February 2, 2023 | 12:56 PM by Jay Kunstman | jkunstman@jaguaranalytics.com

Penumbra (PEN) – Dash for Flash

Penumbra (PEN), a medtech company offering thrombectomy-based products, was featured as a Top Long in the JaguarAnalytics Q4 2022 Outlook. After finishing up almost 14% in Q4, its up over 20% to start 2023. The company’s Q4 earnings are scheduled for February 23rd after the close and today’s write-up will focus on a new product from the company, its Lightning Flash thrombectomy system. Back in early January, Penumbra announced FDA clearance and launch of this product.

Following the JPMorgan Healthcare Conference in January, JPMorgan analyst Robbie Marcus had the opportunity to speak with a number of vascular surgeons, some of which are in favor of Penumbra, while some of which are in favor of Inari Medical (NARI), and some who are split down the middle. Bottom line, these surgeons who participated in the first few cases using Lightning Flash were all optimistic that this product should expand the market and help convert more doctors to use mechanical thrombectomy given its excellent thrombus removal ability as well as driving share shift in favor of Penumbra away from other products and companies such as Inari Medical.

Checks & Pricing

All of JPMorgan’s surgeon calls pointed to the clear benefits of Flash vs. the company’s prior generation product with respect to greater thrombus removal, lower blood loss, and faster procedure times, which should lead to market expansion and share capture.

Taking a closer look at the physician feedback, all the doctors pointed to the larger catheter size as a clear benefit vs. the previous generation. Every physician pointed to the 16 Fr catheter as a clear improvement vs. the previous 12 Fr, with all saying that with the size upgrade it’s much more compelling of an option vs. Inari’s larger size, prior. That said, some doctors still felt more comfortable with larger catheter optionality that Inari’s devices provide, though they were open to changing that opinion if Flash continues to demonstrate the ability to remove larger clots. “Further, it wasn’t just the larger catheter size that makes Flash a more competitive option across both PE and DVT, but rather its ability to quickly and completely remove thrombus – that’s the key.”

While it’s hard to believe, the analyst points out that the vast majority of physicians in the United States don’t perform mechanical thrombectomy cases in venous or arterial, and for those who have yet to become accustomed to existing products, JPMorgan sees an opportunity for Penumbra to make inroads. “Doctors who use Lightning find the device easier to use alone (vs. Inari which requires 2 people) and appreciate the audible clicking to get a sense for when the clot is latched. We also got the sense that the Inari devices tend to be bulkier and less malleable within the vasculature, which can cause safety issues for more inexperienced physicians. For this reason, we think Flash will be a better device for newcomers and barring certain cases, Flash should have a high share amongst these first timers.”

Finally, expectations are for Lightning Flash pricing to fall between $9K – $11K, which is a 25% – 50% premium to its last Lightning product, and also slightly lower than Inari at roughly $12K.

While the device hasn’t made its way through the value committee at many of the large volume institutions yet, as it just launched last month, a favorable DRG should be advantageous for the hospitals and feedback shows very little push back on the higher pricing, especially considering the improved efficacy.

“Given the higher pricing and what we took away as encouraging initial feedback from physicians, we see a clear path to $1B+ in sales this year, and expect some upside off of better than anticipated near-term share capture as well as momentum from the Lightning Bolt product roll-out later in the year.”

Password must meet the following requirements: