapiplasty procedure. As a policy, we require hands-on training prior to using our product and live surgery. Now to help scale this, we have a team of clinical specialists employees, who are highly skilled at all the technical aspects of Lapiplasty to help train and attend the new users' initial cases so that we accelerate their learning curve. In addition to introductory training courses, we continue to invest in the ongoing education of our surgeons by offering an evergreen learning curriculum consisting of regularly scheduled in-person and web-based advanced training events throughout the year. These advanced events are proctored by our experienced surgeon faculty and help attending surgeons become more confident as they expand the use of Lapiplasty in their practices. These events also serve as great venues to train surgeons on our new technologies like our Mini-Incision System and Adductoplasty System. The combination of these introductory and advanced learning programs has created a support community where surgeons can interface and share their collective experiences as they incorporate this new paradigm of bunion surgery into their practice. We have consistent, strong demand to attend our trainings, and these events are key to adding new users to our trailing 12-month user base each quarter. We've also been very effective at raising awareness with bunion patients themselves, with approximately 25% of adults having bunions and a majority of those being female, bunion sufferers aren't difficult to find. We actively use social media, Google paid search and PR to get our message out to this population. Our efforts are driving hundreds of thousands of patients to our website every month to learn more about Lapiplasty. And once on our website, patients can then use our Find a Doctor tool to locate and connect with Lapiplasty surgeons in their area. And patients that connect with our Lapiplasty surgeons aren't your typical bunion patients who would say, "I think I have a bunion, what are my options," often taking over a year or more to get surgery. These patients come in preeducated on their bunion and Lapiplasty and asking when they can get scheduled for surgery. So from the surgeons' and patients' standpoint, this is a really effective and efficient process. A side effect of this program is it does help motivate late adopters to attend our training events because they're tired of turning away patients who've been asking them whether or not they offer the Lapiplasty procedure in their practice. Speaking to our distribution model now. From a geographic standpoint, we are 100% U.S. focused, and we sell our products through a hybrid sales force made up of direct W-2 representatives and 1099 agencies. A powerful competitive advantage we've been building over the past few years is industry's only direct sales team that is 100% focused on bunion surgery. The buildout of this direct team has been an area of heavy emphasis and investment for us in 2021 and will continue to be in 2022. Our direct reps penetrate their markets faster, have higher utilization rates and sell at a higher blended ASP versus our legacy independent distributors on average, largely because they focus 100% of our products and they fully leverage our corporate resources. Our direct rep contribution has grown from 27% of sales in 2019 to 58% of total revenue as of Q4 2021. And we expect this increase in direct rep mix to continue to increase over time and will likely comprise over 75% of our revenue within the next couple of years. This said, we do have some excellent 1099 agencies who have performed very well for us, and we expect they will continue to do so. So this slide tells a very important story that's at the core of our success. We're not just converting new surgeon users to drive our growth. In fact, the majority of our annual procedure growth comes from our legacy user base. What we're showing here is the number of Lapiplasty cases the average surgeon performs each year depending on how many years they've used Lapiplasty. As you can see, the more experience that surgeons have with Lapiplasty, the more Lapiplasty procedures they perform, with the average surgeon performing nearly 7 procedures in their first year and growing to 23 procedures or so by their fifth year. This is largely the result of these surgeons mastering this procedure and experiencing the great patient outcomes in their own practice. And in doing so, we find that not only are these surgeons converting their traditional Lapis procedures, but they're increasingly converting their osteotomy procedures as well. Our continual product innovations, advanced surgeon training, patient education and direct sales channel, all work strategically together to help fuel this trend. So our goal is to establish Lapiplasty as a standard of care for bunion surgery, and we believe we've made significant progress towards this goal, increasing from approximately 0.8% procedure share in 2018 to approaching nearly 4% in 2021. During this time frame, we've also expanded our customer base over threefold from over 550 procedures to nearly 1,800 active surgeon users. We view this as significant early progress as we exited 2021, approaching 20% of the estimated 10,000 bunion surgeons in the U.S. using Lapiplasty in their practice. Okay. We grew our top line at 46% in 2020 and accelerated our revenue growth in 2021, which will be 64% to 65% versus 2020. On a sequential basis, our anticipated Q4 2021 revenue represents an increase of 53% to 54% compared with the revenue in Q3 2021. Not only do we have strong revenue growth, but we've also expanded our gross margins over the same time. And with our successful IPO in 2021, we have a strong balance sheet in place for future growth. In closing, at Treace, we're driving a market conversion in a large, underserved market with a novel and disruptive technology. We'll continue to build upon our success with continued investment in our bunion-focused direct sales channel, product innovations, clinical data sets and our leading surgeon and patient education initiatives. We wish to thank our employees, customers and our shareholders for their loyalty and support as we continue to advance Lapiplasty as a standard of care for bunion surgery. And now I'll stop sharing my screen.

Okay. Thanks for that introduction, John. So just to kind of dive into the questions. I'm sure the first thing on everyone's mind is the quarter that you preannounced, I think you pointed to a little over $33 million in 4Q sales, which step above where the Street was, more in line with our expectations heading into the conference for a bit of a beat. And you didn't provide guidance for 2022, which isn't surprising. But when we think about the cause of that outperformance in the quarter, despite the fact that we did see Omicron impacting your business in fourth quarter, what really drove the outperformance? And can you ride that momentum into the new year even with Omicron challenges continuing and potentially getting worse through January?

Sure, sure, [ Alan ]. Okay. We talked about a lot -- the investments we've been making in our commercial infrastructure and driving our commercial programs throughout 2021. And we really put the pedal down on the build-out of our W-2 channel and strengthening that. So as we entered into Q3 and face the Delta headwinds, that team really, really helped. They really helped drive that number that we needed to make. And as Delta began to subside in early Q4 and we encountered Omicron, we had the same effect, our direct channel really was able to help power through it. The market's very large. There are a lot of bunion surgeries being done, and there are a lot of ways to get to the number. But I'd say, running our commercial playbook, our [ DTC ], our surgeon training in that direct channel really helped us kind of muscle through those 2 challenging quarters and get to beyond our consensus numbers.

And [ Alan ], with respect to the Omicron headwinds, similar to what a lot of other companies have been saying, we definitely felt that in Q4. We're similar in that respect. And we feel like we've got a lot of the team in place, a lot of the marketing initiatives, the direct sales force to have a positive 2022. It's a little early to tell. Omicron is pretty fluid right now. And so as you mentioned, we didn't give guidance, and we plan to get more perspectives later when we have our earnings call for the fourth quarter.

Got it, of course. And then getting down to a bit more of a kind of nuts and bolts. Obviously, I feel like it's very early days for Lapiplasty, you're building out the portfolio with the addition of things like Adductoplasty. What has been the early feedback on that system since its launch? Like how is it -- like how successful have you been really ramping that in this kind of environment where I'm sure introducing new technologies, entering new accounts, despite the strength that you've seen, is probably a little more difficult than you've seen in the past?

Sure, [ Alan ]. I'd say we're in -- early in the first inning of rolling out Adductoplasty. We began to roll it out in Q3 of last year and introduced it to some of our advanced training labs and do some initial cases with interested users. I think the response has been excellent. Everybody is a bit -- all our users are very excited about the system, and we think it holds a lot of potential as we continue to train more surgeons and attend more surgeries. Our clinical specialist fleet has been extremely advantageous in terms of helping surgeons do their initial 1 and 2 cases and get -- really up the learning curve. There's a lot that we leverage from what we've thought surgeons about Lapiplasty procedure and how the image in the OR and the different steps that is leverageable over to Adductoplasty. So the learning curve isn't necessarily as big as it is for Lapiplasty in general, so we can be pretty efficient with that. But I think it's going to be a progressive build over the next 12, 18 months. And the more utilization that occurs with that, that provides support to our blended ASP as well. So it's an exciting product because it's a first to market. It's the first time surgeons have had a way that they can feel confident making that judgment call and doing the procedure on these patients that require it.

So touch -- like going a little bit deeper into your portfolio, you also have -- you've had the Mini-Incision System on the market for just over a year now. I know when you originally launched in 2020, it was more of a limited launch, something that you really ramped up over the course of 2021, I believe. Where does this stand now as a percentage of procedures? And should we really expect that to be the predominant kind of method that surgeons do use for Lapiplasty going forward? Or do you think there will be kind of a mixed approach where maybe some patients will use the older Lapiplasty approach and others will use Mini?

Right. Great question. We continue to train more surgeons on this system. We -- our strategy was to bring it to our most experienced Lapiplasty surgeons first because it follows the same steps, but it's a little more technically challenging. Not insurmountable by any means, but to introduce that to a first-time Lapiplasty user, we have a better shot at getting them up the learning curve using the original Lapiplasty and then introducing the Mini-Incision System to them after they've done 20, 30 cases. So we continue to see that become a larger share of our business. We haven't given out what share it comprises. It's certainly not the majority of the procedure base. We have a long way to go. And some surgeons adopt it in their practice very aggressively, where they're doing the majority of their procedures now with the Mini-Incision. Others are using it selectively for patients that come in and say, "Can you do a minimally invasive procedure on me?" And they say, "I do have an option, and I can provide that with the Mini-Incision System. I can" -- so that's been the kind of blend of usage out there.

Got it. And then touching on the competitive front. It feels like based on our doc checks, it really does seem like there is a clear preference for Lapiplasty over other competitive bunion correction systems. There were some noise a few years ago where I think one of your major competitors here was acquired by another player. And it also feels like there's more me-too players out of the market now. So clearly, that hasn't stopped you from taking share in the market over the last few years. But what are you seeing from a competitive standpoint? And are there any headwinds that you're beginning to see from competition?

Oh, great question. It's flattering in a way that other companies are having to respond to this new paradigm that we brought into play over the past 6 years. That said, this company is 100% focused on doing one thing with excellence and building strong relationships with our customers and providing a product that at the end user level is going to work really reliably and as advertised, more the new entrants. We have a very strong patent portfolio and having to navigate around that can be a challenge. And sometimes, you end up with both a product that doesn't necessarily work as advertised. But we're not seeing major headwinds from any particular player, there's just noise. And we just want to keep our pedal down, keep running our commercial playbook, keep innovating our product, keep bringing real prospective clinical data to the community and to our doctors and exploit our first-mover advantage. We're way out ahead of everybody, and I think we're hard to catch.

So you just mentioned the data, right? And you highlighted that the ALIGN3D data obviously looks very strong objectively. And you also -- I think it was in October, you had your first patient in the Mini3D trial, kind of like a follow-up to ALIGN3D for the Mini-Incision System. So when we think about adoption, how important is it for these physicians to have that data in hand? Do we think that adoption of Mini will be meaningfully helped? And I know you said it was a technically more challenging procedure, so that might be the bigger rate limiting step. But when we think about just getting more people aware of Lapiplasty and getting more people sold on the idea, how important is the data to that really?

Well, we've sort of articulated it as a -- it's not a light switch. And given ALIGN3D's ultimate data report out is going to be back half of 2023, the great news is we've had so many opportunities to provide these interim report outs at key society meetings. And we also have the opportunity to submit interim results for peer-reviewed publication along the way. We don't have to wait until the end. But I think along with all of our other programs, the product iteration, the direct sales channel, the direct to patient that's bringing patients to their clinics asking for Lapiplasty, I think it's another component that just further softens the beachheads of later adopters and encourages them that this is a viable procedure that they really ought to take a look at. And I think it'll just keep incrementally helping our overall commercial program and help accelerate our penetration into the market.

A question that came in from an investor, just asking about the nuts and bolts of Lapiplasty. Like is it -- it's an outpatient procedure and what percentage is done in the hospital outpatient versus the ASC? And has that really influenced the kind of impact you're seeing from Omicron? Because I think when we hear about other elective surgeries, the impact has kind of shifted towards more -- it's not so much that elective procedures themselves are being canceled or deferred, it's more a patient or a physician schedules a procedure, but then they actually contract Omicron and that leads to a delay. So is that the kind of impact you're seeing?

Yes. I'd say that's more of the impact we're seeing. We don't view these patients as gone, lost opportunities. We view them -- it's a temporal factor. And if they've got a bunion, bunions are progressive. They only get worse and worse. If they decided to go forward with surgery initially and tested positive, we view that as more of a deferral not a lost case. It's just a matter of -- it's hard to predict when they're going to decide to get rescheduled or can get rescheduled. Will it be early in the year? Will it be later in the year after deductibles have been met? Which influences a lot of the seasonality we see in Q4 with Lapiplasty volume. But these are predominantly -- these are all outpatient day surgery procedures. The patient comes in, leaves the same day. So it's not as impacted as an overnight stay, elective procedure because we're not tying up those beds, but it is impacted nonetheless, through positive tests, et cetera.

Got it. Okay. And then kind of on the pipeline. So you've clearly continued to iterate on the device, Adductoplasty with Mini. You have the ancillary kind of pieces of the portfolio in there, too. What should we think of as being kind of the innovation pipeline from here on out? How do you continue adding to the portfolio? How do you improve upon the kind of products that you have today with like a next-gen device? And kind of what time frame do you think you'll need to actually launch that to remain ahead of the competition, I suppose?

Yes, great question. With a $5 billion U.S. opportunity for Lapiplasty, our core emphasis is on making Lapiplasty faster, easier to perform, less invasive. You're going to continue to see a steady rhythm of improvements to Lapiplasty over time, just like we did with the Mini-Incision System. We're already working on generations beyond that will come out at the appropriate time. And on the other side, we've got opportunities like Adductoplasty and evolving that further and advancing that program further and then other ancillary products that comprised procedures we're not currently addressing that occur in high frequency within that bunion surgery so that our sales reps have those solutions with them and can maximize their time spent there and continue to drive our top line and bolster our blended ASP.

Okay. And then just a final question. When I look at Treace and I look at the stock, it's clearly been kind of beat up over the course of the year this year with COVID-19 concerns. I would say like hitting the [ IP -- a recent IPO is like incredibly, significantly ]. So I think that the stock price is very attractive, I'm sure you do, too. So to investors, as we look out to the rest of 2022, what's kind of -- what's the investment thesis? Why buy into the stock here? What's there to look forward to in 2022 that will really reward someone for buying it now?

Well -- go ahead, Mark, please. Go ahead.

I was going to say there are a few things. We've had a great 2021. We're super proud of what we've accomplished in 2021 with some of the headwinds. And so hopefully, part of the [ investment thesis is to -- people ] have been able to see some of the performance that we've had in Q3 as well as Q4. And now that we've built a stronger, direct sales channel, we feel like we're taking momentum into 2022. And some investors have questioned the significant step-up sequentially Q3 to Q4, and we've done that and then some. So I think there's a bit of performance and history that we have behind us now that gives us some momentum as we go into 2022.

Yes, well said. Big market, focused company, high growth rate, highly scalable product model and watch us grow.

Got it. That sounds great. Okay. Well, thank you so much for the time speaking with us today. Thank you to everyone on the call. I hope you enjoy the rest of your week, everyone.

Great. Thanks, [ Alan ].

Thanks, [ Alan ].