Good day, and thank you for standing by. Welcome to the Inari’s Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

[Operator Instructions] I would now like to hand the conference over to your speaker today, Caroline Corner, Investor Relations. Please go ahead..

Thank you, operator. Welcome to Inari’s fourth quarter 2021 earnings call. Joining me on today’s call are Bill Hoffman, President and Chief Executive Officer; and Mitch Hill, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the markets in which Inari operates; trends and expectations for Inari’s products and technology; trends and demand for Inari’s products; Inari’s expected financial performance, expenses and position in the market; and the impact of COVID-19 on Inari’s operations and Inari’s customers’ operations.

These statements are neither promises, nor guarantees and involve known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from any results, performance or achievements expressed or implied by the forward-looking statements.

Please review Inari’s most recent filings with the SEC, particularly the risk factors described in Inari’s annual report on Form 10-K for the year ended December 31, 2021 for additional information.

Any forward-looking statements provided during this call, including projections for future performance, are based on management’s expectations as of today. Inari undertakes no obligation to update these statements, except as required by applicable law.

Inari’s press release for the fourth quarter 2021 results is available on Inari’s website www.inarimedical.com under the Investors section and includes additional details about Inari’s financial results. Inari’s website also has the latest SEC filings, which you are encouraged to review.

A recording of today’s call will be available on Inari’s website by 5 p.m. Pacific Time today. Now, I’d like to turn the call over to Bill for his comments and fourth quarter 2021 business highlights..

Thank you, Caroline, and thank you everyone for joining us today. We delivered a productive and successful fourth quarter. As some of you saw in our preannouncement last month, we again treated a record number of patients and grew revenue aggressively. We executed our plan and made progress on all of our growth drivers.

We’ll share some detail about all of this shortly. But we’d like to start now as we always do with a patient’s story to remind you of our mission and illustrate the impact our products and our people have on the lives of our patients and those who care about them.

Early last month, a 52-year old man presented to the emergency department, a small hospital in rural North Carolina after fainting at his home. He’d been suffering from shortness of breath that began 10 days earlier, just after ankle surgery. Imaging revealed large blood clots in both his left and right pulmonary arteries.

While syncope or fainting has many non-significant causes, it is especially dangerous finding when caused by pulmonary embolism. The treating physicians recognized the high risk nature of this man’s PE and immediately arranged for him to be life-flighted to a center with significant experience in treating PE.

Within one hour of arrival, physicians used FlowTriever to extract multiple large blood clots from his lungs. After about the second or third whoosh, the patient asked what did you do to me, I can breathe.

The physician then used FlowSaver to return extracted blood to the patient which allowed him to whoosh again and again a total of 10 times until he extracted all of the clots. The patient recovered quickly and uneventfully, it was discharged from hospital the very next day.

He never received expensive and dangerous thrombolytic drugs and he was never admitted to the ICU. High risk or massive PE carries a mortality rate of up to 50%. While residual clot or clot that remains in the lungs conveys high rates of morbidity over time for patients who do survive. This patient is very much alive of course.

And because the physician was able to whoosh without concerns of blood loss, because of FlowSaver, he has no residual clot to cause devastating long-term complications. The life of this man, just 52 years old, and all who care about him, is changed in extraordinary ways.

We are thankful always for the privilege to serve our patients in this way and to pursue this mission, which remains so much more important to us than just business. This case also illustrates the value our devices carry for hospitals, both in this time of significant resource training and we believe, well beyond.

The patient was treated with a simple, fast procedure in the cath lab, and despite being sick enough to warrant life flight to the treating center, he was discharged from the hospital the very next day without ever having been in the ICU. I’d like now to turn into our Q4 financial performance.

Our revenue in Q4 was $83.2 million, up $34.6 million, or 71% from the same quarter last year and up $10.3 million, or 14% from Q3. Procedure growth was also strong. Our physician customers performed approximately 7,700 procedures, including a modest number of cases from Europe. This procedure count is up to 6,700 procedures, or about 15% from Q3.

Our revenue in 2021 was $277 million, up $137.3 million, or 98% from the prior year. Our physician customers performed approximately 25,700 procedures in 2021, up 95% from 13,200 procedures in 2020. Just a few thoughts now about the impact of COVID on our procedures in Q4 and our plan forward.

We believe that COVID associated procedures represented about 10% of all total procedure volumes, down slightly from Q3. We are especially encouraged that more than 90% of both, total procedures and sequential procedure growth came from treating non-COVID patients.

Regardless of future COVID surges, we are confident we will continue to successfully penetrate our core TAM, and this will serve as the foundation for our continued growth. I’d like now to share with you the recent progress we’ve made on all of our growth drivers. Our first growth driver is the expansion of our sales organization.

The size of our core TAM is large, and despite our commercial success, our penetration remains low. In fact, we have some important updates here. Our existing market size estimates date back to datasets as far back as 2016. Over the past several months, we completed a rigorous bottoms up assessment of the total addressable markets in the U.S.

for both PE and DVT. This work included input from an outside consultancy, triangulation across multiple updated third-party claims data sources and updates to the underlying incidence growth rates. Based upon this work, we believe these markets to be meaningfully larger than we’ve communicated in the past.

We now believe the total annual incidence of patients diagnosed with intermediate to high risk PE in the U.S., using the same definition we’ve always used, is 280,000 patients, compared to our previous TAM estimate of 200,000 patients.

Similarly, we now believe the total annual incidence of patients diagnosed with iliofemoral DVT, again, using the same historical definition is 430,000 patients, up from 262,000 patients in our previous DVT estimates. Combined, this represents 710,000 total addressable VTE patients in the U.S. and with our historical average selling price.

The total new TAM is $5.8 billion. This is 53% larger than our previous TAM estimate of $3.8 billion. Based on these new TAM estimates, we believe, in 2021, only about 4% of all the patients who could benefit from our devices were actually treated.

In addition to better understanding our TAMs, we completed similar work to understand the total number of hospitals with cath labs in interventional suites. We now believe, there are over 2,000 hospitals that could potentially perform our procedures.

The bottom line is our markets are even larger than we thought and we remain very early in the stages of penetrating these markets. All of this serves to underscore the need for a larger sales organization. We ended 2021 with just over 200 territories, slightly above the range to which we guided earlier in the year.

We expect to add territories in 2022 at roughly the same cadence we’ve demonstrated in the past and finish the year with at least 275 territories. We continue to believe that our sales organization when fully built out will be the largest in the peripheral space.

Our second growth driver is building awareness and driving deeper adoption at existing hospital customers. Most VTE patients continue to be treated with anticoagulation alone and in fact, a large percentage of these patients never even see a physician with a VTE expert.

We continue to drive awareness of the benefits on our procedures with non-interventional physicians and we continue to work with hospital administrators to install more systematic processes to consistently identify and triage VTE patients to the physicians who best understand the disease state.

We are supporting these efforts by building centralized capabilities our field team can leverage, including a health economics and market access team, our national accounts team and the Inari Solutions Group, a team of former hospital administrators who can share best practices on disease state program building.

These efforts, which we have designated our VTE Excellence program, are yielding encouraging results. For example, at least 50 centers now have installed VTE coordinators and we believe a significant percentage of our total procedures and growth are a direct result of our VTE Excellence efforts.

Our third growth driver is to build upon our base of clinical evidence. We have several important updates here as well. First, we recently enrolled the 500th and final patient into our CLOUT all comer DVT registry.

Both safety and efficacy results have been best-in-class in the earlier data cuts and we expect to see similarly excellent results, when the full patient cohort of CLOUT is presented later this year. Moving to PE, we enrolled the 800th patient into our FLASH all comer PE registry. This completes the enrollment of the U.S. arm of the registry.

FLASH is already the largest ever prospective interventional dataset in the field of PERFORMANCE, and this latest milestone serves only to widen that gap. We will share data from the complete U.S. patient cohort when it is presented later this year.

Finally, we are pleased to share that we have enrolled our first patient into the PEERLESS randomized controlled trial. PEERLESS is a 550-patient study designed to show superiority of FlowTriever compared to catheter directed thrombolysis for intermediate, high-risk PE patients. We will provide updates on enrollment from time-to-time going forward.

We believe that the high-quality, large volume and consistent cadence of clinical evidence we are producing, continues to raise the bar for both, existing and future competitors in the VTE space. Our fourth growth driver is to expand our product portfolio, exciting developments here as well.

First, we completed our limited market release on ClotTriever Bold and have moved to full market release. Bold is a more aggressive version of our original ClotTriever device. We believe Bold removes even more clots with fewer passes, making cases faster and more efficient.

We expect Bold replace the original ClotTriever device in many acute, sub-acute and chronic clot cases. We are excited also about the potential for Bold to treat long-term DVT patients who may be suffering from a horrendous complication called post-thrombotic syndrome or PTS.

These patients have limited and poor options, and Bold may open a large new market. Next, just a quick update on flow FlowSaver. FlowSaver is enabling physicians to whoosh as many times as necessary without concern for blood loss to remove all of the clots, as described in the patient story earlier.

FlowSaver has been used in over 6,500 procedures since full market release in Q3, and is now used in more than 80% of all FlowTriever procedures. We believe that nearly bloodless thrombectomy is both important for patients and not easily replicated by competitors.

Beyond Bold and FlowSaver, our product pipeline is robust, and you can expect several additional product clearances and launches later this year. Our last growth driver is expansion into international markets. Despite a challenging operating environment, we have now successfully established a commercial presence across all major European markets.

We continue to see steady increases on our monthly case volumes, and since launching in early 2021, we have successfully treated several hundred patients. We are also executing on the longer-term clinical and reimbursement strategies we will need in order to grow rapidly in these markets.

We recently gained approval, for example, for an NUB in Germany, for FlowTriever. This provides a pathway for hospital to seek enhanced reimbursement for a specific new medical technology. We are making progress in other international markets as well.

We recently hired dedicated general managers in both, the Latin America and Asia Pacific regions, and completed cases in both regions, in Chile and Singapore specifically. We are making progress also on the longer-term projects we have underway to gain approval in both, Japan and China.

We remain highly optimistic about the longer-term potential of our international business, but it will not contribute materially in 2022. In summary, our markets are large, the unmet patient needs are spectacular, our growth drivers have never been more compelling, and our resources are great. We sense as much responsibility as we do opportunity.

And we’re going to invest even more aggressively to do better for these patients to access these markets and to grow rapidly. We could not be more excited about our prospects moving forward. We love every second of this work, and we appreciate your support as we pursue this mission. With that, I’d like to turn things over to Mitch..

30% of our revenue is derived from the sale of ClotTriever products during the fourth quarter of 2021, compared with 36% in the fourth quarter of 2020 and 70% was derived from the sale of FlowTriever during the fourth quarter of 2021 compared to 64% in the fourth quarter of 2020.

During Q4, the vast majority of our revenues came from procedures, our stocking revenue was consistent with the level we start during Q3 of 2021, due to the broad acceptance of several of our newer products. We expect our stocking revenue as a percent of total revenue will decrease over time.

Gross margin was 90.1% for the fourth quarter of 2021, compared with 92.4% in the fourth quarter of 2020. The decrease was primarily due to the absorption of higher overheads as we completed our move to a much larger manufacturing facility in the fourth quarter of 2021.

Operating expenses were $73.2 million in the fourth quarter of 2021, compared with $37.9 million for the same period of the prior year. R&D expense was $18.7 million in the fourth quarter, compared with $6.5 million in the same period of 2020.

The $12.2 million increase in R&D expense was primarily driven by an increase in headcount, as well as product development and clinical evidence development costs. SG&A expense was $54.5 million in the fourth quarter of 2021, compared with $31.4 million for the same period of the prior year.

The $23.1 million increase was primarily due to personnel related expenses, because of increased headcount across our organization, higher travel expenses in Q4 ‘21, compared to unusually low levels of travel in Q4 of ‘20, and higher facility-related costs and marketing costs.

As you heard from Bill, we expect to incur increased operating expenses targeted towards driving growth, expanding our commercial efforts, building additional clinical evidence and developing new products. Net income for the fourth quarter of 2021 was $1.1 million, compared with $7 million for the same period of prior year.

The basic and fully diluted net income per share for the fourth quarter 2021 was $0.02 based on the weighted average basic share count of 50.2 million and 55.6 million, respectively.

These compare with the basic and fully diluted net income per share of $0.14 and $0.13, based on a weighted average basic and diluted share count of 48.7 million and 55.2 million, respectively, for the same period of the prior year. I’d now like to update on our full year 2021 financial results.

Revenue was $277 million for the full year 2021, representing an increase of 98% over revenue of $139.7 million in 2022. 32% of our revenue is derived from the sale of ClotTriever products in 2021, compared with 37% in 2020, and 68% was derived from the sale of FlowTriever during 2021 compared to 63% in 2020.

Gross margin increased slightly to 91.1% for the full year of 2021 compared with 90.6% in 2020, due primarily to the higher percentage of 2021 revenue from FlowTriever, our higher margin product offset slightly by our recent move into a larger manufacturing facility.

Operating expenses were $241.4 million in the full year 2021 compared with $108.2 million in the prior year. R&D expense was $51 million for the full year 2021 compared with $18.4 million for the same period of 2020.

The $32.6 million increase in R&D expense was primarily driven by a significant increase in headcount, as well as product development and clinical evidence development costs. SG&A expense was $190.4 million for the full year 2021 compared with $89.7 million for the prior year.

$100.7 million increase was primarily due to personnel related expenses, because of increased headcount across our organization, higher travel expenses in 2021, and higher marketing costs. Net income for the full year 2021 was $9.8 million, compared to $13.8 million for the prior year.

The basic and only diluted net income per share for the full year 2021 was $0.20 and $0.18, based on the weighted average basic share counts of 49.8 million and 55.6 million, respectively.

These compare with a basic and fully diluted net income per share of $0.43 and $0.27, based on a weighted average basic and fully diluted share count of 32 million and 51.6 million respectively for the same period as the prior year.

Moving on to the balance sheet, our cash of $92.8 million and investments of $87.3 million at the end of Q4 2021, totaled $180.1 million compared to $168.6 million at the end of the third quarter of 2021. Our cash flows provided by operating activities were $25.5 million for the full year 2021 compared to $1.9 million in 2020.

I’ll close my comments by addressing Inari’s financial guidance. For the full year 2022, we are guiding to $350 million to $360 million in revenue. With that I’d like to turn the call back to the moderator for questions..

[Operator Instructions] Our first question comes from the line of Cecilia Furlong from Morgan Stanley. .

I wanted to start with 2022 guidance. If you could walk through just what you’ve contemplated from a COVID procedure impact as well as, as you think about headwinds from COVID procedures that you caught out in 2021, balanced by perhaps cases, patients that weren’t treated as a result of COVID.

Could you just walk through how you’re thinking about those two dynamics as we think about growth in ‘22?.

Yes. Thanks, Cecilia. Just to let everyone know, I’m joined here by Mitch, of course, you just heard from, but also Drew Hykes, our COO; and Tom Tu our Chief Medical Officer. So, 2022 guidance, there is a lot to unpack there, and I’m not sure I’ll do any justice to kind of the puts and takes. But I will say this.

We felt really good about the execution generally in 2021, facing exactly the same sets of headwinds that all of our peers have communicated repeatedly over the last two years really, staff shortages and resource limitations, access issues and alike.

So, we feel really good about executing in this environment and I suspect we might even have another gear just in terms of the Christmas of our execution as the operating environment return to something that’s a bit more constructive. And I think we might even be seeing some of that right now, knock on wood.

Hopefully, it’s a sustained period of more constructive operating environment. So, there is lots of puts and takes, but I think generally speaking, we do not want to get over the tips of our skis here. We feel really good about the guidance that we provide. I think it’s about 28% year-over-year increase compared to 2021.

So, we feel pretty good about it. And again, we have established capabilities of executing in both, COVID surges and not so -- I think we’re in good shape..

And Cecilia, maybe I can just add quickly, as you heard Bill comment, in Q4, 90% of the procedure growth was basically attributed to non-COVID patients. As we’ve gotten into 2022, I think you’ve probably seen the same data we are seeing that perhaps as many as two-thirds of the population of the U.S.

has now had COVID, and there is some states such as California where the percentage is up to about 80%. So, it’s almost becoming a factor that can’t be used to distinguish anymore, because it’s almost like everybody’s had it..

Great. Thank you. And I wanted to ask also just about ClotTriever Bold.

What you’ve seen to-date in the limited market or at least your outlook around transitioning to the full market release, where you see the utility specifically in cases in replacing the original ClotTriever? And then, longer-term, but just how you are thinking about further expanding your ability to address PTS. Thank you..

Yes. So a couple things wrapped up there, Cecilia. So first of all, I think the ClotTriever Bold, we weren’t a 100% sure exactly where it fit into the mix here. We were really excited to see it probably as a very positive impact on the number of passes required, probably fewer passes, because it engages the clots a little bit more aggressively.

Fewer passes mean shorter cases. And so, for that reason alone, our physicians really seem to be appreciating the changes and the benefits. So, we’ll see. We think it has a pretty good percent -- pretty good chance to replace high percentage of our existing kind of old -- original ClotTriever cases.

We’ll see how that goes as we get into a much broader audience here, kind of just starting right about now. With regard to these PTS patients, I think there is a multifaceted challenge there, right? First of all, it’s a really complex disease state.

And these patients do not present to the hospital or to anybody in the same way that normal or acute, the subacute DVT and PE patients. They present in the emergency department or they tend to emerge inside the hospital after surgery, for example.

These PTS patients have had DVT at some point in the past and have been probably told there's nothing more that we can do. So there's at least as much of a commercial lift, another market development effort, as well as totally series of tools that will make us better and better at addressing the disease state.

So as far as the tools are concerned, we'll have more to say about those as they come to market. And we'll give updates from time to time about our progress in the market. I would say in the next couple of quarters, the impact of PTS is certainly not going to be material compared to the much greater size of our acute sub-acute market..

Our next question comes from the line of Danielle Antalffy from SVB Leerink..

Just a one question on the TAM expansion. Great to see. I appreciate you guys did a lot of work.

Wondering if you can give a little bit more color on sort of where the confidence is behind these numbers? I don't know, if it's a way to -- like, is it claim status? Or how confident are you in these much higher numbers now? That's the first part of the question. And then I have one follow-up..

Drew, you want to take that one?.

Sure. Yes. So Danielle, we spent several months kind of digging into the TAM estimates. As your heard Bill describe, the previous estimates dated all the way back to 2016. So those numbers were getting pretty stale. We reset to 2018, 2019 numbers, we wanted to avoid any noise from COVID and the '20 and '21 numbers.

And we used three different datasets, claims, datasets from three different third parties to really triangulate on a better understanding of the total addressable markets for both DVT and PE. We certainly had good insight into the Medicare patient population.

But for the first time, we're really able to sharpen our pencil and get much better insight into the private pay segments of the two respective markets. And then we roll forward from the '18 and '19 timeframe with a modest kind of 2% assumption around just incidence growth, population growth, a little better diagnosis.

So you put all that together and it resulted in the numbers as Bill described 200 to 80,000 target addressable patients for PE, 430,000 on DVT. We think we're someplace less than 4% penetrated into those two TAMs. So plenty of runway out ahead of us. And we feel pretty confident about those estimates.

We spent a fair amount of time as you heard me describe. So we feel pretty good about the amount of work we did and the resulting estimates that came out of that..

And just if I could add to that, and I do have one more question, sorry. But just on the diagnostics, I mean, is that a part of the story here long-term too, there is an opportunity. So we're talking prevalence numbers, and you have 2% incidence growth or what have you.

But with higher or better diagnostic capabilities potentially, even higher incidence growth, is that a fair way to think about it? Or am I getting too optimistic here?.

Yes. I think that's a fair way to think about it. If you didn't think the 96% was compelling enough, if you're looking to bump it up north of that, I do think awareness for sure is leading to more diagnosis, as well as potentially better diagnostic modalities, better approaches to understand.

So I think all that's factored in, but I think no matter how you slice it, there's clearly a huge market here, even larger than we had appreciated in our previous forecast, and we're just barely scratching the surface. I think that's true no matter how you slice it. .

Got it. Okay. And then another thing I was curious about, is really how the VTE Excellence program works at the hospital level. So appreciate, at a high level what you guys are doing out there. But if you could give us a little insight into what actually happens at a hospital when you guys are implementing this program? Thanks so much..

Yes, thanks. I'll get started. Let's fill in the blanks with some of the details. I think the first thing to recognize about this, about VTE both PE and DVT, it's a lot different from stroke, for example, where you -- there's a really important time, component time bringing and all that. There's -- this is not an ischemic event.

So we don't have the same sort of time component except for a small percentage of the PEs, with that the mass of PEs, where time is really important. The more important difference though is that we don't have to go outside of the hospital to find them.

I think there's actual education, techniques taking place, education efforts taking place in stroke too at the county level right down to the ambulance drivers to make sure that patients get to the right centers and so forth.

Our patients seeing the most maddeningly simple way are at the hospital, that's where they're diagnosed, they're at the hospital, and at the same time. At the same time, hospitals in many cases have designated a group of experts called PERT, for example, that's the hospital designated PE experts. Patients are there, hospital will have experts.

And we somehow failed to connect those dots. So VTE Excellence is surrounding that problem. The simplicity of that problem is maddening. And the execution is, as always, is the key to success. You want to dive in with detail. .

Yes, sure. So Danielle, maybe I'll just describe what that work kind of looks like at the account level. I think that'll get at your question. So if you think about our 1,200, closing in our 1,300 active accounts, now, they're all in some stage of evolution towards what we hope will become ultimately a center of excellence for VTE.

The vast majority of our active accounts are still in the early days of that evolution. And we call that phase the Engage phase.

The kind of work we're doing in the earliest phase of this VTE Excellence for those engage accounts is really focused on building the foundation, getting the product through that approval, getting inventory purchase on the shelf, initial in-servicing for the interventional team, getting solid initial outcomes.

We've got a group of health economics and market access professionals that can make sure the account understands the coding and the billing information that go along with our procedures. And as a result, all that work the penetration into the TAM at the account level in this first group, this first phase is in kind of modest single digits.

So just getting started and building the foundation. From there we move to a second phase of VTE Excellence. We call this group the Empower phase. And this is maybe a couple of 100 accounts across our account base.

This is where we really begin to do a lot of training and education and awareness building, not only for the interventionalist, but the non-interventionalist stakeholders that health care for these patients. So the ER docs, the pulmonologists, the intensivists, all of those other caregivers, making sure they're aware of these new treatment options.

We have a group of natural account managers that in this phase engage with the administration at the hospital to make sure they understand the health economics and outcomes research. They understand the economic value proposition and are hopefully beginning to actively invest in program building for VTE.

The result of all that work ends up with penetration rates into the TAM at the account level someplace in the double-digits. And then the final phase of this work under VT Excellence is with a group of accounts that have begun to actually emerge at centers of excellence for VTE. And that group, we call Excel.

This is an area where begin, trying to proactively support the placement of VTE coordinators. As you heard Bill describe, we have got 50 some of those now established across the country.

This is where we leverage our Inari Solutions Group, which are formal hospital administrators, which can come in and do benchmarking and best practice sharing about algorithms and care pathways and order sets.

This is really where the treatment of VTE begins to feel like a quality initiative at the hospital, and ensuring that all these patients are being identified and treated in a consistent manner. That's really the flavor you get in that final group of accounts, and we have got a couple of dozen accounts that have made it to that stage of evolution.

And the TAM penetration in that group of accounts encouragingly is 50%, maybe even 60% of the potential patients that could benefit from FlowTriever and ClotTriever. So lots of encouraging signs. We are on the right path here.

We have a systematic approach to all this, but even at our most penetrated accounts, obviously still quite a bit of a runway to continue to drive the penetration even further..

Our next question comes from line of Larry Biegelsen from Wells Fargo. You may begin. .

Hi. It's [Leigh] calling in for Larry. Thanks for taking my questions. Just on your guidance for 2022.

Can you give some color on what you are assuming as far as DVT PE procedure volume mix, volume mix for ClotTriever versus FlowTriever and any color you can give on pricing assumption, ASP assumption for the year?.

Yes. [Leigh] We are thinking about 2022 pretty consistently with the way the business operated in 2021. There could be some reversion to the kind of prior mix in terms of procedures and also revenue having to do with a little bit more DVT mixed in.

As you know, during the past couple of years, there has potentially been more PE in the mix due to COVID, and some other factors that were kind of related to hospital conditions. So that's kind of the way I'd respond to the procedure mix and the revenue mix question.

And then, with respect to -- I'm just trying to think there is anything we can add there about other aspects of the guidance for 2022. I don't know that the pricing is really expected to change in a significant way during 2022. We have been successful as you know adding new products to the FlowTriever price per procedure.

So, on that score, we have actually kept the price very stable because we have added a lot of value to that, basically toolkit, if you want to think about it that way, over the past couple of years. And we may be looking at some additional tools for the DVT and sort of tool kit, if you want to think about it that way as well.

So, we're looking for stable pricing in 2022, and that's been something as based on the hospital economics that Drew was talking about earlier. We have a pretty good experience talking through the economic story of our two products with the hospitals by avoiding the use of thrombolytics.

We keep the patients out of the ICU and whenever, as you know, the patients end up in the ICU with the thrombolytic product and that's a loser for the hospitals, and we are pretty successful telling that story and helping everybody understand it. As we'd like to say, the patients love it, the physicians love it and the hospitals love it..

And just continue on your guidance. Any color you can give on the Q1 seasonality. I mean, historically, your revenue obviously grew from Q4 to Q1, pretty sizable step ups, as we look to Q1 '22 that COVID component 10% to 11% of the cases last couple of quarters.

If that goes away, or decline significantly, I guess, how do we think about that seasonality if that continues into Q1 this year?.

Yes. There's a few things wrapped up there I think. So, first of all, we came up -- Q4 was a really strong quarter a number of different ways. I think that's the comparator, so that’s -- it’s tough comparator. There has been a little bit of the staff shortages, all the things that our peers have reported, we faced also in the early part of the quarter.

And as I said earlier I think we may already be seeing an improvement in the operating environment. So I think, you'll see Q4 or Q1, we are -- at least, the lowest growth in Q1 and we will accelerate throughout the year. So a few puts and takes there, but we feel pretty good about sequential growth throughout the year..

And if I may just squeeze in one more on the clinical side.

On the PEERLESS trial, any thoughts on how long it will take to enroll the patients? Are we talking 12, 18 months longer? And ultimately, is this something that you're looking to add to the label?.

So first of all PEERLESS being run for no specific regulatory purpose. This is really to provide data that we feel will move the space forward. Its 550 patients randomized one to one FlowTriever versus catheter-directed thrombolysis. There's also a separate registry arm for 170 patients who may have absolute contraindications to lytics.

The enthusiasm in the customer base for this trial is intense. We're seeing a lot of excitement about it. We think the enrollments will be high. I think the estimate that you gave 12 to 18 months, seems quite reasonable given what we're seeing here..

Our next question comes from the line of Marie Thibault from BTIG..

I wanted to ask a little bit about your territory expansion, adding close to 75 territories or so in 2022.

Help us understand how much of that is actually adding a focus on new centers and increasing your hospital count and really splitting up existing territories and kind of try to dive deeper within existing accounts?.

Yes. I can help with that Marie. So it's true. I think by and large the focus of the territory adds at this point is much more on driving adoption and penetration as opposed to necessarily adding new accounts into the mix.

As we split territories and at this point, essentially all of our new sales professional adds inherit some type of territory split, so they're inheriting some group of accounts from an existing Inari territory and hopefully building from there with some number of new centers as well.

But as we complete those splits, the idea is to position both the legacy rep and the new rep into smaller and smaller territories, fewer and fewer accounts, so that then they have bandwidth to do the kind of VTE Excellence work that you heard me describe earlier. That's really the focus of these territory splits.

Yes, we're going to continue to add new sites, you heard the updated estimate that we have of the number of target accounts in the U.S. as high as 2,000. So we've got kind of middle innings to go still on new account adds. So yes, there will be new account adds.

But the real story here is on driving penetration, adoption and position reps to do the kind of VTE Excellence work that you heard us talk about..

Okay, that's really good to hear. And I have another question I'd like to ask sort of on spending and priorities there on the OpEx side. But before I get to that, I did want to ask really quickly, I’ve recently received a question about large bore catheters and they are use in severe pulmonary hypertension patients.

I'm aware of the IFU that's out there, but haven't heard anything more.

So at the risk of looking ignorant here, I want to ask you, what am I missing on that front? Anything on that topic?.

Marie, it's Tom here, I don't think you're missing a whole lot. We've heard a little bit of noise about this recently. And quite frankly, I'm quite surprised by it. We are the leaders in the pulmonary embolism space and we've identified patients with severe pulmonary hypertension, as requiring special care, special considerations.

In general, no matter what therapy you use, these are patients that are sicker than most and require a great deal of concentration on the part of physicians. So all of our education, including the IFU description that you mentioned really are focused about educating about the disease state.

There's no specific device related safety concern that we're raising there. In fact, if you look at our FLASH Registry, we have over a third of our patients in FLASH being treated who happened to have severe pulmonary hypertension, and their clinical results are excellent. We treat these patients every day, we treat them safely.

So we think that this is -- it sounds like a lot of competitive noise and sorry to digress a little bit, but frankly, I think our competitors who are raising this know that because they've excluded those patients specifically from their clinical studies. So they know they're higher risk patients and I think to bring it up is a little disingenuous..

And just to be clear, it's competitive noise but it's not having an impact in the marketplace?.

Not at all..

Let me ask my last one here quickly. On spending priorities, you're expanding territory that sounds like you've got a lot R&D in the pipeline.

What should we be thinking about in terms of how your priorities in spend here in 2022?.

Marie, I can start on, add one more detail, maybe Mitch can fill in the blanks here. I think I wouldn't characterize it as prioritizing spend. We like all of our children the same. These growth drivers are all in the infancy of potential impact on patients and on our growth rates.

So I think you'll see we communicated more specifically about how we will definitely -- on the first to growth drivers in terms of new sales professionals and keep in mind our investment in new sales professionals has actually probably produced rather than consumed cash in the past, have been very, very efficient based on the productivity of our sales professionals early in their tenure.

So we'll continue to aggressively invest there along with some infrastructure on our sales organization, as we described in the prepared remarks and as Drew described for VTE Excellence. I think you will see an increase in the spend and probably an increase in the percentage of spend on both R&D and clinical.

Again, those growth drivers we think are really, really important, especially over the long haul, and we continue to build out our international commercial organizations for all the reasons we described in the prepared remarks as well. So I don't know that, I'd say, we are prioritizing one over the other.

But I do think you will see an increased spend. We are really, really aggressive. We are -- again so early, no matter how you slice and dice the big -- the size of our TAM, we are in the very early innings, and it's going to require some investment in all of these growth drivers to penetrate..

And Marie, maybe I can just quickly add, we have been I believe operating income positive in say six of the past eight quarters. So, that was kind of odd for a CFO to say something like this, but it's almost been by accident. We have been funding.

We are very, very productive, and we have been funding our own growth, which is kind of puts us in a class of one of one in terms of the medtech universe doing that. Bill talked about the areas, where we are planning to invest very aggressively.

And I think as I mentioned during my comments in the script, we are planning to even put the foot down on the gas more in 2022. So we are very excited about the opportunities to continue to distinguish the company in those areas and to pursue growth as Bill has described..

[Operator Instructions]. Our next question comes of Bill Plovanic from Canaccord. You may begin..

Hi. It's John on for Bill tonight. Thanks for taking our questions. I just wanted start on O-U.S.

What countries do you have initial commercial infrastructure in place and what countries do you have reimbursement today? And which of those countries do you think actually need some more improvement and priority in terms of reimbursement?.

Yes. John, it's Drew. I can help you start on that one. So, we have got a commercial footprint built out now across all of the major Western European markets. So, France, Germany, UK, Switzerland, Austria, Italy, Spain, the Nordics, Benelux.

We have got either a combination of direct, indirect or hybrid commercial infrastructure built out across all those markets. We have done that over the last year and a half, despite operating with all of the headwinds associated with COVID.

And we have seen really nice sequential growth month-after-month, quarter-after-quarter, good enthusiastic feedback from the docs, same kind of unmet need that we see here in the U.S., clearly same dynamics internationally and particularly in Western Europe. We've got some more work to do in some of the markets relative to reimbursement.

You heard Bill describe, the positive news we got recently on the NUB in Germany. You may know that's an important reimbursement mechanism that allows for enhanced reimbursement. So we've got that established in Germany. We have got good reimbursement in Switzerland. We have got some more work to do in France for instance, in Benelux for instance.

So that is associated with the long-term reimbursement foundation between here and there and some of those markets where we do have additional work to do.

We will be able to access local level budgets, hospital level budgets, regional budgets in a way it will allow us to continue to get commercial activity and commercial traction in those markets as we work towards that longer term, more established, market wide reimbursement that you've heard me describe..

Thanks, Drew. And probably also follow-up detail on this one.

But what percentage of cases today is FlowStasis being used? And are you seeing any adoption outside the core markets?.

Yes, it’s -- I'm not sure even I have a number. It's fairly modest. It is part of our per procedure price package within the FlowTriever case mix, so it's available for use. And we do see a modest amount of FlowStasis being used in our core PE cases, some in DVT as well.

We haven't necessarily made a big commercial push for its use outside of our own procedures. But there are obviously other large four venous access procedures where FlowStasis does fit nicely. And we do see some of that use alongside our own procedures as well. .

Thank you. And that will conclude today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day..