Operator: Our next question comes from the line of Drew Ranieri of Morgan Stanley. Your line is now open.
Drew Ranieri: Maybe just to start, Laura, you mentioned in your comments of maintaining mere record docs position in the quarter. I know that there’s a little nuance here. It’s declining a bit sequentially, but can you just help us better understand maybe some of the dynamics that were happening here and then what’s embedded from a new doc ad dynamic to reach your full year guidance? And I’ll stop there for right now.
Laura Francis: Yes. So, we’re actually very pleased with where we’re at having over 1,100 docs. It is a few less than we had at the end of Q4. That is typical for us. Last year, I think was the exception to that particular rule. But it is very typical from a seasonality perspective that we will have a few less doctors that are performing procedures in Q1 versus Q4. We’re very pleased however, and we did throw in a little bit of qualitative information about training here. We had very strong training trends in the first quarter with a combination of surgeons as well as inter interventionalists as well. And that’s a great forward-looking indicator for us. The active surgeon number is just the number of surgeons that performed at least one case in the quarter.
But all of these even more forward-looking indicators such as training, give us a lot of confidence in this acceleration into the next few quarters. Also, with new product coming out as well, it gives us a lot of confidence too. In particular, if you think about Granite 9.5 is targeting 100,000 degenerative spine procedures. And the expectation that that’s going to increase physician density in the future is exciting. And finally with the addition of interventionalists, it’s increased our target physician number from around 7,500 to around 12,000 in total. So, it gives us the opportunity to sell to additional physicians and also the opportunity to increase the number of procedures per physician per quarter.
Drew Ranieri: Maybe just on the utilization side for a moment, I mean it looks relatively stable quarter over quarter. Just piggybacking off of the Granite 9.5 launch, just maybe help us better understand some of the utilization — or some of the more utilization drivers. Kind of what you’re expecting. And I know that there’s surgeons, physicians that are using your products far in excess of that, but when do we really start to see like a real-true inflection in utilization? I mean, you’re making great progress on the surgeon side, but when do we kind of see the utilization really kind of pick up?
Laura Francis: We did talk a little bit about physician density. Now, we’re in these early innings of expanding our portfolio, but we are seeing a growing number of physicians that are performing multiple procedure types. We did mention specifically that in the first quarter around 15% of our active physicians perform more than one type of procedure. But once again, if I go back to Granite 9.5, Granite 9.5 is targeting degenerative spine procedures and that’s the bread-and-butter procedure of our target surgeon. And so, the majority of their practice is going to be in that particular category. And we just had our first procedures with Granite 9.5 completed in the month of April. And then, we’re rolling out and we expect an expanded rollout and launch in June.
I think you’re going to start to see the impact in the second quarter, but I think you’re going to really start to see that accelerate in the second half of the year. Very excited about the opportunity that’s there with our surgeons and increasing our density there. And then with interventionalists the opportunity to further increase the number of physicians, active physicians we’re working with quarter by quarter.
Operator: Our next question comes from the line of Dave Turkaly of Citizen JMP. Your line is now open.
Dave Turkaly: Laura maybe one for you, just on the competitive front. It seems like there was several sort of fast imitators on the core SI joint, MIS market, and I’m just curious, like what are you seeing in terms of TORQ or Bedrock Granite or some of these other sort of markets that you’re kind of creating or targeting. But I don’t know that I’ve seen the competition follow as quickly and I’m curious to see, get your thoughts on what’s happening there and what you expect moving forward?
Laura Francis: Yes, I think, Dave, thanks for the question. And what we pride ourselves on is identifying unmet clinical needs and then developing differentiated products around those unmet clinical needs. And so, we’re identifying new markets in some cases, where they’re typically a physician is not operating on a patient, performing a procedure on a patient. So, SI joint fusion was in that category. And certainly, sacral insufficiency fractures, most of those cases are treated conservatively as well. So, our goal is to either identify these unmet clinical needs and develop new solutions around them, or to develop a significantly improved technique or product or both that addresses an unmet clinical need. And Granite really falls more into that category.
And so, we expect to see competition coming in. And what they’re doing is creating widgets basically, and selling those into the market. And we think that, especially when you’re in a market where there is an unmet clinical need, having the capabilities that we have are really important. So, whether it’s differentiated patent protected product, whether it is the level one, level two clinical data that we have, reimbursement support including the NTAP, for example, for Granite. And then just taking an educational approach to the market as well, which really is supported by both our professional education group as well as by our sales force. Those are the ways that we really are leading in all of these markets. And we that’s appreciated by physicians in these markets, and that’s what we’re going to continue to do.
So, I think that we’re going to keep disrupting the market. We’ve launched two products so far this year. We’ve talked about a third that we’re going to launch by the end of the year. You’re going continue to see us innovate and grow and utilize these competitive advantages that we have in order to build these markets treat these patients, support the physicians and build the Company.
Dave Turkaly: And then, I think you even mentioned ASPs. I think you said they were flattish, but given that differentiation you’re talking about and what we’ve seen from some of your peers, I’m just curious I mean, is there an opportunity for price increases? I know, we’ve kind of modeled it declining over time, but you seem to have some things that are pretty unique. And I’m just curious as you look ahead, do you think there’s an opportunity potentially for price or is that something we shouldn’t think about?
Anshul Maheshwari: So, Dave, this is Anshul. Thanks for the question. In terms of the ASP, when you think about the opportunity that’s ahead of us, we’ve got almost 0.5 million annual target procedures that we’re going after. And so, there’s a huge opportunity. So, for us, we’re focused on market development. We maintain ASPs that allow us to maintain our attractive gross margins so that we can continue to reinvest in the business from an R&D standpoint. This is something Tony and team review on a very regular basis on how to make sure we can manage the ASP alongside driving adoption. We feel good about that. Our ASP trending generally is based on the procedure mix versus a price erosion to some extent. When you’re doing a deformity procedure using four implants versus a degen procedure using three versus SI joint fusion, you’re using three. So, those things can have an impact, but overall, from implant ASP, we tend to be pretty disciplined on holding that.
Operator: Our next question comes from the line of Caitlin Cronin of Canaccord Genuity. Your line is now open.
Caitlin Cronin: Just to start with the training, you mentioned a record number of docs with first training this quarter. How many of those were interventionalists and just thoughts on given the uptake and interest of TORQ and the lateral trajectory for those interventionalists, would you start thinking about training them in 3D as well?
Laura Francis: We are excited about the record number of first trainings that we saw. And there certainly was heightened interest from Interventionalists during the quarter, and that definitely was a contributor to the number of first trainings. But we also saw strong surge in interest, in demand for being trained across our procedures. So pelvic fixation in particular with the knowledge that that Granite 9.5 had been cleared and was imminent was certainly a driver as well. And then some of the work that we’re doing on the trauma side too. It’s really across the board that we actually saw that interest. And then remind me of the second part of the question.
Caitlin Cronin: No, just any thoughts given kind of the uptake of TORQ in the lateral trajectory for those interventionalists that we’re training, would you think to start training them in 3D at some point?
Laura Francis: We’re not TORQ really has been the product of choice for those interventionalists that are interested in the lateral technique. The iFuse-3D procedure falls into a category that I would call more orthopedic in nature. That’s not a product that interventionalists are naturally gravitating to. It is definitely a product. It’s the gold standard product that’s out there. It has the most clinical data around it, and we have some very loyal users of that particular product. But the interventionalists are actually a little bit surprised at the ease of use with TORQ, and the technique and the outcomes that they’re starting to see with this, some of the early interventionists that are performing the procedure. So, TORQ really as it relates to the lateral technique is the product of choice.
And then there certainly are interventionalists right now that prefer a bone allograft product. And so, that’s the product that some of these interventionalists are at least, thinking about, before they get more comfortable with the lateral technique. But as you mentioned iFuse-3D and as I said, there’s, we have the most data on that product. And when physicians think about SI bone, they really do think about level one clinical evidence and level two clinical evidence. And so, we have one study called the SALLY study, which was iFuse-3D and we expect to see the five-year SALLY study results coming up in the second half of this year. So, we’re continuing to work closely with our, our portfolio of products, whether it’s iFuse-3D with SALLY, whether it’s TORQ with the STACI study or with the SAFFRON study.
And then, Granite and the Bedrock technique with our SILVIA study, with our PAULA study, we’re continuing to really focus on clinical data and being the market leader in this space.
Caitlin Cronin: Just jumping off of that really quickly, any updates to the progress on the STACI or the SAFFRON studies?
Laura Francis: Yes, I think you’ll be seeing a little bit more here, later this year. So, enrollment in STACI is expected to be completed this summer and the early results are very promising and exciting. So, the purpose of STACI was to provide post-market information on lateral minimally invasive SI joint fusion procedures performed with TORQ when performed by interventional lists. So, it’s going to give us more information on the interventional physicians performing lateral SI joint fusion procedures using our TORQ product. SAFFRON, you are going to actually expect to see some initial results that’ll be available later this year. So, that’ll be in line with the launch of our new trauma product as well. You’ll see some clinical data coming through as well as a new product as well. So, those are a couple of things in addition to SALLY you can expect to see.
Operator: Our next question comes from line of David Saxon of Needham & Company. Your line is now open.
David Saxon: Congrats on the quarter. I wanted to follow up on a previous question around pricing. This is probably for Anshul, so pricing is tracking better than, I think it’s a low- to mid-single digit decline that’s assumed in guidance. Is there anything that would cause pricing to get worse throughout the year? I don’t know, if it’s the 9.5 launch or is that more of an area of conservatism as we think about the guidance?
Anshul Maheshwari: Yes, Dave, thank you for the question. So, when you think about the low end of the guidance, some of that conservatism on ASPs are reflected there. We haven’t really changed our ASP expectations for the rest of the year and the guidance now. In terms of what could have an impact on the ASP you right with the 9.5 launch, even though there is no change in price per implant. The potential for the shorter construct procedure is using two implants versus the deformity procedure using four could have an impact, but we think there’s potential for upside on the ASP front as we progress to the year. But again, it’s the first quarter, it’s early in the year, so we think it’s just prudent to hold some of that conservatism to see how it unfolds in the second quarter and the third quarter.
David Saxon: And then maybe for Laura, so the Granite NTAP, I think that runs out next October. So how should we think about that as it relates to Granite procedure volumes? How impactful has that NTAP been to Granite adoption that you’ve seen over the last couple of years? And is there any way you can do work around like Granite coding to preserve this premium facility for fee or even a pro fee?
