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XENT Intersect ENT

Participants
Randy Meier Executive Vice President and Chief Financial Officer
Tom West President and Chief Executive Officer
Robbie Marcus JPMorgan
Bob Hopkins Bank of America
Jaime Morgan SVB Leerink
Matthew O'Brien Piper Sandler
Chris Pasquale Guggenheim
Brian Weinstein William Blair
Ryan Zimmerman BTIG
Kyle Rose Canaccord Genuity
Call transcript
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Operator

Good day and welcome to the Intersect ENT Fourth Quarter and Full Year 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Randy Meier, Executive Vice President and Chief Financial Officer. Please go ahead.

Randy Meier

thank for and call. on Keith you, you participating all today’s Thank

me President West, is CEO Joining Tom ENT. and today of Intersect

outlook begin, without laws. clinical statements result and materially Actual from to as like and timing studies, make to a the I SEC. procurement time-to-time current from anticipated as growth, limitation, sales could that disclaim We which for or based results of uncertainties, we differ coverage, approval force events well and of or detailed the meaning Securities will forward-looking financial within any revise forward-looking our indications of risks which in remind Federal of in the herein. any those our those of obligation new we the performance, include and statements Before statement estimates you upon would update and such forward-looking as contained risks products and reports assumptions reimbursement undertaking we codes other with are file

I will Tom. call the now to over turn

Tom West

early a goals with and XX% the January, million in end, gross revenue full and $XXX I to the revenue to To we good Randy on saying today. call solid meeting all year for to those of $XXX underway, ourselves. guidance year set you, thank is out you margin to can focused morning our Thank XXXX offered ENT off XX%. objectives that we’ve Intersect feel start XXXX confident confirm joining well that the year I full in and With and a million fully between and of

it XXXX focus wish XXXX me the the confidence we on might we my XXXX. earnings part accomplished and much about enter as call, as However, to is continue why will XXXX I QX of to latter what gives in comments I this as as talk

great company. I than when The I and elected to excited ENT’s was am the ENT, state Intersect reputation First, Intersect about an months And portfolio I positive a join and have getting I most ENT. the outstanding me working among to the truly benefit attractive now, last large had evidence have current attracted and remain that as more significant elements the an all growth today. to of Intersect summer novel and solidly pipeline. over innovative We last let physicians of company, me the clinical technology, criteria of teams of talented board openly that committed prospects today engage potential the as well products closely these at here each X and terrific talent know and of with market,

As and presentations XXXX draw. you, strengths is there we to in have to But foundational which I to must we realize our work still are do many said look full potential. as there calls from many in with beyond and of recent

PROPEL is that while With to that backdrop, and necessary, past differentiated and clinically SINUVA to is most best-in-class level compelling. strategies it as evidence that from notion clinical seek. insufficient the are plans months X the informs and this perhaps simple striking is unto growth the we drive insight itself our technologically

products where offer However, developed We the selling Clinical in drive to examples evidence physicians, and penetration and sustained is itself must we strong best practices. adoption, deep evidence to full use double-digit clinical is crucial. their and not also evidence by how of market sufficient growth. consistently compelling our

it infrastructure perhaps efforts selling clinical the and actions strong access back of our that and you products access targeted with makes the that of more into to evidence, importantly, need as and easy they market access XXXX in appropriate and our half ensure XXXX. guided via our informs addition institutions might to wish. In products physicians and The for market payer need simple ensured procure insight reimbursement unencumbered combination our going use we to

be and solutions both development end, for of To we our commercial our SINUVA basics needs The at physician our physician of obstacles identify can in coverage we focusing and the sales to individual market will began capture we field more currently and how to systematically recommendations, a and to for to in intentional products efforts allow effort back individual basics the physician continue individual chronic enabling granular prioritized tailor that and physician have rhinosinusitis. and better that We they start forward. that us These clinical clear more and time. by started doctor nature level our insights and treating as specific go of over with execution XXXX novel the on rigorous understand PROPEL universe selling XXXX moved reimbursement segmentation additional payer level to level. use coverage to use data products

very clear, is and of organization be To Intersect sales the our deep talented ENT has markets. the understanding

physicians opportunity commercial in strong But believe the an we truly data may deeper and physician have We to serve. drive game. grow and in and and the our and practice penetration well-established relationships and XXXX the The execution with beyond to also institutions we differentiated growth. payer field rekindle I enjoy up to drive insight strong our use and enhanced knowledge of greater relationships will expand

roles, XXXX, performance. sales rewards that tied direction in further to will commercial addition and we In refine the

both the medical a a challenged as to With use delivering combination The product in time offices, PROPEL, in the a we at ASC SINUVA, same support drug for pulled multiple SINUVA. of was were regulated the sales with organization launch the directions. while device hospital in

ENT learning, requirements our of XXXX. drug frankly, in do in therapy we SINUVA. with have to With infrastructure necessary quite and not offices of addition, we In this support changes important place spite initiating previously in adequate the best made efforts, in

on selling focus in of sufficiently improved with PROPEL our In and appropriately sales late proportionately models addition and that SINUVA. the we ensure XXXX to the to we of launch franchise, market aligned half did and driving development, clinical analytical XXXX force and in we reward insight, were something our not front

the to our further to time, doing of and penetration of sales redeployed our focused so, infrastructure. core engaging while in third-party access to our drive rewards we bulk all aligned expanded At best team business. PROPEL now clinical our needed specialists address The around much effort the growth force executing SINUVA, needs SINUVA is in appropriate are of talent return incentive majority PROPEL surgical additional of specific and procedures. for unique same core to the strategy to In selling sales on market the and the provide and

the while we additional also payers. of in for SAMs, strategic teams support on we office reimbursement ENT reimbursement story of supporting in XX QX local Specifically, ENT directors, per the added setting. clinical managers, account to the with last Two, RRDs, selling with access SINUVA to and XX staff maximizing in charged it office. SINUVA the on field appropriate office regional national and Intersect this month interfacing XX our And an at reimbursement in coordinated, focused, mirrored and and deployed employee also region clinical and sales trained focus guidance the procedure processing SINUVA one ease structure sales finalized We to meeting. seeking training

the hub to October, went patient coverage of a new SINUVA. determining insurance extent ENT support and staff also in we for In with nature patient office physician live

complement existing also our capabilities. We on brought pharmacy specialty board to a new

process manage in insurance to benefit as of used for adjudication new selected go was specialty seamless in their both payers our support payer to and our designation, by partner December. augmented thereby take Likewise, of by SINUVA. more pharmacy and medical designation distributor product. SINUVA access adding ability can our Our physicians believe Regardless benefit through covering capability McKesson specifically they providing we we the delivery now office better a we

and now for with J alike. J specific our the payers. a published XX% therapy landscape initiating our benefit No The QX there in streamline and reimbursement code Commercial lot and reimbursement and the and of J physicians code around office. of with and a made of experience receive Medicaid code utilization a while the live see of to the for we under the we we the payment especially using last Finally, CMS to to increasingly field teams. the commercial our we yet have furthered code, their and for have also doubt went complexity J have serve much in payers disappointed patients clearer navigating adoption remain Medicare. rate we SINUVA reimbursement the year created in of path learnings covered role the and clarity But to simplifying physicians we are is investment drug population greater new from we new substantially was that

to efforts renewed a have Reflecting as ENT product proud on return demands approach XXXX, I With Intersect in preparing drug our have brand we our and the a adopted of are more team’s our the the With of therapy foundational force the company. to accomplishments with PROPEL, on proportionate in of for growth importance sales of was in XXXX. am office. PROPEL that the go-to-market initiating SINUVA, more consistent the we

specialist do have capability alleviate the clear, past assistance be provide by a to SINUVA of and not the establishing point. sales finely-tuned distraction and customers. have to clinical office-based We at the To teams aligned force to SINUVA we reimbursement specific machine this our

and To the our are in each great SINUVA we growth of enhanced objectives that we we of in end, noted, getting and of both and PROPEL the market go-to-market are committed are are invested out infrastructure XXXX. strides access in you clinical made Bottom this execution XXXX the the have of As and SINUVA half built one the front have as for still well accelerated half foundation overall our back over meaningful year. refining penetration reflecting have for the as upon SINUVA the growth utility further laid but in gears, investor sand XXXX. market commercial confident to asset and we line, model

sustained view, presented to claims, of the briefly our my substantial product the like important R&D, The we substantial deliver ASC excellent delivery the an innovation our the organic, to line the innovation, I a moderate delivering innovation compliment SINUVA in It’s our opportunity claims of drive let’s steady and area from and procedure as platform pipeline. growth. conducted drug and term to offers in believe steadfastly it publications the drug-coated conference on the to and In of incremental a across this see market. and and of office. in platforms bullish extensions remained is cadence a more importance platforms. product continuum future PROPEL In and posters. SINUVA there balloon sinus Now, new balloon longer to new news new look growth by to consistently and drug-coated PROPEL and continuum localized in hospital, to drive

Intersect balloon. ability PMA demonstrated and trial clinical FDA teams statistically forward. versus the conventional ASCEND significant week with reduction provide to greater and edema balloon regulatory ASCEND with next discuss to meeting steps inflammation drug-coated polypoid balloon appropriate and drug-coated this the our ENT’s are Our our to a bring in requirements

We when will bullish. those appropriate but and available, we learnings share as are

We longer delivery cases. in development innovation and in drug work high We the different also human discussed XXXX, at animal allow that should level this funded used a trials January very in publicly on format for studies promise XXXX XXXX that a offers further in the fully localized platform more of initiate sinus completed future. are in to albeit in early a us acting for

but needs Beyond larger extensions respective was variance post-surgical Both balloon, Mini an in a address product and with able PROPEL product for drug-coated to the SINUVA platform lend expanding is play to their core important Contour. PROPEL, our range of ENT lines. line broader themselves the Intersect and complementary, role further offerings of technologies. of PROPEL platform innovation, distinct there to

the of enhancing additional to internal in work economic funnel offers provide evidence. our health innovation broader an inform clinical as this to our well Product expect evidence coming utility innovation claims We years. avenue as

front focus can product intentional claims supplemented and with innovation acquisitions. and determined further road be our down Lastly, complimentary on the tuck-in appropriate and organic

is designed ensure some incremental growth. sustainable together, of and more provide a substantial some Taken long-term this to drive innovation, and to strategy steady cadence

innovation, is to of to believe well-positioned access integrated I innovative the and levers to execution, ENT of continued player from comprehensive technology transition and time With an dual the with more enhanced over coupled commitment company a scale. commercial company

need will and However, right as by consistently we commitments. on our executing earn with plan, that every aspect of this delivering to

XXXX. like a out call to I final Before to Randy, few would over close the I hand observations make to

believe First, that am I truly ENT bright. at excited to and be to as I have is mentioned, continue already Intersect future

culture be the our certainly is of there and we While for growth in foundation marketplace, of teams. commitment the and and the is the more present work done, have unmet reflected foundational to products the needs

development half second entire guidance, the how our in the proud commercial provided to efforts infrastructure organization together XXXX. PROPEL our came am market around as and revised primary really basis the in XXXX guidance. basics and both rallied with of revised XXXX our And teams initial our confidence back for Second, objectives to of access while these the we to us Achieving objective I XXXX. and growth SINUVA achieve a establish

for want Third, at XXXX. and business in last time importantly uniting Lisa, I thank and transition. demonstrated and lot The return And the has of decade. the service to the past our of a a our year. to year, perseverance. most built easy, the at assistance to end, the transition wanted role also one steadying engaging this I leadership entire meaningful with pivotal would day-to-day and This Throughout company confident the for of Chairman, into retirement leadership especially Kieran acknowledge I commitment the smooth together the Kieran and the all her growth technology played that organization I remain around And teams provide leadership organization a endured Jeri’s her year entire more into stepping thank the is behalf team. to start in to operations company, the grip to for at of never interim our thank a of the over ENT in and Gallahue guidance. Intersect to the a we board and and Executive his Overall, ensuring and testament the transitions provide to throughout series grateful. Jeri while thanks in we others year support future, personally transition that’s the guidance leadership in deeply like speaking future providing in outlook special for from am more a to on our

to to me you now Let Randy financial our call results over take our turn and the through outlook.

Randy Meier

I overview income summary and statement. our morning everyone. results Thanks, would like top financial of Tom to more little start line a on provide and good our with a then detail

$XXX.X Intersect of year. XXXX the $XX.X X% from XXXX. quarter year call a full Net increase of second were reported of sales for were of X% over the in August million, the results with These the year net sales XXXX, prior decrease an the the the guidance $XXX.X million revised provided in of fourth quarter that of million ago. the company line of in in

in we mentioned, to to stage this the SINUVA growth performance return believe franchise business. the Tom to has to set PROPEL As and begin our see meaningful gains

gains areas, For while see from in the up X% XXXX, in continued levels. year, pricing all was to X% company spot XXXX ASPs by price our a $XXX declined the bright aggregate across with by in $XXX, volumes to product from XXXX, improving

XX% year fourth in Our gross quarter was compared the period profit the of a to same for XXXX margin XX% ago.

over sold to the levels For a for goods XXXX inventory of margin XXXX, gross in strategic cost build to quarter costs costs margin our impact this XX% units. gross margin compared revised consistent decline More decision unit of was The our full in year spreading by our from on most XXXX in a larger significant in and XXXX. a was reduced resulted the with XX% guidance. year volumes decline the production number gross in recently, our fourth fixed

cost higher absorption consistent in product level we believe ahead, will relatively be incrementally lower. of will result which will rates as sold volumes remain Looking goods

to to the expense XX%. changes $XX.X million organizational increased expenses in XXXX, increase increase $XXX.X is the expenses and X%. work expenses growth an increase R&D million an $XXX.X full and $XX.X access the increase for the operating related balloon XXXX the leadership Total of drug-coated were fourth for The long-term XXXX SINUVA year million market Operating to cost were an associated of in million, organization. in increase versus quarter related to following: compensation support with the in and compared

in million net XXXX. a For of loss loss generated a net or of $X.XX the $X million, to share the a net or per million fourth operating diluted diluted of quarter compared of per of loss fourth XXXX, share quarter a loss $X.X $X.XX $X loss of of we

a For per year loss it’s earlier a a $XX of XXXX. diluted in million parts share At $XX.X we per a point, net the diluted worth this that $X.XX of XXXX. the loss we at loss that of of of the $XX.X full in held we share certain believe or million mentioning loss This $X.XX. accounts excess corrected most of net operating XXXX, net a to inventory of loss compares million, have generated was of or

and precisely environment, these headwind business first seasonality reimbursement While we evolving of beyond our be it’s the difficult this quarter ascertain levels as we believe given the a to the of always don’t should XXXX.

our prior cash Partially to our financing in XXXX increase cash million XXXX and $XXX.X the increase an was use cash in the year. compared in cash increase Now, purchase sheet, end million employee to $XX.X from last exercises million, equivalents turning balance and year, mitigating in cash, $XX.X year cash to stock while totaled due to at restricted of an equity operations was from activities from program. company’s continued participation the the use

like I we year. to this outlook earlier the reaffirm would XXXX provided Lastly,

million the the in revenue revenue As with And in in gradually XX% improve million half are range. with expenses we growth the year-on-year to expected declining expected be expected versus range XXXX. expected to half year second is quarterly first to $XXX XX% of a margin $XXX be year to range of of in of operating indicated improving year million period. to finally, Gross the be in quarterly margins flat to the to the before $XXX first a the throughout reminder, largely quarter million and the with ago revenues $XXX XXXX

Tom. back Now, I to turn will the call

Tom West

Randy. you, Thank

for and providing to XXXX I on commitment I the information as performance questions, the comment move year. our call Before incrementally want we open more to throughout

capabilities. data analytics will our this still we have out as investors infrastructure, discussed, It allow is drivers. business into the share As data vetting investing and access commercial the as to of leading core and our investments us the we similar are but beneficial in building These of status, serve days that believe we to progress with this will and market we insight in performance future greater early be of foresee. progress in get some this indicators or will

that committed future, transparency. We interest to for Intersect our about are we on and grateful your promises in to our delivering optimistic committed Again, are ENT.

would Now, the to call over the your for questions. open you I like turn Keith, would call back to the operator the please open and lines?

Operator

you. thank Yes,

We begin the question session. now first And with comes the question-and-answer Marcus [Operator Robbie JPMorgan. from Instructions] will

Robbie Marcus

any Great. Thanks into place the since you months did the is taking have made processes you a almost changes place? improvements you it for you now put question. to have on able few put to job have the outlining past the in you have comment in great seen you Tom, March are these

Tom West

provide Thanks, we call I momentum feel it we as us. and got get your for in in behind be skies are feel as we I be don’t nice and question have bit get it and as get it to this given into already we want feel Listen that continue will momentum me evasive at where reminding premature momentum behind good close but confident why appreciate on to how data with further have more said I Robbie. us as have kind very we good keep would year more are performing and that and but want my over we of the to to is a but about the data it progress good to we call. comfortable the guidance I we to we go confirming it the we I feel behind various

Robbie Marcus

gross as today flat gives the on Great. sit you up improvement growth that as that about will should accelerate year be what margin with looks here question you a be same year and then our for the And maybe linear the the part year throughout just confidence quarter it as well? like over we to follow your back to you it first year going Thanks. of is improvement able over now to think

Tom West

are in the we gross over course improve as noted it to really XXXX out Yes, the of put in expect that with most year fourth that momentum we the pronounced of that’s we elements particularly in we and then SINUVA going expect through too linearly strengthen dip model correctly built should and work we would fashion so inventory towards to on not downwards of Randy in I working a dip quarter it new relates the that of revenue gross in you linear think of that as in QX, part later market most in heard was kind to still level reach a place the the probably as to in the margin a then of our QX take recovery the back in as part year go terms QX. QX is that and margin infrastructure

Robbie Marcus

Great. Thanks lot. a

Operator

Thank SVB from you. Newitter next question And with Richard the Leerink. comes

Tom West

Richard, Richard. there? are Hey, you

Operator

open. is line Your

Tom West

Rich, you might on be mute.

Operator

then Hopkins the we Bank America. on question from of next with Bob move Well, will come Okay. will to

Bob Hopkins

and good morning. Thanks

Tom West

Hey Bob. you? How are

Bob Hopkins

Good, good.

quick Just me. for two ones

into thoughts fourth of the year exiting of quarter kind seems if must year given be offer may fourth ahead Randy you looks it the course on revenue question second is And in on upfront had it and growth well assumptions throughout or the just of been a second comments of the reasons say as is be that structural XXXX market XX% then wondering maybe original couple those around like is that why different go just any of not so I by a any had and and adjustable the your thinking wondering expectations could lot and as seems like color kind question reason of also of called there analysis is of just the the other size but that. have you expected the after if I original realize that just ago for more launch now market on it company was the of perhaps updated lot up has exiting of SINUVA originally been many opportunities. set the months First that we it’s that growth gone the just on been comments company cadence to a obviously there the XXXX of is why relative quarter kind asked it assuming the the little that I you of a is the

So any comments on updated thoughts on the market Thank opportunity for SINUVA you. would also be appreciated?

Randy Meier

be Bob. to regarding Sure. have outlined good it’s think the comp But think year Well, growth, it’s since while quarter difficult to his first the with over. back we Again in that. very comments, had nicely a a with got I been chatting you, I do Tom it opportunity our I

gradual are expectation. year from aggressive of And flattish a my type little side I the growth XX% seeing on year, kind growth throughout bit think we then is So a the there. ending the probably

to in single the looking I with as up are get double-digit think so a we type high have finishing level that guided sustainable at I XXXX. we low year we think to growth

rebound So bit slightly a addressable learning of say, more right the revenue I than still a going side. you am what I’d suggesting the are gradual market, now. sort I’d From on growth see of curve a through

talk significant in let am from change the and SINUVA reorganized to market, to feeling a growth. perspective. about has our really I have talked have Tom had Tom going I a been team little the address that about we but don’t think this indicated lot bit that about think addressable we I

Tom West

is bilateral per would the market. eligible per with the $X,XXX with a simple there PROPEL times procedure past numbers drive there million FESS The $XXX we good that PROPEL is Yes, upside be believe But in it’s and we which as at that think question certainly for Bob, XXX,XXX placement one at are if market is significant ample that the PROPEL, well. key SINUVA XXX,XXX we’ve in I a company. of would is to used $XXX a wrestled growth total – surgeries, be have the XXX,XXX

bilateral revision that almost patient, in number number for half now of $X,XXX matters $X.X you SINUVA $XXX thing that total that revision to there million apiece If market in to number is of capture million I being that or substantial surgery tens the $X,XXX patient would cut in matter. procedure, sold myself that be particularly at of is that’s available The eligible the where opportunity polyp or of maybe we in think as polyp or going revision for doesn’t that you could is a XXX,XXX need say for that still and surgery, marketplace. more a XXXX. remind is only case. all The opportunity is There millions intervention,

have to got go it. We earn

confident drug We place the and tripped doctor’s stumbled the now over initiating we the have certainly challenges feel in I that. of office. that therapy have tackle infrastructure in necessary to

than gears But to much well I what the my opportunity would that is we market getting what realized that sand of have as to-date. as way to like. to us that momentum make like on take are would we the now in still begin feel see bigger work out said to I a are a comments, in As we starting we allow

Bob Hopkins

Great. you. helpful. Very Thank

Operator

question an Thank SVB with the from is Leerink. attempt you. Newitter next And Richard

Tom West

Richard. Hey,

Jaime Morgan

This Jaime Rich. is Hi, on guys. for

Tom West

Yes, okay. Got it.

Jaime Morgan

Sorry about that.

to commentary mentioned, over So improvement had just SINUVA quickly the the going back for of linear year, the Tom, year. course your around expectations you

through of little little of so about back amount in really be or the then the bit on kind with in revenue could first half dollar does was a So of XQ kind I XQ mean year? basis dollar bit a more the ramping consistent wondering year thinking sequential we should the you half quarter-over-quarter maybe us of a and moving if calibrate this improvement more, just off

Tom West

Yes.

deliberately been So it. we haven’t on haven’t that – and specific

that around our we said first taking fourth specialty sales the it SINUVA investments have the place end and put is at the force would relatively have think off that the and we particularly and to with our be given being made, premature were deployment quarter flat, As suddenly quarter. of capabilities in pharmacy hub

then and slower which of your instincts thereafter is a right think I go acceleration into ramp year. the are QX coming as we out

Randy Meier

also is a like remind just And I’d seasonal. the little business everybody to

is at sometimes the sequential from of growth challenging, that. So reminder a to quarter, the particularly of looking bit just first sort so quarter revenue fourth

Jaime Morgan

it. Got

Okay.

in guys you impact – have to of assume same the maybe is is with with kind sort things the some is said fair XX% at think of PROPEL I least inventory past fair it’s still build? kind as that of there XQ, lingering that business, the from dip, the especially a

Randy Meier

I Well, think we’ve….

Jaime Morgan

down… But inventory was the

Randy Meier

as way. seeing not sure I a dip, it looked I at that go far as am haven’t XX% probably I

don’t want comment I past couple – the reasonably over PROPEL with to has continue the year. nice fairly So would on to But the the but to side, SINUVA growth well business of throughout see we years. on see the seasonality expect we think particularly I precisely, documented, been

Jaime Morgan

to whether likely adoption Okay, for think and and my over could the for going pricing And it potentially a provide amount then just bit question just specifically more SINUVA you second around great. be the detail as That’s SINUVA, to blended is what ASP time? impact could just is on there the a Thanks. curious this you product your how little for helpful. CMS thoughts if

Tom West

seeing. we so it early are I that providing mean of heard with be the pleased out the rate already own now greater kind J we XX% be to patients of reimbursement we that rate the commercial gotten are seeing their I point you to CMS, by am code whether rates continue counsel been payers we adoption be next of would we a with to and this time to have mid rate support this rate or the to were and rate April a of be I much the is with outside can regard that published in us J announced code are am reimbursement we their baffled haven’t honest when SINUVA in on that to it me ultimately the bit work surprised it but blended have we and implementation even to in with to breakthrough would again related that CMS folks am frustrated march I going I lobby my call not the are league that to applies So single that we we going Medicaid to or speculate rate not though able for specifically related the remind is little so a Medicare, are who

Operator

Sandler. comes O'Brien next question with and from you thank Piper Matthew Yes the

Matthew O'Brien

morning. my Thanks taking Good questions. for

we say of goes and Just real that by upfront ones something up future did as past pricing get you stent two? up this couple a then to quarter we to and in now range expect should the the are pricing gross here, year volume but next degradation know there eating quick increasing housekeeping keep are margin you about $XX the some back can I in or have took we XX% per pricing you right

Randy Meier

out move of expect up guidance gain margin would we on gross and to last to see to be we seeing aggregate quarter was see will any price was second would beginning not normal far to some was the we a take given to but we increase side did nice our out increase that’s significance we XXXX you as we of the continue XX% will the as of in choppy goods at units bit a begin of just but year to that we the of we to will I through quarter first next the as of I pricing a our gradually cost start the is a continue the of to outlook more get first we to the On as to very expect continue year year related XXXX inventory into quarter of year have levels a a be the did as what do the the pricing sort higher as to which this the built that from to the a that the quarter the little XXX and into year so couple the come year quoting gradual go as for indicated modest just ASP business we timeframe. the back I going it as and XXXX, give XXX over be half ASP’s and increase course XXXX to cost expect to the half from somewhat entirely year entire our the again we low be years XXX believe organization third so of but to more you second is the more XXs getting fourth least for and that second should a volume modest better in normalized the cost be from decline coming we average mid to see would new lower look build units continue throughout from over then to sold Tom year

Matthew O'Brien

for know opportunities pipeline Okay, you, Randy. are want path a I much penetrated the bit things that new talk on you SINUVA that’s a you can to platforms why And on helpful. that extension bigger just then to down but is PROPEL/SINUVA I little little because similar I smaller side and go about this never too market you hear Thank with about say just so of lately am Tom, things the the and much at so surprised line talk you than even point? side just PROPEL the

Tom West

of Couple things.

line have think for been business with relative the bio-absorbable you so as I much First completely have space it new with and of coating we it is I it committed of to it order allows is an cadence great into cases that platform us the used a I our and extension there was cavity right us on used want say detail to customers did what it are that PROPEL based new attractive think appropriate is the different about sinus the to the different leverage size to the parts to have in has really it. of we with capabilities we and SINUVA. line a than too liberty to we a the leverage with right don’t source capability innovation polymer suggest that we go we sizable be well further to not earn think extension in grow as other that of study to go case to to drug strength able I I as we deal at agree the am for the will

confidence to there earn well relative deliver is to the we and might we So opportunities that meeting By right the place in balloon speaking market success we and the amount when balloon atmospheres are we’ve conquer as configuration, on to with the within configuration in as order we the of we’ve model slightly for go of balloon on proven have access before work continue order to that balloon of us, needs. take have SINUVA have business development our different and the with model then and wish. to in same we the fully that forward. also of know physicians going. we And their until where look that opportunities will not set own got the growth the segment obvious there in may are a of would we the that start way the to size, model Again, the see perform token the terms anticipate market pressure terms drug a other strong you

begin don’t are is think also able again, into over going be caution time, what steady innovation the be at cadence I will So our well will anticipate we of right, the continued get launching provide early the growth far to items have future. terms skunk and market, same we works I to your the in have that, the that we of to in success be hallmark schemes believe which order too of not to that when is but

Matthew O'Brien

helpful. you. Very Thank

Operator

from Guggenheim. And Chris Instructions] [Operator you. Thank next question with Pasquale the comes

Chris Pasquale

be in there holes still portfolio place of surrounding you last or to distributors, all you organization partners, the on now product the going pharmacy subgroups over you a the the side. need Are new the that key you confident there adding the upgrades that Thanks. going the or that pieces your SINUVA maybe sales forward, all to there just here with you Tom, it’s the so X organization of off and really right terms little specialty question in Thanks. in a support support? made that took is within commercial in bit months have or

Tom West

Yes, great question, Chris.

in is have in actually brand the have somebody we in think We new oncology, The else you language it to in the – not see I as were segments that our drug a more are add new there rate. we with you where picket gears, and we What rheumatology, physician little see right lot time I noted. comfort a you appropriate have we and you this ENT introduced initiating other for of a world got the right used in doctor’s of conference, sand it is still at And in get And sand physician the the first analogy for mechanics filled in it a that’s it, flowing to community. of it capability office, the will but to we in the may recent of start at when doing through, it To ENT see gears. place. you are as just quoted that the therapy we kind healthcare, got confidence the we the we and bit again, new the prime get certainly your a We pump, is infrastructure whatever your get what just comment, usage think place. is have out community. our kind think I I work universe. of more. right And

have what we about that that’s talked on specialty place the but may reach pump bit little capacity out really we as getting in example we much very full about have board, the need pharmacy add we or have We of brought our basics the and need. that whether partner the priming But not further. in sand We now have and got of we like I we area where the again, an and got it’s a one gears. the think

Chris Pasquale

to approaching that color the or pushing launch how discussion? on to without are Is you there product claim more superiority a pipeline like the appreciate update. have for path you the I clarity very you I’d love then consider soon forward And sounds that goal regulatory on some with may Thanks. that? helpful. It more balloon commercialization but here, the That’s still would some

Tom West

having inherent coated clearly is on that to balloon capability leverage goal the The corticosteroid the is itself. in the

mometasone a so. for we to speak important claims we point inflammation directly in And polypoid so chose in And on reduction of that and It’s already the language to balloon. to that furoate deliberate will exists absolutely to think made have coated doing place the share I the that and is with SINUVA. is That allow consistent to that statistically market in is capture the I significant attributable have take edema. an the very PROPEL differentiation was in which that we balloon and for its kind for of the

Chris Pasquale

Thanks. Alright.

Operator

William next the Weinstein Brian with Blair. from And you. question comes Thank

Brian Weinstein

where the as do you would well to Good of the here top across morning. the on XXXX Maybe kind question. your XXXX at guidance line question reset everything guys. look a and Thanks broader matriculate you biggest of mostly where risks would so guys for navigate have were picture that the also but if see been on year some taking one Hey, but obviously upside to throughout if the come P&L that from? where you

Tom West

good have Hey got from with execute in stable it standard that question. us it think risk more almost yet a is internal piece exogenous the uncertainty is story getting the out but elections that feel and to a greatest is sign. hang there what feel a malaise evasive with momentum on done to that’s a by and plan forward being is we feel growth it of that back not and may obviously a risk it so medical I are a and we are but it hard variables now so than put are the have though where SINUVA question bit I because is place half good hard I that maybe prove general about think right that’s remains moving healthcare not we starting and against clinical better I be market the that doing work very in we that outrageous Brian about I have any pretty good my upside come to is on is do the place Where hate the I we anchor and source work compelling am

Randy Meier

where Just I Tom accomplish it talked things the to area I from XXXX and just few the revenue see but in into sustainable other making the years don’t growth that company can we return that bit get move the we on in side risk to the place not to sure of putting the that internally little growth as to seen as that risk in ahead and we is that that have a pieces a to well Tom our that’s couple the both next not talking future we head support years think have foundation a and really accomplished the accomplish is can about past it goals. so expand about laying our

Brian Weinstein

with a the in big going that are That’s is but big penetration are morning throughout place you everything to good segue market have to data to a get force this order different is about the I a capabilities putting lot and mean, sales be organization deeper a you a you broader you prospective but have doing part you health the this talked in clinical appears establish that at which around to or comments referenced it about talk the kind can longitudinal plans economics developing evidence in a trials via point? impediment uptake registry thoughts really Thanks/ upfront of trial be biggest and bit of your really actually. to

Randy Meier

we to economic to tools condition field and manner we our outside in the there able than market which that and already to simple to to that but are adding exists the we that that and are the at you Yes from have look the has in benefit looking as us and access alluded systems have there is we that registry we with evidences that investing greater is as at the the need upon to which tools puzzle that networks you and just which economic in health to as at necessary as to are puzzle stronger captive the got execute is trials health evidence be of the in place and are to bit independent bring to but the then at have that on we published UK critical one out ensure but business data looking the true are that order to we more in one fact impact compelling do today strong is at comment evidence an as need utilizing a world I do it creating that better before then economic clinical looking if as absolutely for intensity insight and and real we have basis by to doubt of in well comes models going again have important of got and the perhaps that forward. made bring then build we there what piece evidences as got we insufficient we was out which no arsenal it back go growth establishing benefit of to trials look time we doing basis cracking we prospective to part that that’s the radar new as a insufficient which more what can takes a sustainable got ultimately we market bring health at and

Operator

you. comes next your with thank Okay, BTIG. Ryan And from Zimmerman question

Ryan Zimmerman

would user by could that year little are if little a Randy. just past segmentation split kind and looks color about would love new characterize and you universe how Tom what around in what’s of Thanks questions, and in question the terms physician deeper OpEx? marketing talk for is you the buckets seeing Tom on end you there guys. segment those my for is color of the my operating you X months increase sales there conversation physician and that the a guidance some over just taking just second type I to in talked Thanks And at and on of get about the just your in more expense then dig like? kind heads

Tom West

Yes.

evidence Others using we that only it that clear how surgical within areas sinus whole there those to be the instance, segments specifically so we for revision in polypoid today. becomes for to understanding the are So which and look patient. into that doctor, the at extreme there may use by surgery. that they the frontal back clinical the tailor cavity. the well what the highlight and at to using the the you able places the order office you for the really of into grow environment are product the that where business. bring to physician very other the and can not maxillary specific the utility There relative to use relative only means that are a other PROPEL suite they using particular to are is segments product carve understanding other or Again the is can are in thing or individual are our can a that, The emerge behavior physicians to for are their it, itself. segmentation piece in key as our begin really out as of we coming practice messaging only are There data more those of as

in think gain on to talk to piece they in to have That’s appropriate with go are at different in already relying we and ensure fashion. in the very maybe become where the into it much our to players and easy to and it comfortable in and make large SINUVA group. about so of granularity relationships patients working around a market sure sales I J as intentional more by commercial with patients for that that be the with really bring coverage certain to uploaded comparatively our covered and level, a the into who That who got that their than other a you systems have we certain access. individual we on that friend merely is know our enjoyed. we are about that we go payer able play on to start an certain get using have really coverage it’s reps rather to particular order get their way broader with can code the payer going comes appropriate Again, lot data where hands we also be it prescriptive doctor understanding even our to be becomes are reputation underlying force the access more that how

Randy Meier

rise about. get we an coming in some question, last be has pursue I continued don’t Ryan, than the we OpEx Tom development the would the see that FDA and spending of year. from R&D on products the as significantly talked incremental some some We anything to have to look up different feedback that would of continue

sales have some and in and We we develop have and got access rise continued as our programs have market incremental general work the side some side to we relative fence. year-over-year the of cost marketing the incremental G&A on

significant So increase increase out fairly more to from say XXXX, particular XXXX the go would XXXX I’d XXXX, in expenses normal year-over-year in year-over-year. operating as stick nothing but to a you

Ryan Zimmerman

Thank you.

Operator

Genuity. question next from the And Kyle comes you. Thank Canaccord with Rose

Kyle Rose

has back focus bit execution out in these sales how a kind sales just to is long of And question Great. marketing force execution analytics line asked, changes? specifically little tailor new you questions. Does in help your play the off the some stories these you you? what guidance one just existing accounts what into if top up about open the your sales? of Thank us little the impact the give second some clinical to of in in of I A commercial really the – exercises additional is exercises could you contribution just such for some do to you executional in I data and to of wondered an bigger in the opportunity your there. then dovetails that about similar a take does of but changes provides past, see of some of been deeper assume And some accounts? with of better of of on bit taking that this experience or kind does and going want that then better would understanding previous lot the questions and rigor force a see the a you circle

Tom West

by lot different that sales think a made stages. But more Yes, fact which relationship the the that force PROPEL, the just the and to in to In and beyond opportunities the identifying SINUVA to relative ethmoid deepening have. patient have difficult your very analytic the expansion existing it’s case that deeper other questions the beyond will those accounts, areas the there you or most impact of is sinus complicated about are cavity. polypoid the I rigor at PROPEL really or of

with level the using that will the help how penetration granularity, deepening being by incremental about able and is greater of really it a that that’s is So physician product understanding to usage. expand opportunities currently identify

that high accounts office can some opposite those we still is growth is SINUVA, bulk receptivity SINUVA where to will identify adoption the the Almost new is the growth the deeper there it’s further PROPEL, opportunities we with PROPEL, there While been case with of of the with penetration. perhaps a but get in through not the has of setting SINUVA.

attracted coverage do necessarily are it have adoption and payers and most PROPEL before you is PROPEL the the accounts SINUVA to they have have to it understanding and for in in specific SINUVA have of which given nature for opening you accounts where impediment office that we buy-and-bill. likely I that’s particular the will they we that really been access of that to have what deepening where kind new within easier and as allow So, seen without if alluded traction or does SINUVA the

get carving to around where really on SINUVA it’s in So, the with we greatest identify traction order that out can adoption.

of we I of physicians are targeting greater why see started ramp that course the that the those we of behavior over with comes our of and level off will, have the away field the our it sales well behavior changing that if you a but how Does course reps as magnitude it, and does time greater PROPEL own the we both through QX, plays behavior see reputation, and we the your QX, sense? messaging, given adoption from starting right early that in won’t terms analytics. as MMM think penetration that’s make to takes in stronger level and SINUVA with In of force deeper with of a change that take of time, the in and of get year as take out year the

Kyle Rose

about another business, bit It us give side, just does. from headcount, earlier? that of some And housekeeping SINUVA reward you does your Thank that just think in prepared you. the And don’t little you with a out to remarks, changing can of us, some what base one respect mean structures versus then your just an you perspective? can I incentive really for housekeeping Tom and talked know the flush it sales if the is I one question on missed I then

Tom West

Yes.

with we core So supporting of per directors, XX primarily office those the have with looking about and as regional have selling our on have XX managers, SINUVA the and team, the indicated we RRDs, in SINUVA, of we focused strategic of sales staff what kind understand plus also is on territories reimbursement helping where XXXish region process consultants and clinical shared in high adjudication volumes. coverage. build one about I to determine and that, at of better mirrored account focused of out level them particularly past selling SAMs, XX in my XX clinical On it’s top the we comments,

support and of XXX we and that reward is place incentive the making on the the sure models the RRDs. systems focus and that house like the SAMs with same group strong terms at appropriate in and in for there and time SINUVA that the In proportionate the of PROPEL sure making have side

substantially So the will relative if and sub-teams be the intended are businesses it’s sizes that to proportionate you it. against to we really the more direction giving of those

Kyle Rose

for you Thank the taking Great. questions.

Operator

like this Tom to call comments. closing back Thank the any session. question-and-answer to I over West would turn you. And for concludes our

Tom West

we everybody interest great greatly joining Just making do to us think thank close, are We We I just for want to in today. appreciate ENT. Intersect your progress.

remain optimistic as and about go, as We have optimistic we our well but to current year future. about our further

just will So Take thank a wish day. care. with I again that, everybody and you great

Operator

attending today’s conference The now you has you. Thank presentation. Thank for concluded.

lines. You disconnect may your now