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Penumbra, Inc. (NYSE:PEN)
Q1 2019 Earnings Call
May 07, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon. My name is Emily, and I will be your conference operator today. At this time I would like to welcome everyone to Penumbra's First Quarter 2019 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. If you would like to ask a question during this time, simply press * then the number 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you.

I would now like to introduce Mr. Dan Wilson, Director and Head of Business Development for Penumbra. Mr. Wilson, you may begin your conference.

Dan Wilson -- Director and Head of Business Development

Thank you, Emily, and thank you all for joining us on today's call to discuss Penumbra's earnings release for the first quarter 2019. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, can be viewed under the investors' tab on our company website at www.penumbrainc.com.

During the course of this conference call the company will make forward looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality, compliance, and business trends. Actual results could differ materially from those stated or implied by our forward looking statements due to certain risks and uncertainties, including those referenced in our 10Q for the quarter ended March 31, 2019, which will be filed with the SEC on May 7, 2019, as well as those described in our 10K for the year ended December 31, 2018, which was filed with the SEC on February 26, 2019.

As a result, we caution you against placing undue reliance on these forward looking statements, and we encourage you to review our periodic filings with the SEC, including the 10Q and 10K previously mentioned, for a more complete discussion of these factors and other risks that may

affect our future results or the market price of our stock. Penumbra disclaims any duty to update or revise our forward looking statements as a result of new information, future events, developments, or otherwise.

On this call, certain financial measures are presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted press release. We anticipate the prepared comments on today's call will run approximately 12 minutes. Adam Elsesser, Penumbra's Chairman and CEO, will provide a business update, and then Sri Kosaraju, our CFO and Head of Strategy, will discuss our financial results for the quarter.

With that, I would look to turn over the call to Adam Elsesser.

Adam Elsesser -- Chairman and Chief Executive Officer

Thank you, Dan. Good afternoon, and thank you for joining Penumbra's First Quarter 2019 Conference Call.

Our total revenues for the first quarter were $128.4 million, an increase of 25.1% as reported and 27.2% in constant currency from the first quarter last year. We had operating income in the quarter of $11.2 million, compared to $4 million for the same period last year.

2019 began with great momentum across our entire business. We saw strong sequential revenue growth over the fourth quarter of 2018. This growth is being driven by our ability to treat a growing number of patients in large patient end markets and our ability to continuously innovate within our existing areas such as stroke and vascular thrombectomy, as well as within new areas. I will share a few updates and developments from the first quarter focusing on these themes.

Beginning with our patient end markets, our primary discussion with investors over the past four years has been on ischemic stroke. We have detailed the impact of the disease on patients across the world. We also outlined our views on how we saw the future opportunity. In terms of the addressable patients, we expected growth of patients treated and the likely role of Aspiration in the procedure. Four years later, we are here talking about a larger addressable patient population, faster growth in patients treated, and the validation of Aspiration as the preferred frontline mechanism for stroke thrombectomy. There has been great progress, and we believe the foundation is set for continued growth.

We are now in the process of introducing a second meaningful patient end market for Penumbra. Recently investors have taken notice of the results in our vascular business. We have learned a lot over the past few years about the disease states and the potential of our technology. This has given us greater confidence and visibility on the future opportunity. I would compare this to how we felt about stroke four years ago. Coincidentally our vascular business is at a similar level of annual revenue as our neuro business was four years ago, but it is growing at an even faster rate.

We have learned enough to say that the number of patients with clot in their bodies that we can help in the United States has the potential to expand significantly beyond the current 150,000 addressable patients that we have initially focused on. It is helpful to note that our Indigo system is currently used in about 10% of those patients currently being treated by interventional methods. We are at the very early stages of this patient opportunity.

I would now like to turn our focus to the next theme, innovation. Starting with stroke, in March Compass was published in The Lancet, one of the world's most prestigious medical journals. As you may recall the Compass trial was a landmark study in ischemic stroke. The publication confirmed that direct Aspiration is just as effective as stint retriever thrombectomy. It also reported higher numerical revascularization rates and faster revascularization times for direct Aspiration. This study helps demonstrate the importance of Aspiration for stroke patients. Penumbra has believed in this view, and we have been working diligently with physicians to continuously improve the technology since our first FDA-cleared Aspiration system for ischemic stroke over a decade ago.

While the Compass study is validating, we are not done innovating in stroke. The ambition to keep improving is what defines Penumbra. Last fall, when we launched Penumbra JET Engine, we mentioned that it was the first step in a multiphase effort to continue making the procedure better and better. We believe that our newest technologies that will progressively come this year and next year will each alone serve as significant improvements, and together will fundamentally reshape the way we think about the procedure for stroke patients.

In the first quarter, we also made progress innovating in new areas. In March, we received FDA clearance for our REAL Immersive System. As you may recall, about two years ago we formed a joint venture to try to do something better than traditional rehab for the millions of people who suffer disability from strokes and other neuro conditions. Rehab is typically administered by physical and occupational therapists who try to help patients recover as much function as possible. These professionals do heroic work in their communities for these patients. Our work in this area began with a belief that we can design and build technology with the potential to accelerate and improve therapists' ability to help their patients.

The REAL System is a fully mobilized system that creates a full presence immersive virtual reality experience. With the FDA clearance, we will begin the journey to potentially help millions of stroke rehab patients. We are very busy with the next phase of this work, and we will plan to provide an update on how we see the commercial opportunity later this year.

Creating the REAL System demonstrates the very best of Penumbra. In a very short time our dedicated team took an idea, built an entirely new team, and then created a sophisticated platform that could help millions of people. This is the result of Penumbra's unique and lasting culture of innovation.

I'll now turn the call over to Sri to review the financials.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Thank you, Adam.

For the first quarter ended March 31, 2019 our total revenues were $128.4 million, an increase of 25.1% reported and 27.2% in constant currency compared to the first quarter of 2018. Our geographic mix of sales in the quarter were 64% US and 36% international. Neuro and vascular represented 63% and 37% of sales respectively.

In the quarter, we saw very strong momentum across our entire business, demonstrated by strong sequential growth and strong year-over-year growth despite difficult comparables. Revenue from our neuro business grew to $81.5 million in the first quarter of 2019, an increase of 14.1% reported and 16.5% in constant currency compared to the same period a year ago. Our neuro growth was primarily driven by sales of our Penumbra system for ischemic stroke, where we saw strong sequential growth.

Within the United States our sense is that the ischemic stroke market is growing according to our expectations and that physician preference for frontline Aspiration continues to grow. The Compass trial and recent publication validate this trend. Outside of the United States, we saw strong growth as well, and as a reminder our results can vary on a quarterly basis as we enter new geographies.

Revenue from our vascular business grew to $47 million in the first quarter of 2019, an increase of 50.2% reported and 51.8% in constant currency compared to the same period last year. In the quarter our vascular growth was driven by results from both our thrombectomy and embolization businesses. We are increasingly encouraged by the future long term growth potential of this business. As a reminder, our growth accelerated beginning in the second quarter of last year with the addition of new customers and the introduction of new products.

Our gross margin in the quarter was 65.3% of revenues compared to 64.8% of revenues for the same quarter last year. Total operating expenses for the quarter were $72.8 million or 56.6% of revenue compared to $62.5 million or 60.9% of revenue for the same quarter a year ago. Our research and development expenses were $11.7 million for Q1 2019 compared to $8 million for Q1 2018. SG&A expenses were $61.1 million for Q1 2019 compared to $54.5 million for Q1 '18. Our spend increased primarily due to increases in headcount and related compensation expense.

We had operating income in the quarter of $11.2 million compared to operating income of $4 million for the same period last year. We continue to expect to invest in the growth of our current business and also in the development of potential new areas.

As it relates to our revenue guidance, while we are not formally revising our states 2019 revenue range of $525-535 million, we do feel comfortable toward the top end or slightly above the top end of our initial range. Following two consecutive quarters of strong sequential growth and consistent with our commentary on quarterly variability, we would expect to see our second quarter revenues only slightly above our first quarter.

And now I'd like to turn the call back to Adam for closing remarks.

Adam Elsesser -- Chairman and Chief Executive Officer

Thank you, Sri. Normally we would end our remarks by highlighting a particular patient's story as an acknowledgment to everyone, including the Penumbra team, of the critical importance of the work we do every day. This quarter I would like to slightly alter that tradition and instead end our remarks by highlighting the physicians who are on the frontlines of the significant change taking place, removing blood clot in the peripheral arteries and veins.

I have spent the last several weeks traveling with our commercial team throughout the United States meeting with physicians. We learned a great deal from them about their practices and the challenges they face. We have also been able to share our vision of how we are trying to shift the paradigm regarding the blood clot in the body. I would like to share a representative story from a few weeks ago.

We visited a physician in the Heartland who had not yet used our Indigo system for clot removal. His approach was to use older legacy tools and techniques. Our commercial team recently approached him and began to share how Penumbra's approach could change his practice over time. Following that work I joined our team in discussing with him our long term ambition in this area. After careful deliberation he agreed to consider our approach.

Soon after these discussions he asked our team to come to the hospital because he was treating a teenage girl with a very complex issue in her veins. In his first case using the Indigo system he was able to successfully remove the clot and resolve the symptoms. The result was great for this young girl, but it also represented the start of a new opportunity for this physician and his practice. This illustrates how our amazing team is tackling this challenge and the opportunity to fundamentally change the paradigm of treatment.

Thank you for your attention on this call, and we look forward to further updates on our progress. We would now like to open the call for questions. Thank you.

Questions and Answers:

Operator

At this time I would like to remind everyone in order to ask a question press * then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Robby Marcus with JP Morgan.

Robby Marcus -- JP Morgan -- Analyst

Great, and congrats on the good quarter.

Adam Elsesser -- Chairman and Chief Executive Officer

Thanks, Robby.

Robby Marcus -- JP Morgan -- Analyst

So maybe I'll just combine my two questions here. First, there was a lot of noise out in the market about competition coming from your competitors in the first quarter. Doesn't look like we've seen it yet in the first quarter. You've put up really good numbers in neurovascular. So maybe talk about what you're seeing out in the market.

And then second follow-up question, in peripheral vascular you made the comment that this is for stroke cases four years ago. You know, this is a market I think people understand a little less, and there's no big clinical catalyst coming. So help us understand why you made that statement, and how do we get it to where stroke is today? Thanks.

Adam Elsesser -- Chairman and Chief Executive Officer

Great. Well, thanks, Robby, for both those questions. Let me start with the first question around competition in the stroke market. Really, I think there's sort of three sort of points to make here. The first, we have not seen really or experienced any competitive activity that we haven't seen during the last three years or that was really unexpected by us. But there is, I think, a little bit different dynamic here, sort of a, if you will, a potential benefit to this round of competition that is actually very helpful to Penumbra. Right now there are so many Aspiration systems out there, from big companies and small companies, and that has really validated what we have said for a long time that Aspiration is the primary frontline tool. And I think the market now has embraced that. They know that because everyone has joined that market.

So this for us has been really helpful because, as you know, we've never had 100% market share in the stroke market, and this allows us the chance to go educate new customers on our devices that we haven't been able to do before. That's sort of the first point.

The second is we're saying that, you know, we feel really good about where we are right now in terms of our place in the market in a competitive way, but we're also extremely confident about where we will lead the market in the next several years. And then finally, and this might be the most important point, when you take our incredible stroke franchise that we're obviously proud on, you add it to our faster growing vascular business, and then you add some of the new opportunities, one of which we talked about today, Penumbra as a company is really well positioned for growth for many years to come. So we feel like we're in a good spot.

To address your specific question on peripheral, how does one think about this? It's true that there isn't yet an obvious catalyst like a clinical trial that takes care of the whole area because this is not that easy. And we're here in 2019 talking about it for the first time really because it's that hard. And just to remind you of some basic sort of statistics, there are a million people, just taking US numbers but obviously globally this many more, a million people in the US alone every year have some form of clot in their body. I don't mean in the head or in the heart but just in the body, and that's not good. No one has said that that's a benefit and that that's not somehow problematic.

So just like we looked at stroke many, many years ago and started the journey, we now I think have the confidence and we've done enough work to know that we, over time, can really, really impact this. And this isn't immediate. This isn't next quarter where we go from 0% to 100%, but really impact dealing with this clot in a much more cohesive and thoughtful way. And I think the growth over the last number of quarters is showing the effect of that base or early work that we did, and we have a lot more confidence because of that. So there won't be one thing that turns the corner, but I think you just have to look at our success and I think that will show what is ahead for us.

Operator

Your next question comes from the line of Bob Hopkins with Bank of America Merrill Lynch. Your line is open.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Oh, thanks. Can you hear me OK?

Adam Elsesser -- Chairman and Chief Executive Officer

Yeah. Hi, Bob.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Great. Hey, good afternoon. So, Adam, you don't often proactively talk about your pipeline, and I heard something on the stroke side that I wanted to get a little bit more color on because you talked about fundamentally reshaping the market and you talked about new technology launches coming this year and next year. So I was wondering if you could just develop those comments a little bit more for us because they obviously sound pretty interesting.

Adam Elsesser -- Chairman and Chief Executive Officer

No. I always like my one word answers with you. Listen, it's not actually a new comment other than putting out a little bit of a timeframe. When we launched Penumbra JET Engine, we went, I think, out of our way to say we renamed the sort of series, if you will, and every time we do that it's the beginning of what will be a series of new things coming, not a one-off product. And by putting a timeframe out there, it obviously is simply giving you guys a sense of our confidence of where we are between this year and next.

And there's a lot of work to still be done. We aren't yet at a point where treating stroke is just so benign and easy that it's just sort of an expected thing that we can remove the clot in every patient easily, but that's where we have to keep heading. And that's where our just constant work and innovation -- And our team, I really wanna give a shout out to what we call the "Pengineers." They have never given up, and they have just continued to do things that really have never been done, never thought was possible, and we're just getting closer to it and have a higher confidence than ever before that we can do that.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

So are these new -- Maybe I'll try Sri. So are these new relative to the guidance? Are these incremental to the guidance? Or are these things that were contemplated at the beginning of the year?

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Yeah, Bob, our sort of historical approach in the guidance is to update it based on everything that we know at the time, and as you know we try not to go into a lot of specific detail about specific areas, products, or geographies. But I guess the fair thing to say is it's updated based on sort of everything as we sit here today that we know.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Okay. And then lastly, Adam, you also talked with peripheral and Indigo with some sort of new confidence in kind of quantifying the market opportunity, or at least that's what I thought I heard. So is there an update to how you guys are thinking about the market opportunity for indigo specifically? And I hear you on the 1 million patients, but I'm just -- it sounded like something a little bit more specific as it related to Indigo in terms of how you think about the market opportunity.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

So maybe just something on the market sizing, and Adam can jump in on this as well. But I think most of the investors are used to hearing us talk about the incidents that the million patients that Adam referenced in the United States and the treatable patients of 150,000, which is somewhat analogous to how we describe the addressable market on the stroke side, but I think what we said pretty more directly in this call was we see the visibility on being able to grow the opportunity where Indigo can be used, we see as a strong likelihood and with greater visibility. So the opportunity to be in greater markets for that number to grow I think is an opportunity for us that could benefit Indigo in our results.

And the second thing is, you know, we mentioned that we feel like we're only in 10% of that initial addressable market, and naturally as that market gets bigger we'll be a smaller percentage. So the opportunity to kind of penetrate that market, and we talked about all the ways in which you do that and the catalysts, whether it's on the technology side or clinical data side, those are the two opportunities that give us a great deal of confidence that there's some pretty long term sustainable growth for us to have in that part of the business.

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Great. Adam, Sri, thank you.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Thanks, Bob.

Adam Elsesser -- Chairman and Chief Executive Officer

Thanks, Bob.

Operator

Your next question comes from the line of Larry Bieglesen with Wells Fargo. Your line is open.

Larry Bieglesen -- Wells Fargo -- Analyst

Hey, guys. Thanks for taking the question. One on stroke, one on the new REAL System. So it looks like you had a pretty big acceleration in neuro on a stack two year basis in Q1. So my question is was that driven by US or OUS? I remember in Q4 you said the US market grew by over 30% for stroke and international was relatively flat-ish or I think you could back into that? So I'm just curious how those two trended in Q1. And on the stroke market, I think you had guided, your guidance assumed only about 5,000 new cases in 2019 versus 8,000-10,000 last year. Has anything changed on your thinking about the stroke market growth for 2019? And I had one follow up.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Sure. Larry, those are great clarifying questions. On the neuro side of the business, I think as you look at this against last quarter, and I think the thing that becomes somewhat challenging for folks who tend to look at this on a year-over-year basis, the comps and even last quarter when we talked about the dynamics in Japan make it hard sometimes to look at that. But if you just look sequentially from last quarter, the neuro business grew 10%, and we saw, I mentioned in my commentary, strong sequential growth on the stroke side.

The comment that we also made, we said that the feelings about how the stroke business is in the United States but also the comments about how it is outside of the United States. We're confident in the opportunity. We think there's a lot of runway outside the United States for us. As you know, stroke is a global disease, and we're just entering some parts of the world newly. In much of those areas those are with a little bit of a different commercial model, too, that being working with distributor partners.

So where you see us entering a new geography, where you see us launching new products, both with distributors like we did in Japan, you're gonna see some variability. The international results you could tell last quarter looked a little bit lighter than previously. This quarter you can tell are stronger, and what we're saying is there's some variability to that and particularly as we go into Q2, as well. So that's, I think, some help on sort of the dynamics if you look at US or outside of the US and a little more pointed commentary around what to expect.

On the stroke side, you're absolutely right. Last quarter we talked about our guidance reflecting an expectation. We said it was around 6,000 or 7,000 patients, additional patients treated in 2019 over 2018, and that's simply just looking at sort of an average of the last three years of patient growth that we've seen. So that's what reflective in our guidance and what we continue to believe and what we're currently reflecting in our updated guidance today.

Larry Bieglesen -- Wells Fargo -- Analyst

Thank you. And then on the REAL Immersive System, Adam, you know, you commented on that earlier. I guess my question is, Adam, any color you can provide on the business model? I mean, it seems like a significant opportunity, but at this point it's hard to give you any credit for it today. I mean, could this be as big, for example, as neuro or vascular over time? Any color would be helpful. Thank you.

Adam Elsesser -- Chairman and Chief Executive Officer

That's a great question, and I give you credit for tempting me to answer in sort of a more detailed way than I really am prepared to do now. I will just point -- The answer is if you measure the number of patients we can help, and I said that in my prepared remarks, we can help an awful lot of patients when you look at all of neuro rehab. It really touches people into the millions a year, and so that by definition matters and is a significant effort and journey for us to do that. We want to be able to do that. So if we just stay with that way of talking about it, I think you will understand how important it is for those people that we can help. In terms of trying to quantify it in dollars and all that, it is just premature, and we will promise you we will do that later this year.

Larry Bieglesen -- Wells Fargo -- Analyst

Thanks for taking the questions, guys.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Thanks, Larry.

Adam Elsesser -- Chairman and Chief Executive Officer

Thank you.

Operator

Again, if you would like to ask a question. Please press *1 on your telephone keypad. Your next question comes from the line of Jason Mills with Cannaccord Genuity. Your line is open.

Jason Mills -- Cannaccord Genuity, Inc. -- Analyst

Thank you, Adam, Sri, and Dan. Can you hear me OK?

Adam Elsesser -- Chairman and Chief Executive Officer

Yeah. Hi, Jason.

Jason Mills -- Cannaccord Genuity, Inc. -- Analyst

Good afternoon, Adam. How are you? I wanna just start with peripheral thrombectomy. So I'm gonna do my best at making a simple question hard because that's just my thing, but you have a market or business that's doubled in two years. So rule 72s, you know, some 35% growth, but you've accelerated that in the last year. At a physician level, we've talked a lot about triaging and the development of the market in stroke. What's going on in taking fat out of the peripheral veins and arteries at a customer level that might explain this acceleration? And what are you doing to exacerbate it vis-a-vis salesforce? You haven't given us granular detail there, but maybe qualitatively you could talk about what you're doing there.

And to a previous question about data, what was clear in 2015 at the stroke conference was the paradigm changing data that changed stroke. Understanding there's nothing in the pipeline right now, but do you think that that will be something that will drive market acceleration again at some point in the future? And what can we look for in that regard?

Adam Elsesser -- Chairman and Chief Executive Officer

Yeah, Jason, I think it's a really good question. Let me try to just answer it sort of just in sort of trying to describe what we've actually done, both in the field and with sort of how we think about the market. So we started out addressing and sort of focusing on the patients that were already getting intervene done. That's the sort of 150,000 roughly patients that have some form of clot in their peripheral arteries or veins that are having some form of intervention, that could be catheter-directed lysis or some combination of legacy tools or us. And that was the group that we started. They're already there. They're already being treated by a physician, either an interventional radiologist, a vascular surgeon, or in some cases interventional cardiologist.

And so we started sort of one group, the interventional radiologist. We started working then last year with the vascular surgeons and obviously now the interventional cardiologists. And we're just starting to educate them. It was sort of the representative story that I told. Somebody who hadn't used our product who really spent the time with our team and then me to understand its...benefits, its limitations, its techniques, and then used to great success on really kind of a profoundly satisfying case with that teenage girl.

So that's the effort that we've been doing. I think what you're hearing is two things. One is our confidence in that effort, in the sort of ability to continue to have those dialogues, continue to have those interactions and see the success that comes from that. And that's what you're seeing in our numbers, and that's what you're seeing in sort of our comments today.

The other part that you talked about sort of with data is still relevant. We indicated that we think there's a possibility of expanding that 150,000 patients to be a much larger number, and that's gonna have to come from data...over time. And that is really a cool opportunity, an important opportunity for us to take on on top of the continued penetration of the 150,000. When you add both of those together, there's just an awful lot of room for us to have success in this field really for a number of years ahead of us, and that's what you're hearing in our voice right now.

Jason Mills -- Cannaccord Genuity, Inc. -- Analyst

That's helpful, and then I'm gonna ask you about intracerebral hemorrhage because I care about it. You haven't talked about it much. It's another opportunity that you mentioned about mentioning it, I think. But what struck me at the ISC meeting in Hawaii was the level of discussion about endoscopic techniques for evacuation, and clearly you have an advanced effort there. And what also struck me is the juxtaposition of the physicians that care and those that actually are doing stroke, and many of them seem to be step-retriever people. So if you're helping them with ICH, and maybe you could give us an update on the trials, maybe also talk about the leverage that you can bring to bear with respect to technology, not just in stroke, to Bob's question, but also in evacuation of ICH and its ability to augment over time your stroke business. Or am I overreaching there, which is entirely possible? Thanks.

Adam Elsesser -- Chairman and Chief Executive Officer

That's a great question, Jason. So before I start to talk about the relationship between the physicians doing this procedure and our products, let me sort of address ISC, the International Stroke Conference, and the trial. Just to remind everyone, the Misty-3 study was presented. It turned out not to be successful, but it wasn't using our product or technique but an older idea. And it showed, though, the one thing that if you remove enough of the clot, if you will, there's a better chance for patients to do better, which is really what our whole premise has been. And don't use lytic, don't open up a big whole. Do a minimally evasive approach and remove an awful lot of the clot.

And so I think that trial opened the door for a lot of people to be confident in our approach and what we think we can do with this group of patients. I think this will be different than the peripheral opportunity in that it does, I think, require our trial to show that this is the right way to go. I don't have any specific updates on this call. We have announced in the past that trials can take several years. That hasn't changed in the couple of months since we last said that. So we're gonna just do the hard work and hope that we can bring to bear something that will help this group of patients.

As it relates to the neurosurgeons who also do endovascular work who would use Artemis for hemorrhage, there is some overlap. There's obviously lots of open neurosurgeons who don't do endovascular work who aren't in overlap. It is certainly not impossible that as you spend time with one customer, they may hear and understand our other approach, but it's not typically how we sort of think about things. We remain pretty focused clinically on what we're doing, particularly when we're in an experimental study like the Mind trial, and we remain pretty serious about that. So I don't think that's something that we would look at and count on as a driver there. Doesn't mean we won't go to them separately in a different time and place and make sure that they're using the right tool for stroke.

Jason Mills -- Cannaccord Genuity, Inc. -- Analyst

Fair enough. Thank you.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Thanks, Jason.

Adam Elsesser -- Chairman and Chief Executive Officer

Thanks, Jason.

Operator

And your last question comes from the line of Joanne Winch with Bank of America -- with BMO. Sorry. Your line is open.

Joanne Winch -- BMO -- Analyst

[Audio cut] Joanne. How are you guys doing?

Adam Elsesser -- Chairman and Chief Executive Officer

We're good.

Joanne Winch -- BMO -- Analyst

Good. Good. So my first question is on CAT RX. I haven't heard much about it if at all during the call. Could you provide us an update on that launch? And then has that taken a back seat on a priority basis to the REAL System? That seems to be getting more attention lately.

Adam Elsesser -- Chairman and Chief Executive Officer

Yeah. That's a great question. I'm actually grateful you brought it up. So the CAT RX is one of the three or four devices that make up the Indigo system. So when we talk about Indigo and removing clot, the CAT RX is part of that, and it is, I think as we said I think on the last call maybe or the one before, the product itself is performing incredibly well.

The three physician groups or trained type of physicians that use all of these products are interventional radiologists, vascular surgeons, and interventional cardiologists. So the CAT RX is a really important tool in its own right in terms of removing clot from the coronary arteries, and there are an awful lot of patients that have it that this tool has been very effective on. At the same time it's also a really helpful tool as we move into that third group of physicians that also do a lot of the peripheral work. So there's a lot to cover and we certainly didn't call out every product sort of by subcategory, but it has definitely been a well-received product and is part of our longer-term strategy that we're talking about in the vascular business.

It is not at all taking a back seat to REAL. That's really a separate opportunity, and, as I said on the call in my prepared remarks, we really had built a whole new team around that product so that we can do more than one thing at once. And there will be no effort lost on any of our current business because of REAL and what we're trying to accomplish there.

Joanne Winch -- BMO -- Analyst

That's helpful. And then lastly for me, just an accounting question. Sri, you talked about the OUS neuro business, you know, the results can vary on a quarterly basis. Was there any stocking that took place this quarter or anything else that we should be aware of as we look at the first quarter and second quarter or even just the quarterly cadence throughout the year?

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

The comment about variability in international and we talked about moving into new geographies, and I think you've heard this commentary from us before about that. And in some of these countries we're working with distributors, so whether you call it -- you know, it's really a function of them launching newly into a geography, and until we see that sort of normalize you're gonna see a couple quarters that don't look even.

Stocking is, you know, it sometimes is used interchangeably with that concept, but in the case of stroke, these are largely devices that we're selling that aren't sort of sitting on a shelf or consigned. So the usage is what we're gonna start to see after a couple quarters in some of these newer geographies that we enter, but there are new entries into new geographies that we're seeing in the first quarter.

Joanne Winch -- BMO -- Analyst

That makes sense. Thank you very much.

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Thanks.

Adam Elsesser -- Chairman and Chief Executive Officer

Thank you.

Operator

We have no further questions at this time. Mr. Wilson, I turn the call back over to you.

Dan Wilson -- Director and Head of Business Development

Thank you, Emily. On behalf of our management team, thank you all again for joining us today and for your interest in Penumbra. We look forward to updating you on our second quarter call.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 45 minutes

Call participants:

Dan Wilson -- Director and Head of Business Development

Adam Elsesser -- Chairman and Chief Executive Officer

Sri Kosaraju -- Chief Financial Officer and Head of Strategy

Robby Marcus -- JP Morgan -- Analyst

Bob Hopkins -- Bank of America Merrill Lynch -- Analyst

Larry Bieglesen -- Wells Fargo -- Analyst

Jason Mills -- Cannaccord Genuity, Inc. -- Analyst

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